45 years of Gaming in New Jersey – a Look Back
By James T. Plousis, Chairman, NJ Casino Control Commission
New Jersey’s legalized gaming industry took root 46 years ago, when Gov. Brendan T. Byrne signed the Casino Control Act into law on June 2, 1977 in front of Atlantic City’s Boardwalk Hall. Later that year, on Oct. 4, the Casino Control Commission held its very first public meeting in the General Assembly Chambers at the State House in Trenton. Public interest was robust. In order to overcome the general public’s negative perception of casino gambling, establishing public confidence and trust in the credibility and integrity of the regulatory process and of casino operations was essential.
James T. Plousis
Chairman, NJ Casino Control Commission
The Commission’s first chairman, Joseph P. Lordi, set the tone. His notes from the first public meeting show there was a lot on his mind: the weight of the responsibility given by the people to their government in approving the casino referendum; the promise of revitalizing the convention, entertainment and resort industries in Atlantic City; the desire to stimulate the economy of the entire state; and, in his words, “The awesome task of seeing that the job gets done and that it gets done right.”
The newly seated commissioners debated many details and proposed operations. They didn’t agree on everything, but there was honest, robust discussion and fair consideration of their different points of view. From day one, the public was able to see and hear for itself that this Commission would consider all facts and opinions while holding the public’s interest first and foremost in its decisions—and that the Commission and its sister agency, the Division of Gaming Enforcement, would get the job done right.
Over the months that followed, many important and precedential decisions were made. The Commission licensed the first casino, Resorts, its qualifiers, and key employees. In many ways, New Jersey’s strong foundation for legalized gambling was built in the early days of this Commission. Legalized gaming began 45 years ago when Resorts opened its doors to the public on May 26, 1978.
Over 45 years in New Jersey, nearly $12 billion in gaming related taxes and fees have been collected...”
When New Jersey proved it would ensure the good character, honesty and integrity of the casinos and the people who own and operate them, public confidence and trust grew in both the casino regulatory system and the licensed casinos. The national expansion of legalized gaming over the past several decades became possible after New Jersey set the tone for thorough and strict requirements to ensure integrity. By 2022, 46 U.S. states allowed gambling and 26 states had commercial casinos, which have created and supported over 745,000 jobs.
New Jersey continued to set the tone for the gaming industry and the nation when it approved Internet gaming in 2013 and sports wagering in 2018. Strict licensing with ongoing oversight by the Division of Gaming Enforcement have established New Jersey as the lead state in ensuring online gaming can occur safely, securely and responsibly.
The First Wave / A Modern “Gold Rush”
Those were heady days. By 1979, there were close to 50 casino proposals being touted and every meeting was packed with would-be casino workers pleading to know when they would be licensed. It was a pace that continued unabated for the first three years with the opening of Resorts, Caesars and Bally’s.
While the pace of development continued to surge ahead, the Commission was stunned in 1980 by the Abscam investigation, which led to the resignation of one commissioner. The Legislature acted swiftly to reestablish public confidence by reconstituting the Commission with five full-time members. Through all of that, the Commission kept up its hectic pace of opening and licensing casinos. Between the time the new full-time Commission started in late August of 1980 and November of 1982, four new casinos opened and the Commission held five plenary licensing hearings. It also agreed to reserve a license for Donald Trump for what became Trump Plaza Hotel Casino.
The Second Wave
Public dissatisfaction over the slow pace of the redevelopment led to a major change in 1984 when the Legislature created the Casino Reinvestment Development Authority (“CRDA”). Then-Chairman Read said that the creation of that authority “culminated a long struggle to provide a mechanism to funnel casino revenues into a program that will ultimately restore Atlantic City to its former prominence as a tourist attraction and home for New Jerseyans.”
It also saw the opening of the city’s 10th casino – then called Harrah’s at Trump Plaza – and the start of what was then being called the “second wave” of casino development. The Commission rejected the advice of the Division of Gaming Enforcement and decided to renew a license for Resorts International. Several days later, the Commission denied Hilton Hotels Corporation’s request for a license. The Hilton denial – which came just a few months before the company’s casino hotel was supposed to open – created an opportunity for Donald Trump who quickly purchased the building. It opened in the middle of 1985 as Trump’s Castle and years later would be renamed Trump Marina.
Hilton wasn’t the only casino that the Commission dealt with harshly in 1985. In what was at that time the most serious penalty ever meted out by the Commission, Caesars was ordered to shut down its casino for a day because of regulatory violations that arose out of the casino’s catering to a bank executive who gambled away millions of dollars embezzled from his employer. The Chapter 11 bankruptcy filing of Elsinore’s Atlantis Casino Hotel required the Commission to take a close look at the meaning of financial stability. The Commission also had to review the issue of corporate takeovers as Donald Trump threatened takeover attempts against Holiday Inns Inc., which owned Harrah’s, and Caesars World Inc. In 1987, two casinos were sold and another underwent a massive recapitalization. Golden Nugget Inc. sold its casino hotel to Bally’s, a purchase that Bally’s officials believed would fend off a possible takeover effort from Trump. After that, Trump turned his attention to Resorts and reached a deal to acquire the stock held by the estate of Resorts chairman James Crosby. The Commission, in turn, focused on economic concentration. Casino operators were limited to a maximum of three casinos and Trump already had two and was building a third when he bought Resorts. The Commission approved a plan to close the Resorts casino upon the opening of the Taj Mahal – but it became moot as Trump ended up selling the Resorts casino along with much of the company to Merv Griffin in 1988, before the Taj Mahal opened. Both Resorts and the Taj Mahal ended up going through Chapter 11 reorganizations within just a couple of years.
The First Reorganization
Gov. Jim Florio named his then-Chief of Staff Steven P. Perskie to become the next chairman. Perskie had been one of the primary figures in the move to legalize casinos for Atlantic City in 1976 when he was in the state Assembly. Chairman Perskie immediately started a massive overhaul of the Commission that continued well into 1991.
Starting in 1991 and continuing for the next several years, the Commission focused on redefining the agency after a series of legislative changes. For example, the Legislature eliminated facilities requirements in 1991, permitted three new games, made it easier for institutional investors to invest in casino stocks and gave the Commission the power to approve 24-hour gambling on weekends, holidays and other special occasions. In 1992, the legislature permitted the Commission to authorize 24-hour gambling all year if it would have an economic impact on the city. The Commission promptly decided it would have an impact and casinos have been open around the clock ever since. The Legislature also gave casino employees the right to gamble and the Commission the power to approve new games for casinos. Lawmakers also approved simulcasting of horse races to casinos.
Gaming’s Third Decade
The new $268 million Atlantic City Convention Center opened in May 1997 and with it came a need for more hotel rooms. Three properties – Hilton, Caesars and Harrah’s – each proposed new towers of hotel rooms and Bally’s got approval for its Wild Wild West Casino expansion. Plans to develop new casinos in Atlantic City’s Marina District moved. Mirage Resorts switched partners and brought in Boyd Gaming for a project that was supposed to see two or three casinos eventually built on the “H-tract”. Construction started in 1998 on a controversial roadway and tunnel connecting the end of the Atlantic City Expressway with the Marina District – a project that opened that area to new casino development.
As a result of an agreement reached a few years earlier between the regulators and the industry, the regulators agreed to reduce duplication in the regulatory system and cut costs. In turn, the industry agreed to direct those savings into new revenue-producing projects in Atlantic City that would make the city a more attractive destination. The first of those projects came on line in 1998 with the opening of the Sand Castle stadium, which would become home to the Atlantic City Surf, an independent league baseball team. Other projects followed in subsequent years.
Construction started on the Borgata Hotel Casino and Spa in 2000, the first new casino to start up in over a decade, and the future seemed bright for Atlantic City. MGM-Mirage was planning a big complex next door, while Harrah’s was also building a new hotel tower to expand its property. Several other operators were discussing expansion plans as well.
Las Vegas Comes to Atlantic City
The market in Atlantic City changed forever in 2003 with the opening of the Borgata, the city’s first Las Vegas-style resort. The 2,000-room facility was the first casino to open in over a decade and it quickly became the largest grossing property in the city. Efforts to revitalize downtown Atlantic City took a big step forward with the opening of The Walk in 2003. The outlet mall, funded in part through the CRDA, transformed Michigan Avenue into an attractive shopping arcade linking the Convention Center with the hotels along the Boardwalk.
The casino industry passed the $5 billion mark in gaming revenue in 2005. However, slot machines were introduced in New York State at several racetracks. It was not yet a significant threat to Atlantic City’s industry, but would become so in the years to come.
In an unprecedented move, every casino in Atlantic City closed for several days in July 2006 because the Legislature had not adopted a budget and state government was shut down. The law required Commission inspectors to be present in casinos around the clock, but the government shutdown prevented the state employees from working. While the closure hurt business, casino revenues peaked in 2006 at $5.2 billion. With business looking strong, Pinnacle Entertainment Inc. tried to buy Aztar Corp., which owned the Tropicana Hotel Casino, but was unsuccessful. Several months later, it returned and purchased the Sands Hotel Casino from Carl Icahn. The casino closed as Pinnacle developed plans to replace it with a much larger complex.
Kentucky businessman William Yung won a bidding war for Aztar Corp., which owned the Tropicana. At the very end of 2006 his firm, Wimar Tahoe Corp., received interim casino authorization to take control of operations there. But that was followed by a year so marked by management blunders and disregard for regulatory requirements that the Commission issued a record $750,000 fine and concluded the new owners were not qualified to hold a license. That decision, in late 2007, triggered a trust that took the property away from Yung’s firm and the Commission appointed a conservator to oversee the operation until a new owner could be found.
Atlantic City Gaming by the Numbers
Since the inception of casino gaming in New Jersey approximately:
The Fourth Decade / Competition Takes its Toll
Atlantic City’s casino industry, and the Casino Control Commission, faced a series of challenges in 2007. Slot machines went into operation in Pennsylvania, cutting into Atlantic City’s gaming revenues. As a result, slot machine revenue dropped by almost $350 million, although that was slightly offset by a small increase in table revenue. This represented the first year in which casino revenues actually decreased. By the end of the year, there were slots in operation in Chester, Bensalem, Wilkes Barre and Mt. Pocono in Pennsylvania and in Yonkers, New York, all siphoning away business from Atlantic City. Another development that impacted revenues was the city’s decision to adopt an ordinance limiting smoking in casinos to no more than 25% of the gaming area. This was in addition to a downturn in the national economy. Despite the weakening, enthusiasm was still running strong as Pinnacle Entertainment imploded the Sands to clear the site in anticipation of building a new complex there.
Revenues continued to decline in 2008, but Atlantic City’s casinos continued to grow. Three new hotel towers – conceived when the market was much stronger – added 2,500 new hotel rooms to Atlantic City’s inventory, bringing the industry’s room count to more than 17,000. Borgata unveiled its boutique-style Water Club tower, the Trump Taj Mahal added its Chairman’s Tower and Harrah’s introduced its Waterfront Tower.
As the economic situation nationally continued to erode in 2009, Atlantic City was hit hard. Colony Capital Corp., the owners of the struggling Resorts Casino Hotel, simply turned the property over to the banks and Trump Entertainment filed for reorganization in Bankruptcy Court again. The Commission further streamlined regulations to reduce the number of vendors who needed to be licensed, and it implemented legislative changes that waived vendor licensing for large, publicly-traded corporations.
The Second Reorganization
Gov. Chris Christie signed sweeping legislation in February 2011 that dramatically restructured the state’s gaming regulatory system and additional legislation to create a Tourism District and bolster the gaming industry’s sagging fortunes. The first bill transferred all of the Commission’s day-to-day regulatory responsibilities to the Division of Gaming Enforcement (“DGE”). The requirement for state inspectors in casinos around the clock was eliminated as was the need to pre-approve changes in internal controls.
Revel casino hotel opened its doors in April after the Commission issued the company a license. In September, the city's first casino, Resorts, also became the first to be run by a Native American tribe when the Commission approved its management agreement with a subsidiary of Mohegan Gaming Advisors. The property was soon transformed with Margaritaville-themed dining and entertainment venues.
Gov. Christie signed Internet gaming into law in early 2013 and it commenced in November, providing casinos with a new opportunity to grow. In those 10 years, the casinos have generated $1.2 billion in internet gaming revenue.
Turmoil and Transition
In September, the combined forces of increased competition and a soft economy recast Atlantic City’s casino industry as four of its 12 casinos closed and a significant number of workers lost their jobs. The closure of the Atlantic Club, Showboat, Revel and Trump Plaza emboldened efforts to broaden Atlantic City’s base of attractions and create new and different reasons for people to visit.
In 2015, Atlantic City’s casinos began to stabilize and took steps to grow their businesses. With support from the CRDA, Harrah’s opened its $126 million Waterfront Conference Center in September. Tropicana completed a $50 million project to renovate its North Tower. At Resorts, space was completely renovated to create a new conference center. In 2016, the Commission approved MGM Resorts' decision to acquire Boyd Gaming's half interest in the Borgata, giving MGM total ownership of the city's highest grossing casino hotel. In November, New Jersey marked the 40th anniversary of the 1976 casino gambling referendum, which authorized casinos in Atlantic City. And by year's end, the casino operators attracted more gaming business than the prior year, even with the closure of Taj Mahal in October. Profits, industry spending on goods and services, and employment all rose.
Gaming's Fifth Decade
Industry finances continued to improve. Every casino won more compared to 2016 and profits rose over 22 percent. Casino employment, salaries and wages, hotel revenue and occupancy all rose. A sense of optimism took hold in the region as Hard Rock and Ocean Resort renovated their properties in preparation for openings in 2018.
Also in 2018, Governor Phil Murphy enacted legislation permitting sports betting at casinos and racetracks and online. Since inception, $1.2 billion has been generated in sports wagering revenue.
New Jersey can be very proud of its many achievements in the first 45 years of legalized gaming. As the industry continues to build on these accomplishments, confidence is growing on the future of Atlantic City, the region and the State.
