ATLANTIC CITY — State gaming regulators hold all the cards in the proposed $17.3 billion merger of Eldorado Resorts Inc. and Caesars Entertainment Corp., as New Jersey’s is the final approval needed for the deal to be completed.
But following a second day of testimony Thursday where two economists presented differing analyses of the deal’s potential impact on the Atlantic City casino market, the investigative and enforcement arm of New Jersey’s regulatory body expressed serious concerns.
“In reflecting on the testimony presented, the division’s concerns, as they relate to the overall uncertainty associated with the transaction, remain,” Deputy Attorney General Tracy Richardson said on behalf of the state Division of Gaming Enforcement.
Conversely, the attorney for Eldorado argued the newly created gaming company was well-positioned financially, committed to Atlantic City and the resulting merger would not negatively affect the market.
The Casino Control Commission will resume hearings on the proposed deal at 10 a.m. Friday.
New Jersey regulators must consider the proposal’s impact on market concentration and the financial stability of the resulting merger. Presently, Eldorado and Caesars operate four of Atlantic City’s nine casinos.
The DGE declined to issue a recommendation on the merger in its pre-hearing report to the commission until testimony had been concluded.
On Thursday, after two days of testimony from multiple Eldorado executives and the two economists, Richardson said the DGE still had reservations. She noted the uncertainty of the effects of the coronavirus on gaming and tourism, the financial impact of casino capacity restrictions and the timetable for a market recovery as reasons for the division’s position.
“As we indicated in our report, the financial success of the merger will be determined, in many respects, by events and circumstances that are beyond the control of Eldorado and cannot accurately be predicted at this time,” Richardson said.
Eldorado currently operates Tropicana Atlantic City, while Caesars controls Bally’s Atlantic City, Caesars Atlantic City and Harrah’s Resort Atlantic City. The merged gaming company would keep the Caesars name — becoming Caesars Entertainment Inc. — and customer rewards program, while Eldorado senior management would oversee operations.
Bally’s was recently sold for $25 million to Rhode Island-based Twin River Worldwide Holdings. The sale is pending approval.
The DGE report contained several recommendations for the commission to consider if the deal is to be approved. Among the conditions included in the report is the creation of a $400 million trust fund for capital investment over the next three years at Caesars, Harrah’s and Tropicana. The division also recommended the new company lift existing deed restrictions on casino gaming on three former assets of Caesars’, the Showboat Hotel Atlantic City, The Claridge hotel and the former Atlantic Club Casino Hotel.
Eldorado CEO Thomas Reeg said during Wednesday’s hearing “new Caesars” would adhere to both those conditions, as well as commit to reinvesting 5% of annual net revenue back into the Atlantic City properties.
Eldorado attorney Steve Schrier relied on the analysis of economist Timothy Watts, managing director at National Economic Research Associates Inc., as well as the testimony of five of the company’s executives Wednesday, to argue for approval of the proposal. Watts concluded that a merger of Eldorado and Caesars would not result in an undue economic concentration of casinos in the Atlantic City market.
Schrier said his client was well-positioned financially to absorb Caesars and effectively operate casinos in Atlantic City.
“Eldorado wants to be in Atlantic City, and they back that up, not just with promises but with enormous dedicated and set aside funds,” Schrier said.
Martin Perry, head of the economics department at the University of Illinois at Urbana-Champaign, argued in favor of certain conditions that would foster market competition. Perry, who has conducted several Atlantic City merger and acquisition analyses for the state, did not approve or disapprove of the merger outright.
Instead, Perry offered several recommendations for approval of the deal that would reduce the market share of the newly formed company, including selling one larger casino or two smaller properties. The sale of Bally’s alone, Perry said, would have the least impact on reducing market concentration.
The Casino Control Commission currently consists of two members — Chairman James Plousis and Commissioner Alisa Cooper — following the recent retirement of former Vice Chair Sharon Anne Harrington.
Late submitted petitions by Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort to participate in the hearings were denied by the commission Thursday.
MARGATE — Fans of Lucy the Elephant have been sending cards and photos to Ed Carpenter, the man who — with his wife — was instrumental in preserving the famous landmark, to thank him for his efforts ahead of the elephant’s 139th birthday.
“The Carpenters started it all,” said Richard Helfant, CEO and executive director of the Save Lucy Committee, the nonprofit that powers the pachyderm. “Without them, there probably wouldn’t be Lucy.”
The I Love Lucy Card Campaign was thought up by Carpenter’s daughter, Cheryl Wilson, who is asking those who love Lucy to send a card to her dad to let him know what Lucy means to them. They can also share photos of their families at Lucy or their memories of visiting her.
Lucy is a 65-foot-tall gray elephant and has been a longtime staple in the shore community. She is listed on both the New Jersey and National Registers of Historic Places.
Carpenter, a World War II Army veteran and longtime Margate resident, is 91 and currently lives at the New Jersey Veterans Memorial Home in Vineland. He will not be attending Lucy’s birthday celebration over the weekend due to the COVID-19 pandemic.
“I thought, ‘Wouldn’t it be a nice way to make sure that Dad still knew that people really appreciated his efforts, and the committee’s efforts, to save the elephant?’” said Wilson, of Margate. “I think it will brighten his day.”
Carpenter founded the Save Lucy Committee in 1970 along with Wilson’s mom, Sylvia Carpenter, and their neighbor, Josephine Harron. The nonprofit is made up of local residents and was created to raise funds to continue to preserve and restore the elephant.
The Gertzen family, who owned Lucy at the time, was selling the property the elephant stood on, on Cedar Grove Avenue, to a developer. Lucy fell into disrepair and was condemned by the city, Wilson said, and was going to be demolished.
To save Lucy, Carpenter approached the Gertzens to persuade them to donate the elephant, and it worked.
“He actually took a dollar out of his pocket and gave them a dollar to buy the elephant,” Wilson said. “He met with the city, and the city made arrangements to donate land to Lucy.”
MARGATE — She’s been a tavern, a summer home and a shoreline beacon for ships offshore, and now she can add Airbnb host to her resume.
That land, on Decatur Avenue, is where Lucy stands today.
On Monday, which marks 50 years since Lucy was relocated from Cedar Grove Avenue, city officials will hold a ceremony renaming the beach block of Decatur Avenue “Lucy Plaza.”
Even though Carpenter is no longer on the committee, he keeps a big photo of Lucy in his room at the VA home, Wilson said.
Carpenter got involved with Lucy because he recognized she was a unique piece of property and a part of the history of the city, Wilson said.
“He thought it was something that should be preserved,” she said. “He thought that it would bring happiness to people, and he was right. When you see little kids go to Lucy and they’re touching her, it’s just a fun family experience.
When Low Cut Connie singer Adam Weiner was coming up with video ideas for his new song “Look What They Did,” he suggested he and photographer Alex Wroblewski head to the Jersey Shore boardwalk town where Weiner spent his summers growing up.
“Lucy really is their legacy,” she added of her parents. “They really donated so many years, and it really was a labor of love.”
In March, Lucy was transformed into an Airbnb for three one-night stays, but the promotional event was postponed due to the pandemic. Helfant said the stays will be rescheduled to the fall.
It costs the committee about $500,000 annually to operate and maintain Lucy, Helfant said. And the elephant is currently undergoing some exterior restoration work.
“We were going to strip the paint off of Lucy, but since we started stripping paint we discovered that much of her metal is damaged,” he said. “So in phase two, all of Lucy’s metal has to be replaced.”
The exterior paint job was going to cost $500,000, but with her metal having to be replaced the whole project will now cost $1.4 million.
BRIGANTINE — Margate has Lucy the Elephant, Ocean City has falcons on its Boardwalk to ward off seagulls, and now Brigantine has a horse … but only temporarily.
“It’s going to be a complete facelift, a body lift,” Helfant said. “She’s getting a tummy tuck.”
For six months starting in spring 2021, Lucy will be wrapped in plastic and covered in scaffolding. The plastic will prevent water from entering the structure, as Helfant said so much of Lucy’s problems are related to moisture damage.
“She’ll look like she’s in a cage,” Helfant said of the scaffolding.
He added Lucy will be open to visitors next summer, despite the ongoing work.
And even after 139 years, the oceanside elephant still attracts visitors from all over the world.
“She’s the oldest roadside attraction in America,” Helfant said. “And she’s the cutest elephant in the world.”
TRENTON, N.J. (AP) — New Jersey Democratic Gov. Phil Murphy signed legislation Thursday authorizing nearly $10 billion in debt to plug budget holes that stem from the coronavirus pandemic, and Republicans sued him, arguing the bill runs afoul of the state constitution.
Murphy signed the bill shortly after the Democrat-led Assembly and Senate passed the measure, mostly on party lines.
The borrowing is needed to support public workers, first-responders, education aid and other state services, Murphy has said, but exactly how the money would be spent is yet to be determined.
The first-term governor has also said the state faces a $10 billion budget gap through June 2021.
The legislation while needed, isn't a “silver bullet,” Murphy said in a statement.
“The current economic crisis is virtually unprecedented in both its severity and swiftness,” he said. “(Our) ultimate recovery will depend on a number of factors including additional federal aid and savings within state government.”
Republicans filed their complaint in state Superior Court in Mercer County soon after the vote. They're seeking to have the measure blocked, arguing it flouts a constitutional requirement to have voters weigh in on new debt. They also questioned whether debt can be constitutionally counted as budget revenue.
“What are we so afraid of that we're so afraid of our own constituents?” said Republican Assembly member Gregory McGuckin, of Brick, during a debate over the measure on the Assembly floor.
The bill's sponsors and governor have pointed to language in the constitution that permits borrowing in times of emergency.
Republicans also argued that the governor's budget estimates were premature and failed to take into account income tax levies. The tax filing deadline, which was extended because of the virus, just passed Wednesday.
“Don't mortgage our future in a state that is already overburdened,” Republican Sen. Tony Bucco, of Morris County, said.
Democratic Sen. Paul Sarlo, of Begen County, defended the legislation, saying it simply authorized the governor to borrow the money, suggesting the debt wouldn't be incurred if not needed.
The legislation would authorize borrowing up to $2.7 billion for the current fiscal year, which ends Sept. 30. It authorizes $7.2 billion in borrowing through June 2021. It also establishes a panel of four lawmakers — two from the Assembly and two from the Senate — who will sign off on the debt.
Sarlo and Senate President Steve Sweeney will be the Senate representatives. For the Assembly, it will be Speaker Craig Coughlin and Democratic Budget Committee Chair Eliana Pintor Marin.
An estimate provided by the nonpartisan Office of Legislation Services shows that for every $1 billion in borrowed funds, the state can be expected to pay back from $1.5 billion to $1.7 billion over 20 years because of interest.
GOP Sen. Robert Singer, of Ocean County, called for the panel to include GOP members, but the majority declined to act on his suggestion.
Democratic Sen. Ron Rice, of Essex County, and Democratic Assemblyman Jamel Holley, of Union and Elizabeth, called for Black and Latino members to be added to the panel, but their amendments were defeated.
Murphy reported 254 additional positive cases, bringing the state’s total to 176,501. Thirty-two deaths were reported, giving the state a total of 13,691.
The total number of patients hospitalized, in intensive care or on ventilators continued to trend down, though Murphy said the positivity rate rose slightly to 2.8%.