Carl Icahn Delivers $100 Million Ultimatum on North Jersey Casino Bill
Posted on: March 3, 2016, 04:31h.
Last updated on: March 3, 2016, 04:36h.
Carl Icahn says he will bail on Atlantic City if the state’s proposal to license casino gaming in North Jersey goes ahead.
Just days after he completed a deal to take over the stricken Trump Taj Mahal, rescuing it from Chapter 11 bankruptcy, the billionaire investor has opted to play his own trump card in the New Jersey casino expansion debate.
In late 2014, the Taj appeared to be going the way of its defunct sister property, the Plaza. But that was before Icahn, then the majority holder of the Taj’s $286 million debt, offered to transfer that debt into ownership.
He also promised to invest up to $100 million in the property, provided the Atlantic City would grant him certain concessions.
Those concessions included the right to scrap health insurance and pension benefits for workers, a request that incurred the wrath of casino workers’ union Unite 54.
As a result, public demonstrations outside the Taj and the Tropicana, also owned by Icahn, have become a familiar sight over the past 18 months.
If Casinos Go North, Icahn Goes South
But now that those concessions have been granted, and the Taj has become a full subsidiary of Icahn Enterprises, the billionaire says he may go full stop if the current direction of casino expansion in the state doesn’t come to a halt.
“Although I had planned to invest up to $100 million in the Taj, just as I made substantial investments at the Tropicana, obviously it would not be judicious to proceed with those investments while gaming in north Jersey is an open issue, and we will have to wait to see the outcome of those proposals,” Icahn said.
New Jersey wants to create two new casino licenses in the north of the state, in an attempt to lure customers across the Hudson from New York City. Since the proposal would require an amendment to the state’s constitution, the matter would have to be decided by a public ballot, but that will only happen if it is first approved by three-fifths of the legislature.
I Will Because Icahn
The bill proposes that Atlantic City receive up to $200 million from taxes on the new casinos, but it still lacks any firm proposal of a taxation rate, which means the resort city is in the dark about the level of compensation it would receive for ceding its monopoly.
While expansion has a reasonable body of support in the state legislature, there are also many dissenting voices. Many of those are in Atlantic City itself, where some are concerned that the bill will kill off a casino industry that has already seen a quarter of its gaming properties close over the past two years.
Icahn may not be a popular figure among the casino unions, but money talks, and the addition of his voice to the clamor of opposition, accompanied by his threat to pull many millions of dollars in investments, could well signal the death of casino licenses for North Jersey.