Tropicana License Renewal Rejected by New Jersey Casino Control Commission

The massive wealth and explosive growth of the casino industry have made tidy tax profits for cities and states, made rich men richer, turned some Native American citizens from among the nation's poorest to among the richest, and brought jobs to hundreds of thousands. They have also caused at least one individual to overextend himself in an attempt to play with the biggest of the big boys, and today William Yung paid the price.

The New Jersey Casino Control Commission today refused to renew a license to Yung's Tropicana of Atlantic City Hotel and Casino, placed the hotel immediately under a trustee, and fined Yung's company, Columbia Sussex, the highest fine ever by the commission: $750,000.

The commission fined the company for not having an independent auditing committee for nearly six months ? a main requirement under state law.

Yung purchased the Tropicana of Atlantic City last year from the Aztar Corporation as CEO of Columbia-Sussex Corporation. Yung intended to use the Tropicana brand in both New Jersey and Las Vegas to lift Columbia-Sussex from a middling company running several smaller casinos and riverboats to the level of the casino giants like Harrah's and MGM Mirage.

Unfortunately, there were problems from the outset of Yung's acquisition.

The experience running a casino of the Tropicana'a level was missing, and soon massive layoffs followed under-performing revenues. The local union, Unite Here Local 54, fought the dismissals and petitioned the commission that lack of manpower had contributed to unsanitary conditions and unacceptable service.

Gaming revenue at the casino plunged 21.1% from the previous November. Slot income was down almost 25%.

Linda Kassekert, acting director of the state commission, said, "Staffing was slashed in pursuit of profit. Cleanliness was disregarded in order to meet a predetermined bottom line."

Clearly, this was the view of the entire panel, as the rejection of the license application passed by a 4-1 vote. Columbia-Sussex will appeal.

This is only the second time New Jersey refused a license renewal for a casino. In 1989, the Atlantis Hotel Casino was rejected, its owners bankrupt.

As the casino business roars forward, the Yungs of the industry will have to move more cautiously, or risk being swallowed in the wake.

December 13, 2007
Posted By Bob Hartman
Staff Editor, CasinoGamblingWeb.com
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