GAMBLINGCOMPLIANCE: Atlantic City Considers Room Tax; Trump Taj Mahal Issues Ultimatum

15TH JUL 2016 | WRITTEN BY: CHRIS SIEROTY

Atlantic City wants state lawmakers to allow it to charge visitors a $10 fee on hotel rooms to generate some extra money for the cash strapped city, this is as casino workers at Trump Taj Mahal face a Monday deadline to accept a contract offer.

City Council president Marty Small is proposing money generated from the room fee go toward reducing the city’s debt. Small also introduced an ordinance asking the state to allow Atlantic City to charge a wage tax on non-residents working in the city.

Atlantic City has until November 3 to come up with a plan to avoid a full state takeover. Visitors to the struggling community already pay a 9 percent luxury tax on hotel rooms, which generates about $30m annually for state coffers.

“We are just trying to raise as much money for the city’s coffers as we can instead of asking the taxpayers,” Small told GamblingCompliance Thursday. “There’s no question we need the revenue.”

Small said he has not had any discussions with the gaming industry about his resolution. He added that the next step is to send “it to the legislature and see what they do with it.”

As the cash-strapped city looks for ways to balance its budget to prevent a takeover by the state, almost 1,000 unionized casino workers continued their strike Thursday against the Trump Taj Mahal and its owner, billionaire investor Carl Icahn.

Trump Taj Mahal issued a strongly-worded ultimatum to Unite Here Local 54, reminding the union and its members they have until Monday at 5pm (EST) to accept a current contract offer or it will be off the table.

“We want to be very clear — once this offer expires, it is gone,” Tony Rodio, Tropicana’s president and CEO and manager at the Taj Mahal, wrote in a two-page letter to the union.

Rodio said the contract offers Taj Mahal workers restoration of contributions toward an employee health insurance plan.

Restoring health benefits at the Taj Mahal has been a point of frustration for the union for almost two years, after a federal judge allowed the casino to end health and pension payments after filing for bankruptcy in September 2014.

“As the Taj continues to lose millions, a situation obviously made worse by the strike, the company cannot allow its offer to remain outstanding indefinitely,” Rodio wrote.

He also reminded the union and casino workers that “our ownership has invested over $86m in keeping this property alive.”

“This money has kept the doors open, kept the lights on and allowed almost 3,000 union and non-union people to come to work every day,” Rodio wrote.

“The property has burned through all this cash, continues to lose money and continues to need Icahn Enterprises to pump more and more money into this money pit just to keep it going,” Rodio wrote.

Icahn Enterprises also owns Tropicana Atlantic City, one of four Atlantic City properties that reached tentative contracts with the union before July 1.

Local 54 of the Unite Here union said workers from three Caesars Entertainment-owned properties have ratified their new contract. Workers at Harrah’s, Bally’s and Caesars reached a deal before the July 1 deadline.

The union announced late Thursday that 99 percent of unionized Tropicana workers voted to approve the contract.

Bob McDevitt, president of Unite Here Local 54 in Atlantic City, said workers at Taj Mahal want to know why it is alright for Tropicana workers to have health care and not them.

“The company continually holds up the Trop as an example of a property that was doing poorly and is now doing well. At no point did the Tropicana propose eliminating health benefits for its workers,” McDevitt said in a statement.

McDevitt reminded Icahn Enterprises that the Taj Mahal will never be profitable unless it partners with the union.

“Part of the reason that the property continues to do poorly is because of how it has treated its workforce,” McDevitt said.

An argument that was dismissed by Rodio, who blamed union leadership for their handling of the contract negotiations.

“You are striking because your leadership is intent on squeezing blood from a stone,” Rodio wrote. “Although the Taj loses million and millions of dollars, your leadership expects it to provide the same type of benefits provided at profitable properties such as the Borgata. It makes no sense.”

Rodio did not say if the Taj Mahal would close Monday if no deal is reached. In 2014, Atlantic City lost four casinos and 8,000 jobs when The Atlantic Club, Showboat, Revel and Trump Plaza closed their doors leaving eight surviving casinos.

The Taj Mahal has lost money each year since it posted a $20m operating profit in 2013.

Meanwhile, Atlantic City on Wednesday posted lower gaming revenues at the city’s eight brick-and-mortar casino for the second month in a row.

In June, revenues totalled $197.5m, a decline of 3.6 percent from a year ago, according to the New Jersey Department of Gaming Enforcement (DGE). If you include online gambling, June revenues were $213.9m, down 1 percent from a year ago.

Despite the back-to-back monthly declines, casino gaming revenue in Atlantic City is up almost 1 percent for the year-to -date. Through June, casinos have generated more than $1.15bn in gaming revenue, compared with $1.14bn through June 2015.

Internet gaming revenue, meanwhile, is up almost 32 percent for the half-year period to $94.8m.

Rummy Pandit, executive director of the Lloyd Levenson Institute of Gaming, Hospitality and Tourism at Stockton University in Atlantic City, said the year-over-year revenue increase was “a positive.”

Pandit attributed the revenue increase partially to gaming companies investing in non-gaming amenities, including clubs, restaurants and meeting and conference facilities. He said non-gaming revenues have increased in recent years from 20 percent of total revenue to 30 to 35 percent.

“It’s not too late for Atlantic City,” Pandit told GamblingCompliance. “Everything evolves and Atlantic City is evolving.”

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