Casino Connection Atlantic City

A recent announcement by a member of the City Council in Atlantic City that he wanted to set construction deadlines for casino projects once they are approved is so “local” that it barely makes sense. It appears the Councilman Dennis Mason is peeved that Pinnacle Entertainment tore down a perfectly good and functioning casino when it purchased the Sands only to see its project languish now that the economy and credit markets have gone south. He also is upset that Revel now will apparently stick to its original plan of building its hotel towers in phases, opting to put up one tower and decide later if a second tower is appropriate for the market. Revel CEO Kevin DeSanctis (below) says no plans have been changed and that building two towers at once was only an option. And of course MGM Mirage has delayed groundbreaking on its CityCenter East project is also upsetting to the councilman, even though the company has said it is still committed to the project’s $5 billion scope.

The idea that Atlantic City could or should control how a company develops its property—casino or not—is simply ludicrous. A company responds to many things, but most importantly, it responds to the economic conditions under which it must build its projects. To think that a government could force a company to build according to its original timetables when economic conditions change so radically is akin to forcing developers to leave or not even consider Atlantic City.

Now AC isn’t alone in projects being delayed, cut back or even canceled. In Las Vegas, many projects have been put on the back burner, most notably the Plaza casino project on the old New Frontier casino site and Boyd Gaming’s Echelon project next door on the Strip. Both are multi-billion-dollar affairs but you don’t hear the city of Las Vegas or the state of Nevada demanding that the companies get off their duff and start or resume construction. No, a rational government understands that private companies operate in response to economic conditions and cannot be held responsible for backing out or delaying the project if economic conditions are bad, as they are now. Even in Connecticut, where the Indians hold a monopoly, the Mohegan Sun has delayed an $800 million expansion because the market will not support it today.

So maybe the City Council of Atlantic City should go back to school to learn basic economics. Private companies are beholden to shareholders who demand fiscal responsibility from company officials. To betray that duty to shareholders would verge on the criminal. So Atlantic City’s effort to “hold their feet to the fire” as Mason said is foolhardy and will eventually dry up investment dollars that would normally be committed to the city.

—Roger Gros