Casino workers union calling for change
The Atlantic City casino workers union, Local 54, is calling for quick and decisive action with regard to certain investors from New York. The union claims that these investors are doing their best to “squeeze” cash from the region’s gambling sector.
Over 35% of the casino workers in Atlantic City are members of this union. This amounts to more than 10,000 employees, so they represent the views of a significant portion of the industry’s workers.
The union is calling on the New Jersey Casino Control Commission to take this decisive action to protect the casino sector and the jobs it creates.
The concern is that Wall Street investors are looking to make fast profits that could have awful consequences in the medium to long term for the New Jersey gambling sector.
In recent times, many hedge funds based in New York have been buying significant quantities of shares from companies that operate Atlantic City resort casinos. The main targets for these investors so far have been Caesars Entertainment Corporation and MGM Resorts International.
During a public meeting on May 8, the union brought this to the attention of the state casino regulator. The union said that these investors are making “potentially hostile actions.”
The president of the union, Bob McDevitt, says that possibly these investors’ “only interest is to squeeze money out of the company and it’s going to hurt the industry.”
Past history
Atlantic City certainly has a troubling history when it comes to getting major investors on board. Various major projects have failed despite great hopes and backing from significant investors.
This was especially the case during the recent Great Recession. The two major casino operators at the center of this issue are Caesars and MGM Resorts. Caesars was at the center of a disaster in 2008.
This was after a buyout involving Apollo Global Management and TPG Capital. According to McDevitt, this buyout led to many years of cuts to maintenance and jobs.
The company currently operates three casinos in Atlantic City, Harrah’s, Bally’s, and Caesars Atlantic City. In recent months, there has been talk that the company will be put up for sale.
Caesars shut down the Showboat Casino in 2014 because it was not making enough profit. An employee of this former casino spoke about its closure.
She worked there for 27 years and she said: “No one would have thought that a profitable casino would close down. Many of my other co-workers never found jobs. Some have lost their homes and have to rely on state assistance to get through.”
Icahn making moves
Well-known Wall Street investor Carl Icahn is playing a significant role in putting Caesers up for sale. He is now the biggest shareholder in Caesars Entertainment, having built up his holding to a stake of 28.5% in recent months.
Icahn now effectively has control of the company’s board. With a new CEO set to be appointed shortly, this puts a lot of power in Icahn’s hands. He can play a major role in choosing the successor to the current CEO, Mark Frissora.
This is not the first time that Icahn has been involved in a company that has significant interests in Atlantic City. He was the former owner of what was the Trump Taj Mahal. This is now the Hard Rock Hotel and Casino.
In summer 2016, Icahn and the workers union went to battle over the contracts of the workers at this casino. The workers went on strike for 102 days, which ultimately led to the closure of the facility in October 2016.
Union makes a request
McDevitt did note during his address at the recent public meeting that they were not focusing just on Icahn’s interests in Caesars Entertainment. He also made references to notable hedge funds buying stakes as of late in MGM Resorts International.
McDevitt is calling on the state regulators to not provide gaming licenses to these types of investors. He says they are only looking to “pull money out of people’s pockets in Atlantic City just because they are in a minority position of owning a casino.”
In response to this request, the chairman of the Casino Control Commission, James Plousis, says they will “do due diligence on all [gaming license] applications as they come forward.”