ࡱ> SUT <bjbjVV 4L<<4     $A=.]]]]]888$k  88888  ]]8 ] ]8]@ 'B  0=L 8888888"888=8888888888888 :  NEW JERSEY CASINO REVENUE FUND ADVISORY COMMISSION REGULAR MEETING OF NOVEMBER 19, 2010 Held at Casino Control Commission Tennessee Ave. and Boardwalk Atlantic City, N.J. Chairman Thebery called meeting to order and presented the surveys on casino funding completed by dept directors and suggested that members review them for the January meeting. Ms. Kassekert Chairwoman of the Casino Control Commission welcomed the Advisory Commission to Atlantic City and offered to answer any questions. Kevin Darvey, manager of the Revenue Unit within the Casino Control Commission, explained that his major responsibility for his Unit is to collect the revenues to the Casino Revenue Fund and the Casino Control Fund. By statute, they have the responsibility to collect all taxes required by the Casino Control Act and certify the sufficiency of those tax payments. For the most recent Fiscal Year 2010, via audit assessments, we collected over $300,000 in additional taxes that have been deposited to the Casino Revenue Fund. We also apply the provisions of the State Tax Uniform Procedure Law, and that is a law which concerns itself with delinquent tax payments. The sooner the Casino Revenue Fund receives those tax payments, the sooner they can utilize them, the sooner the fund would start to earn interest on it. With the past fiscal year there were no late tax payments, the casinos have complied 100 percent and made all the tax payments timely. So there were no penalties assessed against the casinos for that. He explained that the largest source of revenue to the Casino Revenue Fund remains to date the Gross Revenue Tax that is the eight percent tax that is applied against the casino revenue. He presented a slide presentation that reviewed the following; Taxes collected for Fiscal Year 2006, for a projected Fiscal Year 2012 Fiscal Year '12, we see things leveling off we're only projecting a decrease of 2.9 percent. They also collect a casino parking fee, a portion of which is deposited to the Casino Revenue Fund. For Fiscal Year '10, $5 million was deposited in the Casino Revenue Fund. Primarily, the Casino Revenue Fund receives 50 cents of every $3 fee collected. For Fiscal Year 2006, and prior, the CRF received $1.50 or half of the fee collected. They also collect a hotel room fee, a portion of which is deposited to the Casino Revenue Fund. Currently $2 of every $3 is deposited to the Casino Revenue Fund with the remaining dollar going to the CRDA. For Fiscal Year 2010, they collected $5 million for the Casino Revenue Fund. Discussion ensued concerning the apparent error in Senate Bill S-12 that designate this money go to our Advisory Commission. Chair Thebery said he already did a blast to Senator Loretta Weinberg and Assemblywoman Valerie Huddle to revisit this bill, because we were never charged with this function. Secretary Tyrrell noted that the legislation can be changed on the floor and the Assembly will have other changes. Chair Thebery and Vice Chair Torok agreed to meet in Trenton Monday to see if this can be changed. The discussion then centered on changing the definition of gross revenue. Chair Kassekert commented that at least that first 90 million would no longer be taxable, so that would mean about a $7.2 million loss based on an 8 percent tax rate to the Casino Revenue Fund under that changed definition She thinks it probably even goes a little bit further in terms of what it exempts from gross revenue. It's not just promotional gaming credits it is non-cash, its vouchers, its coupons. Mr. Darvey said if the exclusion of that from the definition of gross revenue, we believe that it is going to impact the Casino Revenue Fund negatively between 23 and $26 million. Discussion then centered on the $30 million the Casinos had supplemented the horseracing. Mr. Darvey commented on the Division of Taxation being glad to give the administration to the Commission, and the benefit to the State was, that, to the detriment of the industry is, that the administration of those taxes are now borne by the industry, that the cost for that is now borne by the industry as opposed to from the State's general fund. Commission Advisory members commented that they needed clarification on this bill and Ms Fetzko wanted to compare the verbiage and see the Senate and Assembly bill side by side. Vice Chair Torok made a motion to have clarification on our participation in this piece of legislation, and anything else that we find that comes up in relation to that. Motion seconded by Secretary Tyrrell and motion passed. Mr. Darvey said that besides the taxes, there are some other miscellaneous revenue sources that we collect for the benefit of the Casino Revenue Fund that CCC impose fines. The Commission has the authority to impose fines for violations of the Casino Control Act or its regulations. The first $600,000 collected in fines each fiscal year is deposited into the State's general fund for compulsive gambling treatment programs. Anything collected in excess of 600,000 goes to the Casino Revenue Fund. For Fiscal Year 2010, there is 224,000 was deposited into the Casino Revenue Fund. So, the threshold was met and the Casino Revenue Fund did receive an additional 224,000. They also issue invoices for the assessment of forfeited winnings, individuals who are caught gambling who are not permitted to gamble, primarily underage gamblers, and those winnings are subject to forfeiture to the State. Right now only forfeited winnings are split evenly between the Casino Revenue Fund and the General Fund. Expired vouchers, Vouchers that age one year or greater now expire. And these are the vouchers that come out of the slot machines saying that the patron has, you know, $10 or whatever, a lot of them are diminutive amounts, but after one year they are not redeemable and they expire. Twenty-five percent of those expired vouchers is payable to the Casino Revenue Fund. For Fiscal Year 2010, we collected $4.1 million for the benefit of the Casino Revenue Fund in expired vouchers. Going forward we expect the impact to be about $600,000 per fiscal year. Mr. Darvey pointed out that everything is bleak down here in Atlantic City; the most recent quarterly reports filed by the casinos indicate non-gaming revenue (restaurants, shopping, etc.) is up in the city. For the most recent quarter ending September 30th, non-gaming revenue, restaurants, hotels, entertainment is up8.3 percent, and for the 9 months ended September 30th, the non-gaming revenue here in Atlantic City is up over 10 percent. He then discussed legislative changes. He said if we look at the total impact between Fiscal Year '11, and '06, the decrease in the revenues to the fund is $233 million. We can identify $92 million of that as the result of legislative changes. The promotional gaming credits, the change in gross revenue for promotional gaming credits has decreased revenues by $25 million to the Casino Revenue Fund. There was a net income tax that was allowed to expire with Fiscal Year 2006. Complimentary tax expired in Fiscal Year 2009; cost the Casino Revenue Fund $26 million. There is a change in the distribution of the parking fee. When it was first enacted, half of the $3 fee went to the Casino Revenue Fund. Now, only 50 cents of that $3 fee goes to the Casino Revenue Fund same as with the casino room fee. When it was first enacted, the full $3 went to the Casino Revenue Fund. Now, only 2 of the $3 fee go to the Casino Revenue Fund, and of that $2, some of that is utilized to pay the debt service on hotel bonds issued by the CRDA. On the positive front there, the expired gaming vouchers that have resulted in some additional revenues to the Casino Revenue Fund we estimate to be $600,000. So, due to legislative changes that hit the Casino Revenue Fund has been $92 million Fiscal Year '11, versus Fiscal Year 2006. We've already talked about some pending legislation that's out there, S-12. Secretary Tyrell mentioned other impacting factors including the smoking ban and July 5th closure. Ms. Fetzko asked for more detail on S-12 and its impact. Casino Chair Kassekert said under the current statutory, it is a two-agency system with a check and balance. The Division of Gaming Enforcement is the investigatory forum. They investigate complaints; they investigate casino licensees; they investigate employees of the casinos; they investigate non-gaming CSIs, which are casino service industries and gaming CSIs. They provide that information to the Commission, and the Commission makes a decision whether or not to license. We are responsible for the collection and the auditing of all the taxes that's contained in financial evaluation. We are also currently responsible for having the presence on the casino floor, 24 hours a day, 7 days a week, which is something that the Commission was willing to entertain changes to because of the continued attrition that we've experience here. She said her staff is cut from 354 to 267 employees. She also mentioned facets of the Self-Exclusion Program which removes patrons who violate statutes and also helps those with gambling problems avoid casino advertisements. She went on to say, New Jersey is different from every other state, and you will hear that the regulatory cost here are considerably higher than other states. Two of those reasons are New Jersey made a decision in the original Casino Control Act, that we wanted the state police to have jurisdiction over the casino floor. No other -- no other state has the state police on the floor, they will have security guards, and they will have perhaps police. The whole idea was not to burden AC police or resources. She outlined that in our state, all costs relative to regulation are paid for by the casinos. Nevada, for example, has a requirement that 70 percent of their costs are borne by the general public through the general fund. Nevada's regulatory costs are about 44 million; our costs are about 66 million. But of that 44 million, the casinos are paying 30 percent of that while the general fund picks up 70 percent. Commissioner outlined the proposed changes in S-12 for the Casino Control Commission, which would move all day-to-day functions from the Casino Control Commission And that means financial auditors, compliance in terms of approving the games, the licensing function would move. And when I say licensing, I mean the people that come to the cage to fill out their forms, will move it all to the Division of Gaming Enforcement. So it is a shift over. It also makes fundamental changes to the functions that are performed. First of all, right now we license both casino employees, those are the people on the floor, the dealers, the slot techs, and we license what is called key casino employees, managing employees. Under the legislation, casino employees, the dealers, the slot techs will no longer be licensed, they will be registered. Ms. Kassekert said in Pennsylvania there is a seven-member Gaming Control Commission; the decisions are made in a public forum. She went on to describe other states and how their commissions function. Secretary Tyrrell offered that the proposed changes were to fix the structure of what was wrong on others. He also commented that many hotels had to retrofit to come into the present and away from the coins and receipts of the 1970s. Commission Chair Kassekert then outlined several recommendations of changes in Casino Control duties and responsibilities that might save 16 million. Mr. Darvey commented that between the changes in the definition of gross revenue, he believed it impacts the fund negatively between 25 and $26 million. Secretary Tyrrell said prior to this $90 million horse supplement, which is the reason why we had to go through this process, it never was taxed as gross gaming revenue prior to this. It was never taxed as gross gaming revenue. It was marketing materials. That same marketing material, a free meal they are being taxed on. It wasn't considered gross gaming revenue; they were taxed on promotional items. It was never taxed as gross gaming revenue. So, the loss of this is what's supposed to go back into marketing in Atlantic City, getting people to come here and spend time and money. That's the purpose of why we do promotional credits, come play here, because they are not paying in Pennsylvania; they are not paying in Connecticut or Delaware. We have to be competitive in this marketplace. Ms. Torok made a motion to accept the revised minutes of June 18th, and the current minutes of September24th, as presented. Chair Thebery seconded and members accepted the minutes. Discussion ensued that the current bills were deserving of another review, and it is up for a Senate vote Monday. Ms. Torok said in the meantime, because it mentions the Revenue Advisory as the receiver of funds, she will contact Whelan and Burzichelli and bring them our concerns. Commissioner Kassekert then offered the Advisory copies of her summary comments. Chairman Thebery asked for a motion to adjourn. Ms. Torok made motion. 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