1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 08-01-30 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Wednesday, January 30, 2008 10 Atlantic City Commission Offices 11 Joseph P. Lordi Public Meeting Room - First Floor 12 Tennessee Avenue and Boardwalk 13 Atlantic City, New Jersey 08401 14 10:30 a.m. to 12:28 p.m. 15 16 17 Certified Court Reporter: Darlene Sillitoe 18 - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 20 ATLANTIC CITY COURT REPORTING, LLC 21 CERTIFIED COURT REPORTERS AND VIDEOGRAPHERS 22 1125 ATLANTIC AVENUE, SUITE 416 23 ATLANTIC CITY, NEW JERSEY 08401 24 (609) 345-8448 www.accourtreporting.com 25 2 1 B E F O R E : 2 CASINO CONTROL COMMISSION: LINDA M. KASSEKERT, CHAIR 3 WILLIAM T. SOMMELING, VICE CHAIR MICHAEL A. FEDORKO, COMMISSIONER 4 RALPH G. FRULIO, COMMISSIONER 5 PRESENT FOR THE CASINO CONTROL COMMISSION: 6 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 7 LISA SPENGLER, PUBLICATIONS COORDINATOR 8 OFFICE OF THE GENERAL COUNSEL: DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE 9 SECRETARY LEONARD J. DIGIACOMO, ASSISTANT GENERAL COUNSEL 10 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 11 BERNADETTE T. FRIGEN, PROGRAM SUPERVISOR CLAIRE FRANK, PROGRAM SUPERVISOR/SENIOR EEO 12 COORDINATOR 13 DIVISION OF LICENSING: SHARON HAND, MANAGER 14 DIVISION OF FINANCIAL EVALUATION: 15 CHRISTOPHER GLAUM, MANAGER 16 DIVISION OF GAMING ENFORCEMENT: JOSH LICKTBLAU, DIRECTOR 17 DEPUTY ATTORNEYS GENERAL BRIAN BISCIEGLIA, DEPUTY ATTORNEY GENERAL 18 TIMOTHY C. FICCHI, DEPUTY ATTORNEY GENERAL MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 19 JAMES FOGARTY, DEPUTY ATTORNEY GENERAL FREDERICK J. McDONOUGH, DEPUTY ATTORNEY GENERAL 20 21 22 23 24 25 3 1 A P P E A R A N C E S : 2 ITEM NO. 8d BERNADETTE T. FRIGEN, PROGRAM SUPERVISOR BRIAN BISCIEGLIA, DEPUTY ATTORNEY GENERAL 3 H. ROBERT BONEY, JR., ESQ. FOR: THERESA M. McCONAGHIE 4 ITEM NO. 11 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL 5 MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL STERNS & WEINROTH 6 BY: PAUL M. O'GARA, ESQ. FOR: HARRAH'S OPERATING COMPANY, INC., 7 ET AL. 8 ITEM NO. 12 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL JAMES FOGARTY, DEPUTY ATTORNEY GENERAL 9 STERNS & WEINROTH BY: PAUL M. O'GARA, ESQ. 10 FOR: APOLLO HAMLET HOLDINGS, LLC, ET AL. 11 ITEM NO. 14 LEONARD J. DiGIACOMO, ASSISTANT GENERAL COUNSEL 12 MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL PATRICIA M. WILD, ESQ. 13 FOR: RESORTS INTERNATIONAL HOTEL, INC. WOLF BLOCK 14 BY: GILBERT BROOKS, ESQ. FOR: RESORTS INTERNATIONAL HOTEL, INC. 15 16 17 18 19 20 21 22 23 24 25 4 1 AGENDA PUBLIC MEETING NO. 08-01-30 2 JANUARY 30, 2008, 10:30 a.m. ITEM PAGE VOTE 3 1 Ratification of the minutes of 9 10 January 16, 2008, Public Meeting 4 2 Resolution commending a Commission 10 employee selected as recipient of the 5 "Sandra Donahue Employee Recognition Award" for the calendar year 2007 6 3 Applications for employee and casino service industry licenses: 7 21 applications for initial and/or 17 18 Renewal of casino key and casino employee 8 licenses Applications for a casino service 18 19 9 industry license and a junket enterprise license pursuant to NJSA 5:12-92(c) and 10 NJSA 5:12-102 for S. J. Travel Corporation and Mabrey Smith Group (Junket) 11 4 applications for initial and/or 19 19 Renewal of casino key and casino employee 12 licenses Application for casino key employee 21 22 13 license of Sara Warpness 4 Petition of Shuffle Master, Inc., for the 19 21 14 temporary casino key employee qualification of Phillip C. Peckman, pursuant to NJAC 15 19:51-1.14B and for the renewal of a casino service industry license to Shuffle 16 Master, Inc., pursuant to NJSA 5:12-92(a) (PRN 3020708) 17 5 Stipulations of settlement and consent agreements: a) Charlotte B. Blake (a/k/a 22 24 18 Bonita Blake) (07-0400-EA) b) Mark A. Branch (07-0464-EA) 22 24 19 c) Karl P. Famiano (07-0725-EA) 22 24 d) Carlos E. Perdomo-Calambas 22 24 20 (a/k/a Carlos Perdomo)(07-0479-EA) 22 24 e) Scott M. Pringle (07-0684-EA) 22 24 21 f) Beatrice F. Robbins (08-0002-EA) 22 24 g) James Weatherford (08-0001-EA) 22 24 22 h) Jamar R. Shackleford (07-0418-EA) 22 24 i) Joseph E. Beals, Sr. (07-0426-ER) 22 24 23 j) Richard W. Holmes (07-0424-ER) 22 24 k) Patricia A. Dennis (07-0256-RC) 22 24 24 l) Richard M. Spence (a/k/a Richard 22 24 M. Spencer)(07-0442-ER) 25 m) Nancy Troy (a/k/a Nancy Nguyen) 22 24 (07-0701-RA) 5 1 CONTINUED AGENDA PUBLIC MEETING NO. 08-01-30 2 JANUARY 30, 2008, 10:30 a.m. ITEM PAGE VOTE 3 6 Stipulation of settlement in State v. 24 26 Raymond C. Kenny (07-0379-VC) 4 7 Petition of Aundrey L. Davis for early 26 28 reapplication (07-0701-RA) 5 8 Applications for suspension: a) Jason L. Bowen (08-0061-RC) 28 30 6 b) John Dull (08-0062-RC) 28 30 c) Juan M. Guevara (08-0046-RC) 28 30 7 d) Theresa M. McConaghie (08-0048-RC) 30 35 e) Tesla D. Morales (08-0049-RC) 28 30 8 f) Juan D. Plasencia (08-0047-RC) 28 30 9 Petition of Highgate Steel, Inc., for adj. 9 release for monies held in escrow and other Relief (PRN 1630701) 10 10 Petition of Elektroncek D.D. for waiver adj. of qualification (PRN 2850705) 11 11 Joint petition of Harrah's Operating 36 37 Company, Inc. (HOC), Marina Associates, 12 Atlantic City Showboat, Inc., Bally's Park Place and Boardwalk Regency Corp., for 13 waiver of qualification for an officer of HOC (Maggie Nation) (PRN 0040802) 14 12 Petition of Apollo Hamlet Holding, LLC, 38 41 et al., for qualification of entity 15 qualifiers and financial sources of casino licensees (PRN0140801) 16 13 Petition of Marina District Development 42 43 Company, LLC, (d/b/a Borgata) requesting 17 permission for Jeffrey Santoro to perform the duties and exercise the powers of 18 Senior Vice President-Treasurer of Boyd Gaming Corporation pending plenary 19 qualification (PRN 0100801) 14 Amended petition of Resorts International 44 122 20 Hotel, Inc., for renewal of its casino license, casino hotel alcoholic beverage 21 license and other related relief (PRN 2760711); Petition of Resorts International Hotel, Inc., 22 for approval of time in which to reconstitute its independent audit committee (PRN 0020801); 23 Amended joint petition of Resorts International Hotel, Inc., and RIH Acquisition NJ, LLC, for 24 approval of the transfer of ownership interest in various entity qualifiers (PRN 2040703) 25 6 1 ITEM NO. 14 2 WITNESSES: DIRECT CROSS 3 ANTHONY P. RODIO 53 64 4 NICHOLAS L. RIBIS 88 91 5 FRANCIS X. McCARTHY 102 104 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7 1 E X H I B I T S : 2 ITEM NO. 3 DESCRIPTION ID EVD EL-1 Remand for hearings 21 license X 3 applications EL-2 Grant 4 licenses X 4 5 ITEM NO. 14 C-1 Casino Hotel Alcoholic beverage License X 6 Report, 1-30-08, by Christopher Storcella, Director, Division of Licensing 7 C-2 Equal Employment and Business Opportunity X Report, 12-21-07, by Claire Frank, Program 8 Supervisor C-3 Draft Resolution X 9 D-1 Report, 1-4-08, on the Petition of X 10 Resorts International Hotel, Inc., for renewal of its casino and CHAB licenses 11 and other related relief, by Mary Jo Flaherty, Deputy Attorney General (2760711) (SEALED) 12 D-1A Supplemental letter report, 1-15-08, X to Linda M. Kassekert, Chair, CCC, from 13 Mary Jo Flaherty, Deputy Attorney General, Re: (PRN 2760711) 14 D-2 Report, 1-9-08 to Linda M. Kassekert, X Chair, CCC, from Mary Jo Flaherty, Deputy 15 Attorney General Re: Resorts International Hotel, Inc., 16 for approval of time in which to reconstitute its independent audit committee (PRN 0020801) 17 D-3 Letter report, 1-7-08, to Linda M. X Kassekert, Chair, CCC, from Timothy Ficchi, 18 Deputy Attorney General, DGE Re: Resorts International Hotel, Inc., 19 Casino Hotel Alcoholic Beverage License 20 P-1 Resorts International Hotel, Inc., Equal X Employment and Business Opportunity Plan, 21 1-30-08 P-2 Letter, 11-28-07, to Linda M. Kassekert, X 22 Chair, CCC, from Mark Hedstrom, Vice President, Colony IV, LP 23 P-2a Letter, 3-12-07, to Linda M. Kassekert, X Chair, CCC, from Mark Hedstrom, Vice 24 President, Colony IV, LP Re: Finding and Ruling No. 21 of Commission 25 Resolution No. 07-03-07-13 (Exhibits retained by Commission.) 8 1 (Public Meeting 08-01-30 was commenced 2 at 10:30 a.m.) 3 MR. NANCE: I'd like to read an opening 4 statement: 5 This is to advise the general public 6 that in compliance with Chapter 231 of the 7 Public Laws of 1975 entitled the "Open Public 8 Meetings Act," the New Jersey Casino Control 9 Commission on October 16th, 2006, filed with 10 the Secretary of State at the State House in 11 Trenton an annual meeting schedule. On October 12 16th, copies were mailed to subscribers. 13 Members of the press will be permitted 14 to take photographs, and we would ask that this 15 be done in a manner which is not disruptive or 16 distracting to the Commission. 17 The use of cellular telephones in the 18 public meeting room while the Commission is in 19 session is prohibited. 20 Any members of the public who wish to 21 address the Commission will be given the 22 opportunity to do so before the Commission 23 adjourns for the day. 24 Please stand for the Pledge of 25 Allegiance. 9 ITEM NO. 1 1 (The flag salute was recited.) 2 CHAIR KASSEKERT: Good morning. 3 MR. NANCE: Good morning. 4 The matters discussed in closed session 5 were: Employee and enterprise license matters. 6 The Commissioners approved the January 7 16th, 2008, closed session minutes. 8 Litigation update regarding: Warren 9 Lackland and Lewis M. Springer, Jr., versus the 10 State of New Jersey and the Casino Control 11 Commission; 12 Gloria Ford versus the State of New 13 Jersey, Casino Control Commission, et al.; 14 Tyron J. Floyd versus the Casino Control 15 Commission and Sands Casino Hotel; 16 Husain versus the Casino Control 17 Commission, et al.; 18 Petition of Tropicana, et al., for 19 renewal of casino license; 20 And application of Dana White for 21 renewal of a casino employee license. 22 Item No. 1, ratification of the minutes 23 of January 16th, 2008, public meeting. 24 VICE CHAIR SOMMELING: Move to approve. 25 COMMISSIONER FEDORKO: Second. 10 ITEM NO. 2 1 CHAIR KASSEKERT: The motion has been 2 made and seconded. All in favor? 3 (Ayes.) 4 CHAIR KASSEKERT: Opposed? 5 (No response.) 6 CHAIR KASSEKERT: Motion carries. 7 MR. NANCE: Item No. 2, resolution 8 commending a Commission employee selected as 9 recipient of the "Sandra Donahue Employee 10 Recognition Award" for the calendar year 2007. 11 Miss Frigen? 12 MS. FRIGEN: Madame Chair, 13 Commissioners, as a member of the Commission's 14 Employee Recognition Team, it is my pleasure to 15 bring before you today two individuals who were 16 recently nominated for the Sandra Donahue 17 Employee Recognition award for the calendar 18 year 2008. 19 The ERT considers both of these 20 individuals most worthy and deserving of these 21 nominations. We would also like to thank the 22 nominators Dale, Shawn, and Tom for taking the 23 time and courtesy to make these submissions. 24 Before Tom presents the award to Toni 25 Lynn Rispoli, I would first like to first bring 11 ITEM NO. 2 1 forth Daryl Nance who today is receiving an 2 accommodation for his nomination. 3 Daryl came to the Commission in 1987, 4 has been a life force ever since. He and 5 former co-employee, Barbara Gallo, initially 6 shared responsibilities for preparing the 7 biweekly agendas for the public meetings which, 8 in addition to making sure all the required 9 items are scheduled and appropriately parties 10 noticed, includes making sure that the 11 Commission receives all of its agenda 12 materials, monitoring each public meeting, 13 reading information into the record, taking 14 minutes, and accurately recording the results, 15 and so on. 16 Daryl is also responsible for the 17 scheduling, distribution of materials, and 18 record keeping of all action taken by the 19 Commission in connection with its licensing 20 hearings and is frequently called upon to 21 provide documents to the public. 22 Although this was a two-team task, no 23 doubt, in 2004 Miss Gallo retired, leaving 24 Daryl to assume primary and mostly solely 25 responsibility for all of these tasks. Daryl 12 ITEM NO. 2 1 definitely rose to the challenge. And one of 2 his nominators described him as being the glue 3 which holds the Administrative Practices Unit 4 together. 5 Since Miss Gallo's departure, Daryl has 6 not missed a public meeting, and he frequently 7 arranges his vacation schedules to accommodate 8 the Commission's schedule. His dedication to 9 the Commission was also duly noted recently 10 given the long hours, he -- and also, I would 11 note, Dale -- put in during the Tropicana 12 licensing proceedings. 13 So, Madame Chair, the ERT Committee 14 believes that Daryl is most deserving of his 15 commendation, and we would ask that you present 16 it to him. 17 CHAIR KASSEKERT: Sure. 18 COMMISSIONER FRULIO: And he's a Giants 19 fan. 20 COMMISSIONER FEDORKO: Isn't everybody? 21 CHAIR KASSEKERT: Congratulations, 22 Daryl. 23 (Standing ovation and photos.) 24 CHAIR KASSEKERT: I want all the 25 licensees to note how we do more with less. 13 ITEM NO. 2 1 And Daryl's a prime example of that. 2 MS. FRIGEN: And, Tom, I would ask you 3 to go forward, presenting the next one. 4 CHAIR KASSEKERT: Thanks. 5 MR. TOM: Thank you, and good morning, 6 Madame Chair, esteemed Commission, and all 7 guests and esteemed workers at the Casino 8 Control Commission. 9 It is indeed an honor for me to present 10 to you today a coworker who is the recipient of 11 the Sandra Donahue Recognition Award. 12 Twenty-one years ago, I was hired as an 13 inspector, and it was at that time while in 14 training that I met Toni Lynn. She was our 15 gaming equipment instructor. During the first 16 encounter, it did not take long to pick up on 17 her energy, enthusiasm, and comprehensive grasp 18 of the subject matter. It was obvious she knew 19 her stuff. She knew the regulations inside and 20 out. Today we have ISIS, a computer program 21 that opens up a plethora of regulatory 22 information with the click of a mouse. Back 23 then we didn't have ISIS, but we had Toni Lynn. 24 She made a lasting impression on me that 25 day because what she said set the tone for the 14 ITEM NO. 2 1 next 21 years of my life. She told us that the 2 inspectors were the eyes and the ears of the 3 Commission and that we would be required to be 4 present in each casino 24 hours a day, seven 5 days a week, 365 days a year. We would be 6 working weekends and holidays because the 7 inspectors needed to be present on the casino 8 floor so that the mission of the Commission to 9 ensure the integrity of casino gaming be 10 guaranteed. After all, here at the Commission, 11 honesty and integrity do not get to take days 12 off. 13 She further told us that the presence of 14 the inspector on the casino floor would be a 15 beacon to the gaming customer that would remind 16 and assure them that honesty and integrity were 17 not options but mandates, for the Casino 18 Control Commission would have it no other way. 19 Her enthusiasm that day was contagious, 20 and since then, Tony has been involved in some 21 way or another in the training of every 22 inspector who was hired by the Commission. And 23 in recent years she has been responsible for 24 the on-the-job training and monitoring -- 25 mentoring of one member of each graduating 15 ITEM NO. 2 1 class. Toni Lynn's competence in all aspects 2 of her job and her willingness and eagerness to 3 share her knowledge is only where it begins. 4 Toni Lynn is a supervising inspector. 5 Steve Wynn defines a supervisor as a 6 cheerleader and a motivator who brings out the 7 best in her -- in his employees and yet 8 provides a work environment that is enjoyable 9 and perhaps even fun. Toni Lynn is a poster 10 child for a Steve Wynn supervisor. For Toni 11 Lynn brings out the best of the supervisors 12 because she truly has their best interests at 13 heart. There is nothing that she would ask an 14 inspector to do that she wouldn't do herself. 15 As a working supervisor, she leads by example. 16 As a supervising inspector, she is 17 responsible for the Commission daily operations 18 at her assigned casino. And this is where Tony 19 really shines. For those of you who only know 20 her casually, that enthusiasm and high energy 21 that you see is not short-lived. She is upbeat 22 and raring to go from the beginning of the day 23 until the end. No task is a bother, no request 24 is too much to ask. If you need something 25 done, Tony can and will do it in a heartbeat. 16 ITEM NO. 2 1 She perpetually displays a willingness to take 2 care of business, and at all times she treats 3 her staff, casino personnel, outside 4 contractors and the general public with the 5 utmost respect and professionalism. 6 And at the end of the day, when you 7 think all is done, Toni Lynn appears in her 8 refereeing outfit for she is off to ref a game, 9 that is if she is not coaching one of her 10 teams, or fighting with the Egg Harbor Township 11 recreation officials about the needs of the 12 area youth. In fact, I think the hardest part 13 of her working day is just beginning when she 14 leaves to go home. 15 If there is one thing best that seems to 16 say it all about Toni Lynn, it's contained in a 17 statement that Toni Lynn made to me last week. 18 We were having a casual conversation about 19 retirement. And she said to me and I quote -- 20 after I said I want to get up when I want to 21 get up. I want to go to bed when I want to go 22 to bed. I want to be where it's warm in the 23 winter. She said to me and I quote, "Life has 24 been good to me, and when I retire, I would 25 like to do something to give back." 17 ITEM NO. 3 1 Hmm. In this day and age it is nice to 2 hear someone speak that way. And do you know 3 what? It's even nicer to work with someone who 4 would say it. That statement speaks volumes 5 about the content of her character. 6 Toni Lynn is truly a credit to the 7 inspection unit, and she's a credit to the 8 Casino Control Commission. We are fortunate to 9 have her on our team. 10 And I present her to you, Madame Chair, 11 as the recipient of the Sandra Donahue 12 Recognition Award. 13 (Applause.) 14 MS. RISPOLI: Thank you. 15 What can I say? Thank you. 16 CHAIR KASSEKERT: Congratulations. Job 17 well done. 18 MS. RISPOLI: Thank you, everybody. 19 It's great being part of this family. Thank 20 you, everybody. 21 (Applause.) 22 MR. NANCE: Item No. 3, application for 23 employee and casino service industry licenses. 24 This agenda item will be entered as Exhibit 25 List 1 and 2. 18 ITEM NO. 3 1 Exhibit List 1 consists of 21 2 applications for initial and/or renewal of 3 casino key and casino employee licenses. 4 The Division has objected to licensure. 5 COMMISSIONER FRULIO: Motion to remand 6 for hearings. 7 COMMISSIONER FEDORKO: Seconded. 8 CHAIR KASSEKERT: The motion has been 9 made and seconded. All in favor? 10 (Ayes.) 11 CHAIR KASSEKERT: Opposed? 12 (No response.) 13 CHAIR KASSEKERT: The motion carries. 14 MR. NANCE: For consideration are the 15 applications for a casino service industry 16 license and a junket enterprise license 17 pursuant to NJSA 5:12-92(c) and NJSA 5:12-102 18 for S. J. Travel Corporation and Mabrey Smith 19 Group. 20 The Division has objected to these 21 applications. 22 COMMISSIONER FRULIO: Motion to remand 23 for hearings. 24 COMMISSIONER FEDORKO: Second. 25 CHAIR KASSEKERT: The motion has been 19 ITEM NO. 4 1 made and seconded. All in favor? 2 (Ayes.) 3 CHAIR KASSEKERT: Opposed? 4 (No response.) 5 CHAIR KASSEKERT: Motion carries. 6 MR. NANCE: Exhibit List 2 consists of 7 four applications for initial and/or renewal of 8 casino key and casino employee licenses. 9 The staff and the Division have 10 recommended that these licenses be granted. 11 COMMISSIONER FRULIO: Motion to grant 12 applications. 13 COMMISSIONER FEDORKO: Second. 14 CHAIR KASSEKERT: The motion has been 15 made and seconded. All in favor? 16 (Ayes.) 17 CHAIR KASSEKERT: Opposed? 18 (No response.) 19 CHAIR KASSEKERT: Motion carries. 20 MR. NANCE: Item No. 4, Petition No. 21 3020708 of Shuffle Master, Inc., is requesting 22 the issuance of a temporary casino key employee 23 license to Phillip C. Peckman pursuant to NJSA 24 19:51-1.14B and the renewal of a casino key -- 25 excuse me -- and renewal of a casino service 20 ITEM NO. 4 1 industry license of Shuffle Master, Inc., 2 pursuant to NJSA 5:12-92(a). 3 MS. HAND: Good morning, Chair. Good 4 morning, Commissioners. 5 You have Ms. Jones here on behalf of 6 Petitioner and Mr. McDonough for the Division 7 of Gaming Enforcement. 8 CHAIR KASSEKERT: Good morning, Ms. 9 Jones. 10 MS. JONES: Good morning, Chair, 11 Commissioners. 12 We urge you to waive our temporary 13 qualifier, Mr. Peckman, and to renew the 14 license of Shuffle Master. 15 Thank you. 16 CHAIR KASSEKERT: Thank you. 17 Mr. McDonough? 18 MR. McDONOUGH: Good morning. 19 I reported by letter report dated August 20 10th and November 19th of last year favorably 21 in the matters that are in front of you now and 22 concur with Miss Jones. I ask you to approve 23 them. 24 CHAIR KASSEKERT: Thank you. 25 Any questions? 21 ITEM NO. 3-4 1 VICE CHAIR SOMMELING: No questions, 2 Madame Chair. 3 COMMISSIONER FRULIO: Motion to approve 4 the petition and find Phillip C. Peckman 5 temporarily qualified to exercise the powers 6 and assume the duties as an outside director 7 for a period of 18 months pursuant to NJAC 8 19:51-1.14B and grant the casino service 9 industry license renewal applications of 10 Shuffle Master, Inc., pursuant to NJSA 11 5:12-92(a). 12 COMMISSIONER FEDORKO: Second. 13 CHAIR KASSEKERT: Motion is made and 14 seconded. All in favor? 15 (Ayes.) 16 CHAIR KASSEKERT: Opposed? 17 (No response.) 18 CHAIR KASSEKERT: Motion carries. 19 MS. JONES: Thank you. 20 MR. McDONOUGH: Thank you. 21 MR. NANCE: And for consideration is the 22 application of Sara Warpness for a casino key 23 employee license. 24 Staff has recommended that this matter 25 be sent to a hearing. The Division have 22 ITEM NO. 3/5 1 recommended that this license be granted. 2 CHAIR KASSEKERT: Thank you. 3 Is there a motion to send this matter to 4 a hearing? 5 COMMISSIONER FEDORKO: Motion to send to 6 a hearing. 7 VICE CHAIR SOMMELING: Second. 8 COMMISSIONER FRULIO: Second. 9 CHAIR KASSEKERT: The motion has been 10 made and seconded. All in favor? 11 (Ayes.) 12 CHAIR KASSEKERT: Opposed? 13 (No response.) 14 CHAIR KASSEKERT: Motion carries. 15 MR. NANCE: Item No. 5, stipulations of 16 settlement and consent agreements. When I call 17 your name, please come forward, stand behind 18 this middle table, spreading across the room so 19 that you may be seen: Charlotte Blake, Mark 20 Branch, Karl Famiano, Carlos Calambas, Scott 21 Pringle, Beatrice Robbins, James Weatherford, 22 Jamar Shackleford, Joseph Beals, Sr., Richard 23 Holmes, Patricia Dennis, Richard Spence, and 24 Nancy Troy. 25 Mr. Ingis? 23 ITEM NO. 5 1 CHAIR KASSEKERT: Thank you. 2 I would ask everyone whose name has been 3 called come forward. I would ask that you 4 state your name for the record, starting with 5 you, sir, 6 MR. BRANCH: Mark Branch. 7 CHAIR KASSEKERT: Ma'am? 8 MS. BLAKE: Charlotte Blake. 9 MR. SPENCE: Richard Spence. 10 MR. FAMIANO: Karl Famiano. 11 MR. WEATHERFORD: James Weatherford. 12 MR. PRINGLE: Scott Pringle. 13 MS. TROY: Nancy Troy. 14 CHAIR KASSEKERT: And you, sir? 15 MR. BEALS: Joseph Beals. 16 CHAIR KASSEKERT: Okay. In a moment 17 we're going to vote on the stipulations which 18 you've agreed to with the Division of Gaming 19 Enforcement. I'm going to ask at this point if 20 any of you wish to be heard on your matter. 21 You don't have to say anything if you don't 22 want to. 23 Does anyone wish to be heard? 24 (No response.) 25 CHAIR KASSEKERT: Okay. Very good. 24 ITEM NO. 5-6 1 MR. BISCIEGLIA: Good morning, Chair, 2 Commissioners. 3 CHAIR KASSEKERT: Good morning. 4 MR. BISCIEGLIA: The Division has 5 nothing further to add on this matter and ask 6 that the stipulations be approved as submitted. 7 Thank you. 8 CHAIR KASSEKERT: Thank you, Mr. 9 Biscieglia. 10 Any questions? 11 VICE CHAIR SOMMELING: Move to approve 12 the stipulations, Madame Chair. 13 CHAIR KASSEKERT: The motion has been 14 made and seconded. All in favor? 15 (Ayes.) 16 CHAIR KASSEKERT: Opposed? 17 (No response.) 18 CHAIR KASSEKERT: Motion carries. 19 Thank you for coming. Good luck. 20 MS. FRIGEN: Just note for the record 21 that Mr. Perdomo was also present. 22 CHAIR KASSEKERT: Thank you. 23 MR. NANCE: Item No. 6, stipulation of 24 settlement in State versus Raymond C. Kenny. 25 Mr. Ingis? 25 ITEM NO. 6 1 MR. INGIS: Good morning, Madame Chair 2 and Commissioners. 3 This is a stipulation of settlement for 4 an underaged gaming violation which, if 5 approved, will result in the civil penalty in 6 the amount of $250 and a 20-working day 7 suspension. 8 Mr. Biscieglia is here on behalf of the 9 Division. 10 CHAIR KASSEKERT: Thank you. 11 Mr. Biscieglia? 12 MR. BISCIEGLIA: Thank you, Chair. 13 The Division has nothing further to add 14 and ask that the stipulation be adopted as 15 submitted. 16 Thank you. 17 CHAIR KASSEKERT: Thank you. 18 Any questions? 19 COMMISSIONER FEDORKO: Move to approve 20 the stipulation and impose a civil penalty of 21 $250 and a 20-working day suspension for 22 underaged gambling violation of Section 119(a). 23 VICE CHAIR SOMMELING: Second. 24 CHAIR KASSEKERT: The motion has been 25 made and seconded. All in favor? 26 ITEM NO. 7 1 (Ayes.) 2 CHAIR KASSEKERT: Opposed? 3 COMMISSIONER FRULIO: Abstain. 4 CHAIR KASSEKERT: Commissioner Frulio 5 abstains. 6 Motion passes. 7 Thank you very much. 8 MR. NANCE: Item No. 7, petition of 9 Aundrey L. Davis for early application. 10 Miss Frigen? 11 MS. FRIGEN: Let me ask for the record 12 whether Aundrey Davis is present or 13 represented? 14 He apparently is not here today. For 15 your consideration is his petition seeking 16 permission to obtain noncredential hotel 17 employment. 18 The Division has interposed an objection 19 to his request. 20 CHAIR KASSEKERT: Thank you. 21 Mr. Biscieglia? 22 MR. BISCIEGLIA: Thank you. 23 The Petitioner's casino service employee 24 registration was revoked by the Commission 25 order on September 29th of 2005 after he failed 27 ITEM NO. 7 1 to request a hearing following the filing of 2 the Division's complaint. 3 The basis for this complaint was a quite 4 serious one, as on January 7, 2005, Mr. Davis 5 was convicted of aggravated assault. This 6 assault took place in the Harrah's Atlantic 7 City parking lot where he lied [sic] in wait 8 for the victim who he had had a domestic 9 relationship with. And after she refused to 10 get in the car with him, he stabbed her several 11 times. Of course, this is a very serious 12 matter. 13 Also, you'll see in the Division's 14 report of two previous arrests in Mr. Davis' 15 criminal history also regarding violent crimes. 16 It's the Division's position, based on 17 the violent history of the Petitioner and 18 especially with the relationship to this having 19 happened in the casino parking lot, that this 20 petition should be denied at this time. 21 Thank you. 22 CHAIR KASSEKERT: Thank you. 23 Any questions? 24 VICE CHAIR SOMMELING: Madame Chair, 25 move to deny Mr. Davis' petition to obtain 28 ITEM NO. 8 1 employment early as a noncredential hotel 2 employee. 3 COMMISSIONER FRULIO: Second. 4 CHAIR KASSEKERT: The motion has been 5 made and seconded. All in favor? 6 (Ayes.) 7 CHAIR KASSEKERT: Opposed? 8 (No response.) 9 CHAIR KASSEKERT: Motion carries. 10 MR. NANCE: Item No. 8, application for 11 suspension for Jason Bowen, John Dull, Juan 12 Guevara, Theresa McConaghie, Tesla Morales, and 13 Juan Plasencia. 14 Miss Frigen? 15 MS. FRIGEN: Madame Chair, 16 Commissioners, I would just like to bring to 17 your attention that with respect to 8c, Juan 18 Guevara, his attorney, Avis Kofkoff (phonetic) 19 has contacted us this morning advising that 20 they had determined not to contest the 21 application for suspension. 22 I have Robert Boney is here on behalf of 23 Theresa McConaghie. 24 Let me ask whether Jason Bowen, John 25 Dull, Tesla Morales, or Juan Plasencia are 29 ITEM NO. 8 1 present or represented? 2 (No response.) 3 MS. FRIGEN: Apparently not. So, 4 apparently, we only have Item 8d present this 5 morning. 6 CHAIR KASSEKERT: Okay. Why don't with 7 we take Items a, b, c, e and f first. 8 Mr. Biscieglia? 9 MR. BISCIEGLIA: Thank you. 10 The Division would just like to point 11 out in regards to b, John Dull, a warrant was 12 issued for his arrest by the Atlantic City 13 Municipal Court for failure to appear on 14 November 19th of 2007. 15 In regards to a, e and f, they are all 16 currently bending a grand jury with no date 17 set. 18 CHAIR KASSEKERT: Thank you. 19 Any questions for Mr. Biscieglia? 20 VICE CHAIR SOMMELING: No questions, 21 Madame Chair. 22 COMMISSIONER FRULIO: Motion to suspend 23 the credentials on Items 8a, b, c, e, and f. 24 COMMISSIONER FEDORKO: Second. 25 CHAIR KASSEKERT: The motion has been 30 ITEM NO. 8 1 made and seconded. All in favor? 2 (Ayes.) 3 CHAIR KASSEKERT: Opposed? 4 (No response.) 5 CHAIR KASSEKERT: Motion carries. 6 MS. FRIGEN: Madame Chair, 7 Commissioners, I would ask the Division to go 8 forward and bring forth its basis for seeking 9 suspension in this case before we hear from Mr. 10 Boney. 11 CHAIR KASSEKERT: Thank you. 12 Mr. Biscieglia, you may proceed. 13 MR. BISCIEGLIA: Thank you. 14 On November 18, 2007, the Respondent was 15 arrested by the New Jersey State Police Casino 16 Enforcement Bureau and charged with theft by 17 unlawful taking contrary to NJSA 2C:20-3. 18 While working as a roulette dealer at Caesars, 19 Atlantic City, the Respondent was observed on 20 film taking a $500 gaming check and putting it 21 into her pocket. During questioning the 22 Respondent admitted to taking the check and 23 stated that she had taken the check to use to 24 pay a bookmaker for a debt that her brother had 25 incurred. 31 ITEM NO. 8 1 Thank you. 2 CHAIR KASSEKERT: Thank you. 3 I'm sorry. I didn't catch your name, 4 sir. 5 MR. BONEY: Thank you. Robert Boney, 6 Madame Chair. 7 CHAIR KASSEKERT: Mr. Boney, you may 8 proceed. 9 MR. BONEY: Thank you. 10 That's correct. I'm handling the 11 criminal matter, and we don't dispute what 12 counsel said in respect to the discovery in the 13 statement was -- although we don't have 14 discovery yet, technically, because it's a 15 third-degree situation. That there is a 16 statement given, and she was forthright, did 17 concede the taking of that gaming check. 18 The -- the arguments we had, just very 19 briefly, with regard to mitigation as far as 20 the suspension is that what we have here, 21 unlike some of your other matters with serious 22 charges, this is a matter in which, although 23 there's no question it took place at a casino, 24 is a $500 amount which the Commission may know 25 is a very, very marginal -- it's the exact 32 ITEM NO. 8 1 amount necessary to even make the charge 2 indictable. The prosecutor may -- may or may 3 not -- downgrade this matter to a disorderly 4 person's situation. I think she also made good 5 on the check, and I don't think there was any 6 loss suffered by the casino employer. 7 The only other points we want to make is 8 that there is a matter -- there is -- we have 9 filed for a probable cause hearing just 10 investigatively to probe into this matter. And 11 if the matter is downgraded by the prosecutor, 12 it will be resolved in municipal court as a 13 disorderly person's offense. 14 If it's indicted, I'm sure the 15 Commission already knows that she would -- at 16 least I would represent -- that based not only 17 is her 20 years in the casino industry pretty 18 much blemish free, no criminal record, age 42 19 years, but that would make her an extremely 20 likely -- not possible, but likely -- candidate 21 to receive pretrial intervention, the granting 22 of pretrial intervention, which then would 23 result in an ultimate, assuming compliance with 24 conditions there, dismissal of the charges even 25 if there is an indictment. So that it is very 33 ITEM NO. 8 1 likely that -- not just possible, but likely -- 2 that these charges were going to be dismissed 3 as the outcome of this -- at the outcome of 4 this matter, and that there never will be any 5 indictable criminal conviction in this matter. 6 In other words, at least it's my 7 opinion, that that is a likely outcome, not a 8 merely a possible outcome in the matter. So 9 that we would ask that you take this into 10 consideration in not suspending her license 11 pending the outcome. 12 We certainly agree to defer further 13 proceedings here until, under the case law that 14 you have and statute, to pending the outcome of 15 the criminal matter, which, again, I'm handling 16 also. And consider that she's a -- not only a 17 20-year employee in this -- in the industry 18 with a blemish free record, but also a mother 19 of a nine-year old, and I think 14-year old 20 children that she supports. 21 So we ask that you take all that into 22 consideration and abide by your discretion. 23 CHAIR KASSEKERT: Thank you. 24 Mr. Biscieglia? 25 MR. BISCIEGLIA: In response, I would 34 ITEM NO. 8 1 just say that regardless of the action that the 2 criminal courts choose to take in this matter, 3 the evidence supports the fact that the 4 Respondent did take the chip, the evidence, of 5 course, being videotape evidence and the 6 Respondent's own admission. 7 Based upon that, while the criminal 8 courts might not consider a $500 theft a matter 9 of the utmost magnitude, both the Division and 10 the Commission have treated casino thefts very 11 seriously, and based upon that, it's the 12 Division's position that the suspension is the 13 only appropriate action. 14 Thank you. 15 CHAIR KASSEKERT: Thank you. 16 Before we hear any more, does anyone 17 have any questions? 18 VICE CHAIR SOMMELING: No, Madame Chair. 19 CHAIR KASSEKERT: Mr. Boney, anything 20 else you'd like to add? 21 MR. BONEY: That's essentially it. Our 22 position. 23 CHAIR KASSEKERT: Okay. Okay. Let me 24 ask if we have a motion? 25 COMMISSIONER FRULIO: Madame Chair, move 35 ITEM NO. 11 1 to suspend the credential. 2 COMMISSIONER FEDORKO: Second. 3 CHAIR KASSEKERT: The motion has been 4 made and seconded. All in favor? 5 (Ayes.) 6 CHAIR KASSEKERT: Opposed? 7 (No response.) 8 CHAIR KASSEKERT: Motion carries. 9 Because this incident occurred on the 10 casino floor, we have to take it extremely 11 seriously, and this matter will proceed through 12 the process. And you will have an opportunity 13 to be heard at a later date. And Miss Frigen 14 can explain that process to you. 15 Thank you. 16 MR. BONEY: Yes. She's been very 17 helpful. 18 Thank you. 19 CHAIR KASSEKERT: Thank you. 20 MR. BISCIEGLIA: Thank you. 21 MR. BONEY: Thank you very much. 22 MR. NANCE: Item No. 9 has been 23 adjourned at the request of the Petitioner. 24 And Item No. 10 has been adjourned. 25 Item No. 11, joint petition of Harrah's 36 ITEM NO. 11 1 Operating Company, Inc., Marina Associates, 2 Atlantic City Showboat, Inc., Bally's Park 3 Place and Boardwalk Regency Corp. for waiver of 4 qualification for an officer of HOC. 5 Miss Wozniak? 6 MS. WOZNIAK: Good morning. 7 I have distributed a draft resolution. 8 Mr. O'Gara is here on behalf of the 9 Petitioners, and Miss Flaherty for the 10 Division. 11 CHAIR KASSEKERT: Mr. O'Gara? 12 MR. O'GARA: Yes, ma'am. 13 CHAIR KASSEKERT: Good morning. 14 MR. O'GARA: I think the petition -- and 15 we've seen it, the draft resolution and have no 16 issue with it. The individual in question is 17 going to be the General Manager of 18 Margaritaville. Sounds like a pretty 19 interesting job, actually, and report to John 20 Pain (phonetic), whose qualification has also 21 been waived. 22 CHAIR KASSEKERT: Thank you. 23 Miss Flaherty? 24 MS. FLAHERTY: Yes. You have the report 25 of January 10th, 2008. The Division and 37 ITEM NO. 11 1 Director concurs with the waiver of this 2 individual's qualification. 3 And we concur with the resolution as 4 drafted. 5 Thank you. 6 CHAIR KASSEKERT: Thank you. 7 Any questions? 8 VICE CHAIR SOMMELING: No question, 9 Madame Chair. 10 Move to approve the -- adopt the draft 11 resolution and waive the qualification 12 requirement pursuant to NJSA 5:12-85d(1) as to 13 Maggie Nation in her capacity as Vice President 14 of the Margaritaville Resort/Casino 15 Development. 16 COMMISSIONER FEDORKO: Second. 17 CHAIR KASSEKERT: The motion has been 18 made and seconded. All in favor? 19 (Ayes.) 20 CHAIR KASSEKERT: Opposed? 21 Oh, it's a roll call vote. I'm sorry. 22 MR. NANCE: Commissioner Frulio? 23 COMMISSIONER FRULIO: Yes. 24 MR. NANCE: Commissioner Fedorko? 25 COMMISSIONER FEDORKO: Yes. 38 ITEM NO. 12 1 MR. NANCE: Vice Chair Sommeling? 2 VICE CHAIR SOMMELING: Yes. 3 MR. NANCE: Chair Kassekert? 4 CHAIR KASSEKERT: Yes. 5 MR. NANCE: The record will reflect that 6 the motion is unanimous. 7 Item No. -- 8 CHAIR KASSEKERT: We're going to try to 9 move through the agenda, and I'll ask Mr. 10 Ribis' indulgence. Because I promised him we 11 would start at 11:00, so -- 12 MR. NANCE: Item No. 12, petition of 13 Apollo Hamlet Holdings, LLC, et al., for 14 qualification of entity qualifiers and 15 financial sources of casino licensee. 16 Miss Wozniak? 17 MS. WOZNIAK: Chair, Commissioners, 18 again, I have distributed a draft resolution. 19 And, again, Mr. O'Gara for the 20 Petitioners and Mr. Fogarty for the Division. 21 CHAIR KASSEKERT: Thank you. 22 Mr. O'Gara? 23 MR. O'GARA: Yes, ma'am. 24 CHAIR KASSEKERT: I didn't even get to 25 make my Jimmy Buffet joke because the General 39 ITEM NO. 12 1 Counsel interrupted me before I -- 2 MS. FAUNTLEROY: I'm sorry. 3 CHAIR KASSEKERT: But anyway, Mr. 4 O'Gara. 5 MR. O'GARA: Feel free. 6 I believe the last time we were here a 7 couple weeks ago, I indicated to you that I 8 believed this petition would be on the agenda. 9 This is a petition to find constituent 10 funds of TPG Hamlet B and Apollo Hamlet 11 qualified entities, qualified and as financial 12 sources as they now will fund up approximately 13 $300 million of equity investment which would 14 be anticipated coming through the co-invest 15 vehicles which had previously been qualified. 16 And I believe your staff's had a chance to 17 review all of this. 18 This will be the last piece of the 19 closing. The remainder of the transaction 20 closed on Monday. The notes will be sold 21 tomorrow, I am told. Or Friday. And this will 22 allow the final piece of the second equity 23 closing that will complete the distribution in 24 accordance with the universal chart which you 25 have which shows the structure of both the fund 40 ITEM NO. 12 1 and co-investors. 2 CHAIR KASSEKERT: Thank you. 3 Mr. Fogarty? 4 MR. FOGARTY: Yes. I'm pinch-hitting 5 for DAG -- 6 Good morning, by the way. 7 CHAIR KASSEKERT: Good morning. 8 MR. FOGARTY: I'm pinch-hitting for DAG 9 Adams. He filed a response with you dated 10 January 25. 11 He's reviewed Miss Wozniak's draft 12 resolution. I've even reviewed it and tried to 13 understand it. An awful lot of Apollos and 14 Hamlets running around. And we have no 15 objection to its entry. 16 CHAIR KASSEKERT: Thank you. 17 Any questions for Mr. Fogarty? 18 (Laughter.) 19 VICE CHAIR SOMMELING: No questions, 20 Madame Chair. 21 COMMISSIONER FRULIO: Madame Chair, move 22 to adopt a draft resolution and find that: 23 A, the new Apollo and TPG Funds, as set 24 forth in the resolution shall be required to 25 qualify for purposes of NJSA 5:12-85 and 84b 41 ITEM NO. 12 1 for the purposes of Petitioners' ICA and 2 plenary qualification; 3 And, B, the qualification of the limited 4 partners of the New Apollo and TPG Funds 5 subject to and conditioned upon the findings 6 and conditions set forth in Resolution No. 7 07-08-01-10, which is hereby amended 8 accordingly. 9 CHAIR KASSEKERT: Is there a second? 10 COMMISSIONER FEDORKO: Second. 11 CHAIR KASSEKERT: Motion is made and 12 seconded. This is a roll call vote. 13 MR. NANCE: Commissioner Frulio? 14 COMMISSIONER FRULIO: Yes. 15 MR. NANCE: Commissioner Fedorko? 16 COMMISSIONER EPPS: Yes. 17 MR. NANCE: Vice Chair Sommeling? 18 VICE CHAIR SOMMELING: Yes. 19 MR. NANCE: Chair Kassekert? 20 CHAIR KASSEKERT: Yes. 21 MR. NANCE: The record will reflect that 22 the motion is unanimous. 23 Item -- 24 MR. O'GARA: Thank you. 25 MR. NANCE: No. 13, Petition of Marina 42 ITEM NO. 13 1 District Development, LLC, requesting 2 permission for Jeffrey Santoro to perform the 3 duties and exercise the powers of Senior Vice 4 President-Treasurer of Boyd Gaming Corporation 5 pending plenary qualification. 6 Miss Frank? 7 MS. FRANK: Good morning, Chair and 8 Commissioners. 9 A draft resolution on Mr. Santoro's 10 temporary qualification has been distributed to 11 the parties. 12 General counsel, Joseph Corbo of Borgata 13 has indicated he had no problem with that 14 resolution, although he is not here today. Mr. 15 Fogarty is here for the Division. 16 MR. FOGARTY: Good morning again. 17 We filed -- I filed on behalf of the 18 Division a response not objecting to the relief 19 requested. Boyd Gaming, as you know, is a 20 holding company of the casino licensee, 21 Borgata. 22 I've seen Miss Frank's draft resolution, 23 and we have no objection to Jeffrey Santoro 24 being granted a temporary qualification for the 25 position of Senior Vice President and treasurer 43 ITEM NO. 13 1 of Boyd Gaming. 2 CHAIR KASSEKERT: Thank you. 3 Any questions? 4 VICE CHAIR SOMMELING: No questions, 5 Madame Chair. 6 COMMISSIONER FEDORKO: Motion to adopt 7 the draft resolution and authorize Jeffrey 8 Santoro on a temporary basis prior to his 9 plenary qualification to assume the duties and 10 exercise the powers of Senior Vice President 11 and Treasurer for Boyd Gaming Corporation 12 subject to the conditions contained in NJAC 13 19:43-2.7 which, among other things, require 14 that he file a personal history disclosure form 15 MJ and NJ supplement by February 14th, 2008. 16 COMMISSIONER FRULIO: Second. 17 CHAIR KASSEKERT: Motion is made and 18 seconded. This is a roll call vote. 19 MR. NANCE: Commissioner Frulio? 20 COMMISSIONER FRULIO: Yes. 21 MR. NANCE: Commissioner Fedorko? 22 COMMISSIONER FEDORKO: Yes. 23 MR. NANCE: Vice Chair Sommeling? 24 VICE CHAIR SOMMELING: Yes. 25 MR. NANCE: Chair Kassekert? 44 ITEM NO. 14 1 CHAIR KASSEKERT: Yes. 2 MR. NANCE: The record will reflect that 3 the motion is unanimous. 4 CHAIR KASSEKERT: Thank you. 5 As Mr. Daryl gets ready to call Item 14, 6 let me just recognize Josh Lichtblau who is the 7 recently -- Governor Corzine has just nominated 8 as the new Director of the Division of Gaming 9 Enforcement. And I'm very pleased to see him, 10 and I look forward to working with him as we 11 move forward. 12 MR. LICHTBLAU: Thank you, Chair. 13 CHAIR KASSEKERT: Josh, stand up so 14 everybody can see you. So they can identify 15 you for the future. 16 Thank you. 17 MR. LICHTBLAU: I wasn't expecting that. 18 CHAIR KASSEKERT: We can call Item 14. 19 MR. NANCE: Item 14, amended petition of 20 Resorts International Hotel, Inc., for renewal 21 of its casino license, casino hotel alcoholic 22 beverage license, and other related relief; 23 petition of Resorts International Hotel, Inc., 24 for approval of time in which to reconstitute 25 its independent audit committee; and amended 45 ITEM NO. 14 1 joint petition of Resorts International Hotel, 2 Inc., and RIH Acquisition, New Jersey, LLC, for 3 approval of the transfer of ownership interest 4 in various entity qualifiers. 5 CHAIR KASSEKERT: Mr. DiGiacomo? 6 MR. DiGIACOMO: Chair, Commissioners. 7 Good morning. 8 Miss Patricia Wild, I believe, on behalf 9 of the Applicant for renewal, as is Mr. Gilbert 10 Brooks. Miss Mary Jo Flaherty for the Division 11 of Gaming Enforcement. 12 CHAIR KASSEKERT: Thank you. 13 Good morning, everyone. 14 MS. WILD: Good morning. 15 CHAIR KASSEKERT: And, Mr. Ribis, I note 16 I'm four minutes late. 17 MR. RIBIS: Thank you very much. 18 CHAIR KASSEKERT: Before the Commission 19 today is the application of Resorts for the 20 renewal of its casino and casino hotel 21 alcoholic beverage licenses. We will evaluate 22 that application in accordance with the 23 pertinent licensing criteria under the Casino 24 Control Act which now confers on the Commission 25 the flexibility to renew a casino license for 46 ITEM NO. 14 1 up to five years. 2 For casino relicensure under Section 84 3 of the Casino Control Act, Resorts needs to 4 establish by clear and convincing evidence four 5 essential affirmative criteria: 6 Number one, good character, honesty, and 7 integrity; 8 Two, financial stability, integrity, and 9 responsibility; 10 Three, the integrity of its financial 11 sources; 12 And four, business ability and casino 13 experience. 14 Additionally, under Section 86 of the 15 Act, Resorts must establish that it does not 16 suffer from any of the negative 17 disqualification criteria such as failure to 18 provide required information, conviction of a 19 serious crime, pending criminal charges, or 20 association with what the Act calls the "career 21 offenders" or "career offenders cartels." 22 Further, Section 134(b) of the Act 23 prohibits the Commission from issuing any 24 license to any applicant that fails to agree to 25 afford equal employment opportunity under an 47 ITEM NO. 14 1 approved affirmative-action program. And 2 Section 134(d) of the Act nullifies any license 3 that the Commission issues in violation of 4 Section 134. 5 As for the CHAB license, the relevant 6 criteria are included in Section 103 of the Act 7 and Chapter 50 of the Commission's regulations. 8 While the Commission will certainly 9 evaluate all the licensing criteria, but we 10 understand the testimony today will focus on 11 finances. 12 Before hearing the witnesses, there are 13 also a number of exhibits that have been 14 premarked and that Mr. Nance will now identify 15 for the record. 16 MR. NANCE: Chair, Commissioners, I have 17 the following premarked exhibits. The Casino 18 Control Commission has three exhibits, C-1 19 through C-3. C-1 is the CHAB report, Resorts 20 International Hotel, Inc., dated June 20, 2007. 21 C-2 is the EEBOP report dated December 21st, 22 2007, regarding Resorts International Hotel, 23 Inc. C-3 is the draft resolution regarding 24 Resorts International Hotel, Inc. 25 The Division of Gaming Enforcement has 48 ITEM NO. 14 1 four exhibits, D-1 to D-3. D-1 is a report 2 dated January 4th, 2008, on the application of 3 Resorts International Hotel, Inc., for renewal 4 of its casino and CHAB licenses and related 5 relief. D-1A is the supplemental letter 6 report, dated January 15, 2008, regarding PRN 7 2760711. D-2 is a report dated January 9, 8 2008, regarding Resorts International Hotel, 9 Inc., for approval of time in which to 10 reconstitute its independent audit committee in 11 regards to Petition 2760711. D-3 is a letter 12 report dated January 7, 2008, regarding Resorts 13 International Hotel, Inc., CHAB license. 14 The Petitioners have three exhibits, P-1 15 through P-2a. P-1 is Resorts International 16 Hotel, Inc., EEBOP dated January 30th, 2008. 17 P-2 is the letter November 28th, 2007, from 18 Mark Hedstrom regarding Item 8, January 24th, 19 2007, with attachment, see P-2a. P -- excuse 20 me. Exhibit P-2a, is a letter dated March 21 12th, 2007, from Mark Hedstrom regarding CCC 22 Resolution No. 07-03-07-13. 23 CHAIR KASSEKERT: Thank you. 24 Are there any objections to the 25 admission of any of these exhibits? 49 ITEM NO. 14 1 And are there any sealing requests? 2 MR. BROOKS: There's no objection, 3 Madame Chair, to the exhibits being moved into 4 evidence. 5 And we do have a sealing request in 6 connection with D-1, the Division report. 7 CHAIR KASSEKERT: Thank you. 8 Miss Flaherty? 9 MS. FLAHERTY: Yes, Chair, 10 Commissioners, we would ask that the exhibits 11 be entered into evidence, and we have reviewed 12 the sealing request and have no objection and 13 leave that to the Commission's discretion. 14 Thank you. 15 CHAIR KASSEKERT: Thank you. 16 Without objection, then, we would move 17 these submissions into evidence and approve the 18 sealing request. 19 The draft resolution specifies the 20 rulings we're asked to consider, many of which 21 will require the Division's concurrence. 22 Miss Flaherty, does the Division concur 23 on those items? 24 MS. FLAHERTY: Yes, Chair. We've 25 reviewed the draft resolution. We concur in 50 ITEM NO. 14 1 the waivers, the exemptions, and the requests 2 not to designate qualifiers. 3 Thank you. 4 CHAIR KASSEKERT: Thank you. 5 Are there any on procedural matters that 6 need to be brought to our attention at this 7 time? 8 MS. FLAHERTY: No, Chair. Thank you. 9 MR. BROOKS: No, Madame Chair. 10 CHAIR KASSEKERT: Okay. Very good. 11 We are now set for opening statements, 12 which the parties may waive and elect instead 13 to proceed directly to testimony. 14 Counsel, what's your reference? 15 MR. BROOKS: Just a short opening, 16 Madame Chair. 17 CHAIR KASSEKERT: You can proceed. 18 MR. BROOKS: Third time through the 19 licensing process for Resorts since Resorts was 20 acquired by Colony Capital and Mr. Ribis. 21 During this time period, Resorts, which is 22 Atlantic City's first casino hotel, has 23 undergone changes to its physical plant and to 24 its management team, but with the influence and 25 active support of Colony Capital and Mr. Ribis, 51 ITEM NO. 14 1 Resorts has remained a superior, first-class 2 facility, and Resorts has remained competitive 3 in the Atlantic City casino hotel marketplace. 4 Today, Resorts asks that its casino 5 license and its CHAB license be renewed by the 6 Commission for a five-year term. By the 7 voluminous submissions have been made to the 8 Division and the Commission, augmented by the 9 testimony we intend to present today in 10 connection with this hearing, we believe that 11 the Commission will find that Resorts has 12 clearly and convincingly demonstrated that with 13 continued support of Colony Capital and Mr. 14 Ribis, Resorts will remain a superior 15 first-class facility competitive in the 16 Atlantic City casino hotel marketplace. 17 Thank you. 18 CHAIR KASSEKERT: Thank you. 19 Miss Flaherty? 20 MS. FLAHERTY: Briefly, Chair. 21 CHAIR KASSEKERT: Surely. 22 MS. FLAHERTY: Chair, Commissioners, as 23 set forth in the record, we are here to address 24 Resorts' application casino licensure renewal. 25 Resorts, the first casino hotel to be licensed 52 RODIO - WILD 1 in Atlantic City, is seeking for the first time 2 a five-year renewal of its license. 3 The Division has subjected its 4 investigation, reported to the Commission with 5 regard to Resorts' application, and the 6 Division's January 2008 report is in evidence 7 before you. Today witnesses will provide 8 further information for the Commission's 9 consideration concerning Resorts' operations 10 and its financial status and plans. 11 By the Division's January 2008 report, 12 it has recommended licensure renewal subject to 13 various conditions which will be addressed to 14 some extent during the testimony today. 15 Thank you very much. 16 CHAIR KASSEKERT: Thank you. 17 Mr. Brooks, would you like to call your 18 first witness? 19 MS. WILD: Yes, Madame Chair. I'd like 20 to call Tony Rodio, please. 21 CHAIR KASSEKERT: Thank you. 22 Mr. Rodio, you can come forward. 23 Mr. Nance will swear you in. 24 25 ANTHONY P. RODIO, having been first duly 53 RODIO - WILD 1 sworn to tell the truth, testified as follows: 2 3 MR. NANCE: Please state your name for 4 the record. 5 THE WITNESS: Tony Rodio. 6 MR. NANCE: Thank you. 7 CHAIR KASSEKERT: You may proceed. 8 MS. WILD: Good morning, Madame Chair, 9 and members of the Commission. 10 11 DIRECT EXAMINATION BY MS. WILD: 12 Q. Mr. Rodio, for the purposes of the 13 record, could you please state your position with 14 Resorts Atlantic City. 15 A. I'm the Chief Operating Officer for the 16 Eastern Region for Resorts International. 17 Q. Okay. And what do those 18 responsibilities entail? 19 A. It entails the two properties in 20 Atlantic City, Resorts as well as the Atlantic City 21 Hilton, as well as our two properties on Tunica, 22 Resorts Tunica and Bally's Tunica. 23 Q. Encompassed under that heading you also 24 serve as President of Resorts, Atlantic City; is that 25 correct? 54 RODIO - WILD 1 A. That's correct. 2 Q. And can you tell the Commission how long 3 you've held that position? 4 A. June of 2006. 5 Q. Okay. Could you explain to the 6 Commission some of the operational changes that you 7 faced when you took over Resorts in June of 2006? 8 A. Okay. I think, first and foremost, any 9 time there's change at the top, I think that creates 10 uncertainty throughout the management ranks and as 11 well as throughout the entire employee base, and so we 12 wanted to solidify that as quickly as possible. 13 The thing that I chose to do quickly was 14 to identify someone to head up the operations, which 15 was Steve Callendar who's here today, who was a 16 day-one Resorts employee. And I can't think of 17 anybody better -- of the thousands of people have that 18 have worked at Resorts over its long history than 19 Steve to head up that task. He immediately 20 solidified, as I said, any concern amongst the rank, 21 rank and file and instills confidence across the 22 entire management team, you know, during this period 23 of transition. 24 Q. Thank you. 25 Could you explain some of the efforts 55 RODIO - WILD 1 that were undertaken by you and Steve and the 2 management team with respect to employees and staff 3 along the way? 4 A. Well, I think, first and foremost, I 5 believe to our advantage Steve concurs and opened up a 6 dialog. And we have a periodic employee meetings and 7 periodic management meetings to make sure that the 8 rank and file and the management team is well versed 9 on what's going on with the company both financially 10 as well as our plans moving forward. I think that 11 that communication has gone a long way to having a 12 dramatic impact on the overall attitude and morale of 13 the workforce. 14 We do an annual employee opinion poll. 15 As a matter of fact, HR Solutions is the name of the 16 firm that we use. They represent over 600 companies 17 nationwide as well as a number in the gaming industry. 18 And our two properties in Atlantic City for the most 19 recent employee opinion poll were number one of all 20 the companies that they handle in the gaming industry 21 in terms of employee satisfaction and year-over-year 22 improvement. And we were number four out of over 600 23 employees -- 600 companies nationwide in those same 24 two categories. 25 Q. Can you explain some of the benefit 56 RODIO - WILD 1 issues that you addressed and how you handled those 2 benefit issues? 3 A. Actually, that -- before I get to the 4 benefits, I think -- one other thing I think is 5 important to note certainly in this most recent year 6 we've seen a very turbulent year in terms of the 7 business environment as well as the workforce 8 environment. There's been a number of certainly 9 elections and unionization efforts across the entire 10 city. And through the efforts of Steve and our HR 11 department and the communication vehicles that I've 12 talked about, we were able to avoid any -- any such 13 movement at our property at Resorts. And I think a 14 big piece of that, in addition to the communication, 15 is the way that we've handled our employees. 16 Benefits, when we first got there, was a real big 17 issue. And I think we've done a great job of shoring 18 up the benefits that we provide. We've taken number 19 of steps. We offer benefits now for our employees for 20 the part-time employees for the first time ever. We 21 reduced the number of hours that it takes to get to 22 full-time benefit status. We maintained the employee 23 contribution in 2008 from 2007 for what the employees 24 pay for their benefits. 25 And I think that one of the things that 57 RODIO - WILD 1 I'm most proud of -- I'm most proud of overall how 2 we've handled our employees at both of our properties, 3 but I think the thing that I'm most proud of, as we 4 went through a turbulent year -- and certainly nothing 5 of a surprise to the Commission -- as many companies 6 looked at ways to cut costs, I think the route that we 7 chose really should be a model for the industry as 8 well as for companies at large. 9 I mean, as an effort to cut costs, we 10 rather than just did a layoff, we did a voluntary 11 layoff program, which I think it certainly cost the 12 company more money to do it that way. The severage 13 costs for the two properties was about $1.5 million, 14 and it was over 60 employees. But by accommodating 15 long-term employees who were looking for retirement or 16 were looking for a change in career, we were able to 17 save 60 people who did not want to -- you know, lose 18 their job from having to go through a layoff of those 19 individuals, and it cost us more by having to pay 20 severage to longer term employees. But it was so well 21 received by the people who had that opportunity as 22 well as, you know, the workforce at large knowing that 23 we did everything that we possibly could to save 24 every-- every single job. And beyond that we've 25 looked to reduce costs, and we tried to do it through 58 RODIO - WILD 1 attrition and through, you know, any way possible to 2 avoid any layoffs. And we kept that to an absolutely 3 minimum at both properties. 4 Q. Thank you. 5 Could you explain some of the 6 operational changes that you made at the property and 7 explain how you see those changes affecting the future 8 performance the property? 9 A. Before the operational change, I think 10 the first thing we did, aside from the employee 11 issues, was we reinvigorated the whole marketing 12 approach of the property. We took a much more 13 aggressive position and kind of changed the position 14 of Resorts from what my predecessor was doing. And 15 that certainly began to immediately reap benefits. 16 Actually, in the first quarter of 2006, 17 as a result of these efforts, we actually had the best 18 quarter at Resorts, going back to I think it was 2002. 19 And so the property was certainly moving in the right 20 direction. 21 Coupled with the marketing, we have 22 Gallagher's at Resorts, and we really began to take 23 advantage of that brand. And it's incumbent upon each 24 of these properties, I think -- especially the smaller 25 ones, where we don't have a lot of amenities -- to 59 RODIO - WILD 1 have some offerings out there that are an enticement 2 or inducement for customers that are staying at other 3 hotels to visit your property. And I think 4 Gallagher's has really served that purpose. It's won 5 a number of awards as the best steakhouse in Atlantic 6 City, and I believe it's well deserved. 7 We've moved our Asian gaming pit to the 8 boardwalk area, which was a big improvement as we 9 enter into this world of restricted smoking, 10 potentially ultimately a hundred percent smoke-free. 11 By having the Asian gaming pit adjacent to the 12 boardwalk, it allows easy access in and out for our 13 Asian customers who traditionally -- have a very, you 14 know, smoke significantly. Made it easy for them to 15 go in and out and smoke and still be close to the 16 gaming area, and I think it positions us well going 17 forward. 18 Another thing that we did that I think 19 that really contributed to our results as we went 20 through 2007 was, after the refinancing after the 21 first quater of last year, we finished -- we had three 22 floors of rooms that were never finished when the 23 Rendezvous Tower was 63 additional rooms, and I think, 24 that more than anything else allowed us to post very 25 good results relative to the market in 2007. 60 RODIO - WILD 1 In spite of the difficulties that the 2 market's experiencing, rooms continue to be a big 3 driver and significant, you know, advantage for 4 anybody that can add that capacity. And particularly 5 on weekends, and that's really served us well. 6 Lastly, we just opened a nightclub, 7 which it sounds like a minor thing, '70s theme 8 nightclub, Boogie Nights. It's open right now only on 9 Saturday nights. But, again, it's another reason to 10 attract customers from other properties into our 11 property. And it's been really well received, and 12 we're looking to expand the nights of operation of 13 that. And that's been a huge -- huge success for us. 14 Q. Thank you. 15 Can you talk a little bit for the 16 Commission about some of the factors that impacted the 17 2007 performance, particularly the fourth quarter? 18 A. Okay. I mean, when I think about 2007, 19 it really seemed like there was always something 20 additional getting added on top of our issues that we 21 were confronted with. As a matter of fact, we just 22 went through management meetings and supervisor 23 meetings, and we talked about this at length with our 24 employees. And you know, in the first quarter, the 25 regional competition started to come on-line in 61 RODIO - WILD 1 Pennsylvania, and that certainly impacted us. And the 2 market was down, I think it was a couple percentage 3 points. When we got to the second quarter, we had a 4 partial smoking ban that came on-line in mid-April, 5 and it took us down. And I think in the second 6 quarter, we were in the mid fives and declined, so it 7 got worse than the first quarter. 8 In the third quarter -- and I think the 9 thing that was probably, certainly unbeknownst to me, 10 and I think the item that a lot of people didn't 11 anticipate was that the Pennsylvania casinos, because 12 of the way the tax law is structured, they are able to 13 market with free slot play and not have that be a 14 taxable transaction. So I was under the impression 15 because of their 55 percent tax rate that they were 16 going to be very limited as far as the way that they 17 can market. And because of that ability where they 18 don't pay tax on that free slot play, they really 19 could match Atlantic City offer for offer in terms of 20 coin offers. And they really began to ramp up those 21 offers in the third quarter. 22 So in the third quarter, we now have the 23 regional competition, the smoking ban, and the 24 marketing, and the market went down even further from 25 the first two quarters. We get to the fourth quarter, 62 RODIO - WILD 1 add on top of that the sluggish economy and gas 2 prices, and we had our worst quarter of the year. So 3 it was just a domino effect that continued to erode. 4 However, I mean, in the face of that, I 5 think the Resorts performed very, very well. We had 6 almost dollar-for-dollar year-over-year bottom-line 7 performance in 2007 compared to 2006 when you adjust 8 for some exceptional items. And, you know, the market 9 declined almost nine percent in slots, and Resorts was 10 the third best performer in the market and was, I 11 believe, in the mid threes and we improved our market 12 share in GGR from 5.7 to 6 percent. 13 So in the face of the difficult 14 operating environment, I think we held on very, very 15 well and were actually able to improve our market 16 share. And I think those 63 rooms -- and we only had 17 them for four months of the year -- that was a big 18 piece of it. 19 Q. As far as the future is concerned as, of 20 course, this is a five-year license, what advantages 21 or strengths do you see for Resorts in terms of 22 remaining competitive going forward? 23 A. I think one of the beauties that we have 24 at Resorts is that there is -- we have a number of 25 vacant spaces that we can utilize. And we -- you 63 RODIO - WILD 1 know, Boogie Nights is a perfect example. We had a 2 restaurant that was our steakhouse and was no longer 3 needed once Gallagher's opened. We took an 4 under-utilized space that wasn't being used utilized 5 at all other than special events or employee functions 6 and created an attraction that allowed us to -- as I 7 said, allowed us to attract customers to the property. 8 We have a number of other spaces throughout the 9 property where we can do that, retail spaces, 10 under-utilized food and retail spaces. And also in 11 the -- in the Rendezvous Tower we have a mezzanine 12 level that's roughly 30,000 square feet similar to the 13 three floors that were never finished. We have 30,000 14 square feet that empties into the casino floor with an 15 escalator that has yet to be utilized. 16 So I think that we continue to look for 17 opportunities to add additional amenities, little by 18 little to constantly change the experience. And I 19 think that that's going to serve us well as we move 20 forward. 21 I think, you know, as I look at -- you 22 know, all the rooms that are coming on line. You 23 know, it cuts both ways in terms of, you know, it's 24 competively challenging because now the competition 25 has more rooms. But I look at it with roughly 2600 64 RODIO - FLAHERTY 1 more rooms in the market soon, that's roughly 5,000 2 more people in the hotels, particularly on the 3 weekend, and if we can create reasons to get those 4 people over to our property, you know, when I go to 5 Vegas, I don't stay in the hotel I check in. I want 6 to go to dinner to other places and experience things 7 at other properties. And we continue to add those 8 types of amenities, I just look just at it as 5,000 9 more people in the market that we can hopefully gain 10 some, you know, visitations from. 11 Q. Thank you. 12 MS. WILD: I will -- they are all the 13 questions I have, and I'll reserve the right to 14 ask Mr. Rodio follow-up questions if you'd let 15 me. 16 Thank you. 17 CHAIR KASSEKERT: Certainly. 18 Miss Flaherty? Cross. 19 MS. FLAHERTY: Thank you, Chair. 20 21 CROSS-EXAMINATION BY MS. FLAHERTY: 22 Q. With regard to the Pennsylvania market, 23 you commented about its effect and that Resorts has 24 held its own in terms of that. Can you state for the 25 record why that is? What's Resorts' advantage in 65 RODIO - FLAHERTY 1 maintaining these slots? 2 A. Well, first of all, I mean, I can only 3 speak in terms reference to our two properties in the 4 way our database is used. But it's interesting. 5 Resorts -- they are only roughly a mile apart, but 6 Resorts customer base because of the entrance from the 7 Parkway onto the Expressway skews more towards to 8 North Jersey and New York than the Atlantic City 9 Hilton because of the entranceway to the Expressway 10 and the affinity of the Philadelphia area customers 11 being down beach. That skews more towards 12 Philadelphia. So the Atlantic City Hilton was more 13 impacted than was Resorts. However, it was certainly 14 impacted. 15 I think the other thing that helped 16 Resorts not feel the full brunt or do very well 17 relative to the market, again, is those 63 rooms. I 18 can't tell you, you know, enough how significant it is 19 to be able to house 63 more people, even if you're 20 mid-week occupancies are soft. You know, it's every 21 Friday. It's every Saturday. It's every Sunday 22 throughout the summertime, which we didn't even really 23 have them in the summertime, we're almost at a hundred 24 percent occupancy at all times and. That ability to 25 handle more customers in an overnight fashion has a 66 RODIO - FLAHERTY 1 dramatic impact. 2 Q. Now, you've also spoken about the 3 partial smoking ban and its effect. Has the fact that 4 Pennsylvania slot operations allows smoking had an 5 effect in relation to Atlantic City's partial smoking 6 ban? 7 A. Without question. I think when you 8 think about it from the consumer's standpoint and, you 9 know, if you're a customer that's within close 10 proximity of one of those racinos in Pennsylvania, and 11 if you happen to be a smoker, you add on top of the 12 fact that you're very limited as to where you can 13 smoke in Atlantic City. You have to pay $3 a gallon 14 to get down here. You have to pay the tolls going 15 over the bridge and the Expressway. And the offer, 16 it's that, you know -- it's not the big customers that 17 get the gourmet dinners and the overnight stays, and 18 the shows all those things. We're holding on to those 19 customers. But it's the thousands and thousands and 20 thousands of guys from that hundred dollars to $400 21 where the cash that they're able to give them in 22 Pennsylvania is similar to ours, and they have all 23 that added expense and inconvenience of travel down 24 here and the smoking restriction. So it's that core 25 customer we're really -- has the market struggling 67 RODIO - FLAHERTY 1 with. 2 Q. Now, in terms of the casino floor at 3 Resorts, has there been a noticeable shift in 4 business, smoking or nonsmoking as a result of the 5 smoking ban? 6 A. We've done extensive studies at both of 7 our properties, and it is dramatic. If you look at 8 the way the win-per-units were, and particularly in 9 slots, the win-per-units were January 1st of '07 to 10 April 15th of '07. And then look at the same 11 win-per-units post the smoking ban, we're now -- part 12 of the floor have smoking and part don't. There was a 13 dramatic shift of higher win-per-units in the areas 14 where you could smoke and a dramatic decline in the 15 areas where you can't. 16 Another evidence of that is, if you look 17 at -- our cocktail waitresses bid on seniority where 18 they want to work. And the ones with the highest 19 seniority now choose to work in smoking areas because 20 there's so much more business there, and they make so 21 much more in terms of gratuities. So it has 22 definitely had a dramatic impact in the slot areas. 23 I think that tables, thus far, really 24 hadn't being impacted because we haven't had to put up 25 the walls, and we maintained, for the most part, our 68 RODIO - FLAHERTY 1 Asian gaming areas and our high-level pits for smoking 2 areas. So we haven't seen that impact. But when we 3 get to the point where there's a one hundred percent 4 smoking ban or we have the wall areas -- which I don't 5 think anyone will actually do -- I think we're going 6 to see in the next wave more of an impact on the 7 tables. 8 Q. Now, you mentioned the pit that's right 9 off the boardwalk. Is that your only smoking area at 10 Resorts or is there other -- 11 A. For table games? 12 Q. Yes. 13 A. It's that as well as our baccarat pit. 14 So there's two pits. 15 Q. Now, what do you see as the ongoing 16 effect of Pennsylvania slot operations? 17 A. I think that -- believe it or not, I 18 think that in the long run, it's really going to help 19 Atlantic City. You know, we look at how the market 20 was down for the first time ever, and it was a 21 dramatic decline. And our slot revenues in the market 22 were actually reduced down to about the 2003 levels. 23 But when we look at the region, the regional lot 24 revenue for the Northeast Corridor went from, I 25 believe it was $5.6 billion to 6.3, so we actually had 69 RODIO - FLAHERTY 1 a 13 or 14 percent increase when you take into 2 consideration Connecticut, New York, Pennsylvania, 3 Delaware, and New Jersey. So we're creating more slot 4 customers. And, ultimately, I think that Atlantic 5 City is going to become the gambling destination of 6 choice. 7 It's incumbent upon each of the 8 operators and the market to continue to add those 9 amenities, to diversify our experience, to add the 10 hotel rooms. And I think that, ultimately, as the 11 overall Northeast region gaming pie gets bigger, 12 Atlantic City, ultimately, is going to get a shift 13 back and grab its more-than-fair share of that. 14 Q. Do you foresee that the casino 15 facilities in Philadelphia will be opening during your 16 license term? 17 A. Yes. But I originally thought that they 18 would be opened in, you know -- when this all first 19 started, you know, 2008. Then I thought it was going 20 to be 2009, and now it looks like it's getting pushed 21 back even further. So I think the good news for us is 22 it will probably be pushed back, the earliest at this 23 point, I think 2010. 24 Q. What do you see to be the effect of 25 those gaming facilities? 70 RODIO - FLAHERTY 1 A. And I mean, you know, it's certainly 2 going to have an impact as well. I think that the 3 difference is that when the -- particularly the 4 Philadelphia Park and Chester property opened, all the 5 revenue, for the most part, was stolen from Atlantic 6 City. When those properties opened, they're also 7 going to be stealing from the existing operators in 8 Pennsylvania as well. So it's not going to all come 9 from Atlantic City. You know, we continue to have 10 more properties come on line. And, again, I think 11 that, ultimately, the region is going to grow. And 12 Atlantic City, you know, we'll never be a Las Vegas 13 for the country, but I think could be a Las Vegas for 14 the Northeast Corridor. 15 Q. Now, you've spoken about the relations 16 that you have with employees. In terms of 17 Philadelphia's opening, employees as well as patrons, 18 do you see that to be a concern? 19 A. No. I -- 20 Q. In the future? 21 A. I mean, I don't think that the 22 Philadelphia racinos have any impact on our ability to 23 hire or maintain our employee base. We haven't seen 24 very much migration of that. I mean, there's probably 25 been a few, a handful of management type positions 71 RODIO - FLAHERTY 1 that have migrated across the river. But that hadn't 2 impacted our ability to attract and maintain a 3 workforce. 4 Q. Is that something you think you need to 5 do, though, in terms of the eventual casino facilities 6 in Philadelphia? 7 A. To be honest with you, I really don't 8 see that as being a concern of ours. I would think 9 that the concern of those two 5,000 slot machine 10 parlors are more on the revenue side than the 11 employment side. 12 Q. How about the impact of gaming 13 operations in New York eventually upon Resorts? 14 A. Well, I mean, so far, the one has really 15 had a very limited impact on us. And, you know, I 16 don't know how far down the road the second property 17 will be up and running. That seems to be similar to 18 the situation in Philadelphia where it keeps getting 19 pushed back. But, thus far, the one operator has very 20 minimal impact on us. 21 Q. Okay. You've discussed the expansions 22 of the existing facilities provided at the Harrah's, 23 Taj. How will new entries affect Resorts during its 24 license period? 25 A. Again, I think that it cuts both ways. 72 RODIO - FLAHERTY 1 I think that if you look at what the Borgata did when 2 it came into the market, it certainly stole market 3 share but, ultimately, has reinvigorated the market 4 and introduced a lot of new customers that had 5 traditionally not thought of Atlantic City as a choice 6 for them for any of their leisure dollars. And I 7 think that, ultimately, everybody benefits from that. 8 And I think that you'll see a similar situation as 9 these other operators get up and running probably in 10 the latter part of our licensing period. But, again, 11 it will -- it will allow the market to attract more 12 people. And it's incumbent upon us between now and 13 when they come on line to add some more diversity to 14 our experiences so that we can garner some of that 15 business. 16 And I think it helps us, particularly at 17 Resorts. You know, we benefit when the Taj does 18 better because of the proximity in the neighborhood. 19 And, you know, Revel will benefit that whole little 20 neighborhood and cluster of properties, I think, as 21 well. Because, as I said, everybody likes to 22 experience different things. And, although I'm sure 23 it will be a magnificent place, there will be a lot of 24 transfer of customers back and forth between that 25 facility and others facilities in the neighborhood. 73 RODIO - FLAHERTY 1 Q. Now, you've mentioned the economy to 2 some extent in factors of impacting Atlantic City 3 performance. Is that mostly gasoline prices or more 4 general problem in the economy? 5 A. No. I think it's -- at this point I 6 think it's more general and just the consumers at 7 large. There's a lot of fear out there. And, you 8 know, there's not a whole lot different in the forth 9 quarter than the third quarter and the second quarter 10 as far as all the external -- you know, Mt. Airy came 11 on line, but that -- I don't think that's had a 12 dramatic impact on the market. I think the biggest 13 difference is just the sluggishness in the economy and 14 the uncertainty of the average consumer, and I think 15 that it's impacting their gambling budget. 16 Q. In light of that in the fourth quarter, 17 what short-term steps can you take to deal with those 18 issues? 19 A. Well, the approach that we take is, you 20 know -- we've tried it on selected days, couple 21 different ways. We've tried to be very aggressive 22 with our marketing dollars. And, by and large, I 23 don't think that that has been agreeable to our bottom 24 line. You end up spending a lot of money on the 25 people that are coming, anyway. And we're taking more 74 RODIO - FLAHERTY 1 of a conservative approach right now. There are a lot 2 of competitors out there that are being very 3 aggressive. And rather than take a shotgun approach 4 and just add additional reinvestment dollars or 5 promotional dollars to our customer base, we're trying 6 to be selective in terms of the customers we haven't 7 seen as much or the customers that are in these 8 embattled areas that are near these Pennsylvania 9 casinos where we know have reduced trips. Even if we 10 can get those customers back even for a trip or two, 11 even though it might -- for that individual customer, 12 it's a higher level of reinvestment overall, it's an 13 incremental visit that we weren't getting. So we're 14 trying to be more precise with the way we're 15 approaching our offers to our database as opposed to a 16 shotgun approach. Which, as I said, I think we've 17 tried that a couple different time, and every time it 18 just seems to have a negative effect overall. 19 Q. Thank you, Mr. Rodio. That's all. 20 CHAIR KASSEKERT: Thank you. 21 You talked a little bit about the 63 new 22 rooms you added at the top of the tower. What 23 has been your occupancy rate on the weekends? 24 Are you booked solid? 25 THE WITNESS: Oh, every Saturday night 75 RODIO 1 we're at a hundred percent. Almost every 2 Friday night we're at a hundred percent, and 3 the shoulder nights, Thursdays and Sundays, we 4 do very, very well. And it also depends on 5 what happens to be going on, you know, the 6 holiday weekend or the type of marketing. It's 7 the Monday through really Wednesday period that 8 is really not -- right now is sluggish. And, 9 quite frankly, it hadn't been this sluggish at 10 any time that I can remember as far as our 11 mid-week occupancies. But the weekend 12 occupancies continue to be at a hundred percent 13 or near a hundred percent. And we continue to, 14 you know, turn away customers. We could 15 accommodate more overnight stays, without 16 question. Particularly on Friday and Saturday 17 nights. 18 CHAIR KASSEKERT: And you think with the 19 proximity of the new Taj tower, that that might 20 even be more helpful rather than looking at the 21 Harrah's tower or the Water Club? 22 THE WITNESS: Yeah. Again, I think that 23 things like Gallagher's and this little 24 nightclub they -- we are seeing a lot of 25 crossover. You know, we're connected via 76 RODIO 1 bridge to the Taj, and we're seeing a lot of 2 people. Even from the other properties that 3 are making their way to Resorts to visit 4 Gallagher's and to experience these this 5 nightclub. And we want to continue to expand 6 and build on that. As I said, we're going to 7 be expanding the nights of operation from just 8 one night to an -- I think in the 9 not-to-distant future, we'll probably have it 10 operating three nights a week. 11 CHAIR KASSEKERT: And Miss Flaherty 12 talked to you a little about it the 13 Pennsylvania and the impact. What about your 14 table games? Because right now the 15 Pennsylvania statute doesn't allow for table 16 games. How have they been throughout this 17 period? 18 THE WITNESS: The table games, I think 19 you really have to look at in two different 20 segments. You have the Asian table market -- 21 CHAIR KASSEKERT: Uh-hum. 22 THE WITNESS: Which is just growing 23 leaps and bounds, I think, across the entire 24 city, across the entire market. You know, it's 25 our mini-bacc and our bacc drop at both of our 77 RODIO 1 facilities that are up month-over-month basis, 2 just about every month for the last few months 3 in the 25 to 30 percent range. 4 The domestic table play, up until 5 recently, was -- was growing, but not nearly 6 like the Asian play. But now since we've got 7 to the fourth quarter and into January, we've 8 seen that play drop off. And, again, I think 9 it's indicative of the economy, and the Asian 10 demographic doesn't seem to have been impacted 11 by that as of yet. So we are starting to see a 12 little bit of a drop-off in that domestic table 13 play. That's your blackjack, craps and 14 roulette, that play. 15 CHAIR KASSEKERT: In addition to some of 16 the things that you talked about, the area that 17 you have over at the tower that, I'm assuming, 18 you're looking at retail or looking at 19 restaurants, are there any other capital 20 changes that you're looking at at Resorts? 21 THE WITNESS: Yeah. In addition to that 22 30,000 square feet that we have, we also have, 23 as I said, a number of other retail spaces that 24 are vacant. We have -- we just opened a 25 jewelry store, a couple weeks ago, as a matter 78 RODIO 1 of fact. We're looking at a men's store for 2 another one of our retail spaces and a couple 3 of other opportunities. And then we also 4 have -- on boardwalk frontage, we have a deli 5 that isn't operating that we are in discussions 6 with a potential third-party operator for that 7 space as well. So I think that partnering with 8 a branded name that has national recognition or 9 certainly regional recognition, again, improves 10 our ability to, you know, and move over some of 11 that business. Because people always want to 12 be, you know -- they want to frequent a place 13 that they are comfortable with, that they know 14 they get consistently with. When they go to 15 Gallagher's, they know what that means. And 16 more of those types of recognized brands that 17 we can partner with, I think, the better. 18 And I think those are the things that we 19 need to add as we begin to diversify against 20 Pennsylvania and prepare for the additional 21 hotel capacity and the additional competitors 22 coming into the market. 23 CHAIR KASSEKERT: Any thoughts with 24 respect to the vacant land that you hold right 25 next door to Resorts, that area? 79 RODIO 1 THE WITNESS: Not -- nothing imminent, 2 but we are constantly looking at long-term 3 master plans and how we would position things 4 and where we would put a parking garage and how 5 we would develop those sites. 6 CHAIR KASSEKERT: Okay. Thank you. 7 Commissioner Sommeling? 8 VICE CHAIR SOMMELING: Yes. In regard 9 to promotions for the property, what 10 specifically are you doing in the market to 11 promote Resorts? As a destination. 12 THE WITNESS: Well, I think that we 13 have-- we've used a mid-week entertainment 14 strategy, and the beginning part of the year, 15 we really haven't had that much on our 16 calendar. We're coming into March. But one of 17 the concerns with using entertainment in the 18 early part of the year is that you're 19 susceptible to weather. You don't want to have 20 a high-quality act out there, and then you a 21 snowstorm, and you've got costs. So as we get 22 into March and into the spring, we'll use more 23 entertainment as part of -- and mary that with 24 a room. And that is what we use to try to 25 boost our mid-week occupies. And then as far 80 RODIO 1 as our actual promotions to our database, we -- 2 we do the same traditional type events that all 3 the competitors do, but I think that we do it 4 in a very tactical way. I mean, we use gifts, 5 we use cash. We use sweepstakes. We use 6 tournaments. And I think that, even though we 7 have two of the smaller properties in the 8 market, I think we try to leverage the 9 partnership of the Hilton and Resorts, and we 10 don't want to take a back seat to any of the 11 big boys. 12 We had a million-dollar slot tournament 13 that we did in the Fall. Nobody in Atlantic 14 City has a million-dollar slot tournament, but 15 we did it in connection with IGT and Wheel of 16 Fortune. We have had a couple of $200,000 17 blackjack tournaments. We're going to have 18 another one those coming up in March, I 19 believe. 20 So we're -- we're, you know, very 21 aggressive. And with our gambling approach and 22 gambling-centric approach, because we don't 23 have a ton of those amenities I spoke about, we 24 need to be, you know, gambling-centric, and we 25 use that at the forefront of all of our 81 RODIO 1 promotional and marketing programs. 2 VICE CHAIR SOMMELING: Would you 3 conclude that a lot of your customers are 4 repeat customers? 5 THE WITNESS: Oh, without question. 6 Yeah. 7 VICE CHAIR SOMMELING: Okay. And in 8 addition to that, do you find that your 9 customer base is growing beyond the repeat 10 customers? 11 THE WITNESS: Actually, this past year, 12 2007 at Resorts it was about flat, up slightly, 13 which is tremendous relative to, I think, the 14 market at large. At our sister property, the 15 active customer base actually shrank a little 16 bit. So given the difficulties that we've had 17 in the market and the number of rated customers 18 that have now opted for Pennsylvania, I think, 19 by and large, we've seen a decline in the 20 market, and I think the fact that Resorts was 21 flat, up slightly, it was a great year. 22 VICE CHAIR SOMMELING: Do you offer your 23 weekend occupancy as a package? In other 24 words, is it individual nights, or do you offer 25 Friday, Saturday, Sunday? 82 RODIO 1 THE WITNESS: By and large on the 2 weekends -- 3 VICE CHAIR SOMMELING: Yeah. 4 THE WITNESS: Really there's not really 5 a cash rate out there, per se. Not -- most of 6 the rooms are used for our rated gaming 7 customers. And depending upon their level and 8 what their ratings are and their history, will 9 determine, you know, who gets a Friday night 10 room, who gets a Saturday night room, who gets 11 a Friday and Saturday night combined. So 12 there's -- certainly better customers can get 13 the entire weekend. But, you know, the level 14 of play that it takes to get a comp'd room on a 15 Saturday night in July is dramatically 16 different than the level it takes to get a 17 Tuesday in February, for example. So we yield 18 it to the -- based on the demand, and we yield 19 it to better customers on the weekend. 20 VICE CHAIR SOMMELING: That's all, 21 Madame Chair. 22 Thank you. 23 CHAIR KASSEKERT: Okay. Commissioner 24 Fedorko? 25 COMMISSIONER FEDORKO: Mr. Rodio, you 83 RODIO 1 talked about 2007 being a turbulent year, and 2 you've talked about a lot of positive things 3 that you're going to do. But are you seeing 4 anything at all that indicates that this year 5 is not going to be another 2007? 6 THE WITNESS: Yeah. I think that from a 7 market standpoint, the way we project it in our 8 plan, we projected that the first quarter was 9 going to be down again. And I got to be honest 10 with you, when we did the projections, we did 11 not really foresee the economic turndown that 12 we've seen now and when we did our projections 13 back in September and the beginning of October. 14 So it's probably -- I think the first quarter 15 is going to be off a little bit more than we 16 originally anticipated. But we anticipated a 17 decline in the second quarter. We anticipated 18 the market kind of getting back to an 19 equilibrium and balance in the second quarter 20 as some of the hotel expansions come on line. 21 And then we look for some small growth as we 22 get into third and fourth quarter. 23 In the third and fourth quarter, we're 24 going against easier comparisons because the 25 market was done so much. And, as I said, we'll 84 RODIO 1 have the added capacity. And then it's -- 2 since we're not one of the properties that is 3 taking advantage of that capacity, we have to 4 come up with ways to leverage some visitations 5 out of those additional customers that the 6 market's going to see overnight. 7 COMMISSIONER FEDORKO: The last time you 8 were here, you talked about an expansion at the 9 Hilton. I'm assuming that's on hold for a 10 while? 11 THE WITNESS: Yes. We looked at a major 12 expansion, and we've looked at a -- since then 13 a scaled-down version of that expansion. And 14 right now, with the uncertainty in the markets 15 both in the, you know, the credit markets as 16 well as the Atlantic City market, yeah, I would 17 say right now that that's on hold. But that 18 doesn't mean that if we were to see a 19 turnaround that that's not something that we 20 could revisit. And I'm sure Mr. Ribis can 21 speak to that in a little bit more detail when 22 he's up here. 23 COMMISSIONER FEDORKO: Yesterday I read 24 something on the internet about two New Jersey 25 senators who are going to propose a bill for 85 RODIO 1 VLTs. What do you think that's going to do to 2 the market down here? 3 THE WITNESS: If it -- 4 COMMISSIONER FEDORKO: At the 5 racetracks. 6 THE WITNESS: First of all, let me say 7 that I think it will be -- I think it would be 8 grossly unfair if the State were to allow VLTs 9 at any of the racetracks. It's like changing 10 the rules in the middle of the game. The State 11 said to these companies, you can come in there, 12 and this will be the operating environment. 13 And after these companies -- not just ours, but 14 all of them -- put forth the literally billions 15 of dollars in investment, to then turn around 16 and say, okay. You know what? We're going to 17 change the rules and now we're going to put 18 5,000 slot machines in the Meadowlands. I 19 think that would be grossly unfair. 20 If it were to happen, we'll see 21 similarly to what we've seen with Pennsylvania, 22 and I think even potentially to a larger 23 degree. I just don't understand why one 24 industry is being required and asked to prop up 25 one that is failing. 86 RODIO 1 I think the analogy I always use, I 2 mean, Microsoft wasn't asked to subsidize the 3 typewriter industry when word processors made 4 typewriters obsolete, and I'm not quite sure 5 why the casino industry is being asked to 6 subsidize or change the rules in the middle of 7 a game, the gaming industry. 8 COMMISSIONER FEDORKO: Thank you. 9 CHAIR KASSEKERT: Mr. Frulio? 10 COMMISSIONER FRULIO: Yeah. I'm -- 11 fortunately or unfortunately, I'm last, so most 12 of my questions were answered. 13 But I did want to take this opportunity 14 to commend you and your management team on that 15 volunteer layoff, which I call the early-out 16 program. Just terrific. You said that it 17 affected 60 employees? 18 THE WITNESS: Sixty at both properties. 19 I don't remember exactly how many it broke down 20 at Resorts. It was skewed a little bit more 21 towards the Hilton, but it -- it was a little 22 over 60 in total. 23 COMMISSIONER FRULIO: Great. Thank you. 24 THE WITNESS: Thank you. 25 CHAIR KASSEKERT: Any other questions? 87 1 VICE CHAIR SOMMELING: No more 2 questions, Madame Chair. 3 CHAIR KASSEKERT: Anything on redirect? 4 MS. WILD: No further questions. 5 CHAIR KASSEKERT: Anything on recross? 6 MS. FLAHERTY: No. 7 CHAIR KASSEKERT: Mr. Rodio, you can 8 step down. 9 Call your next witness, please. 10 MS. WILD: Yes. I'd like to call 11 Nicholas L. Ribis. 12 CHAIR KASSEKERT: Mr. Ribis, Mr. Nance 13 will swear you in. 14 15 NICHOLAS L. RIBIS, was duly sworn to 16 testify in this matter. 17 18 MR. NANCE: Please state your name for 19 the record. 20 THE WITNESS: Nicholas L. Ribis. 21 MR. NANCE: Thank you. 22 CHAIR KASSEKERT: Thank you. You may 23 proceed. 24 THE WITNESS: Thank you. 25 DIRECT EXAMINATION BY MS. WILD: 88 RIBIS - WILD 1 Q. Good morning, Mr. Ribis. 2 A. Good morning. 3 Q. Almost afternoon. 4 A. Yes. 5 Q. Could you explain to the Commission what 6 your position is relative to Resorts International? 7 A. I'm a partner with Colony Capital for 8 Resorts International and other properties we own 9 around the country. And I am the chief executive 10 officer, I think. Is that correct? 11 Q. Yes. 12 And you also are Vice Chair of the Board 13 of Directors; is that correct 14 A. I'm Vice Chair. Mr. Barrack is 15 Chairman. 16 Q. Yes. Thank you. 17 Mr. Ribis, I really just have one 18 question for you, and I'm sure that the Commissioners 19 and the Chair has some other questions. 20 The Division has expressed some concern 21 and with -- I'm sure they'd like to know the answer to 22 this. There is an exhibit that we've introduced as 23 evidence into this hearing. It's P-2 and P-2a. And 24 it consists of a letter from Mark Hedstrom dated 25 November 28th. 89 RIBIS - WILD 1 A. I'm familiar with it. 2 Q. Thank you. 3 Could you explain to the Commission why 4 you believe that on the basis of this letter Colony 5 will continue to support the property and be an 6 available resource if Resorts, Atlantic City 7 encounters any of these issues? 8 A. Well, I think the Commission can look at 9 the history of our partnership in Atlantic City and 10 can look at the type of owners we are in Atlantic City 11 and, as you know, our continued interest in expanding 12 Atlantic City which we can address more in detail on 13 those two properties as you wish later. But as to 14 Colony and Ribis, when necessary to invest in our 15 properties in Atlantic City, we have. We did it -- we 16 did $50 million at the Atlantic City Hilton a couple 17 years ago and when it was necessary. We've done it at 18 Resorts when it's necessary over the past five years, 19 and I don't see any reason why in the future we 20 wouldn't do the same thing. 21 I mean, we're business people. We 22 understand the ups and downs of life. Although 23 Resorts has significant liquidity right now because of 24 a recent litigation settlement, we are prepared to do 25 what needs to be done when the time comes if it ever 90 RIBIS - WILD 1 came to that. But we don't -- we don't see that in 2 the foreseeable future, but we're private owners, and 3 we feel strongly about our assets. 4 Q. Thank you. 5 Before having the Division question you 6 and hear the comments of the Commission, you have 7 heard the testimony of Mr. Rodio. And I wonder if you 8 have any particular comment that you'd like to make as 9 to anything he explained to the Commission. 10 A. First of all, Mr. Rodio is -- I listened 11 to him, and I said to Mr. Kozlov, my attorney, he 12 certainly knows his industry. He knows the numbers. 13 He knows the percentages, and he's a wonderful 14 operator, somebody that I enjoy working with on a 15 day-to-day basis. He just knows what's going on and 16 is a good operator. 17 And I agree he did a wonderful job with 18 the employees. That was his idea, his operating 19 team's idea. I think what they did was smart. It 20 cost us a little bit more money, but it's something 21 we're happy we did. 22 So I think from a company standpoint we 23 like Mr. Rodio. He's a great executive, and that's 24 why he continues to get more responsibilities and 25 sleeps less at night. 91 RIBIS - FLAHERTY 1 (Laughter.) 2 Q. Thank you, Mr. Ribis. 3 CHAIR KASSEKERT: Cross? 4 THE WITNESS: Not Mary Jo, please. 5 (Laughter.) 6 7 CROSS-EXANIMATION BY MS. FLAHERTY: 8 Q. Good morning, Mr. Ribis. 9 A. Good morning. 10 Q. The Investors IV partnership has been 11 extended to this year; is that correct? 12 A. Yes. 13 Q. And there's another extension that is 14 available to 2009? 15 A. Correct. Unless we do something. 16 Q. Yes. And can you the Investors IV 17 partnership be continued after that date? 18 A. It can. Yes. 19 Q. And will Investors IV continue for the 20 foreseeable future? 21 A. Yes. We -- we, as recently as yesterday 22 in New York spent a significant part of the day 23 working on an investor -- new investor to Atlantic 24 City for a minority interest in Resorts. And we 25 will -- we're very optimistic that something will come 92 RIBIS - FLAHERTY 1 out of that in the very near future. And we had like 2 six lawyers in the room, so the day cost me, like, a 3 million dollars. But -- 4 (Laughter). 5 A. I can tell you we've been working on 6 this for many, many months in anticipation of whatever 7 date it is in 2009 so that Colony doesn't have any of 8 those fund issues to face a year from now or a year 9 and a half from now. 10 Q. Now, at this point there's no support 11 agreement running from Colony Capital to Resorts? 12 There's no obligation on Colony Capital's part to make 13 capital contributions to Resorts? 14 A. A formal one, no. No. No. There never 15 has been since we've owned it. 16 Q. And what assurances can you provide that 17 any needed funds will be available if needed by 18 Resorts? 19 A. As I said a few minutes ago, Mary Jo, 20 there's history. There's current operations, and our 21 ownership interest in Atlantic City. We're not 22 fly-by-night. We're here. We've committed to this 23 Commission over and over again that we would be there, 24 if necessary. We have been both at Hilton and Resorts 25 when necessary on liquidity of events that we will be 93 RIBIS - FLAHERTY 1 there in the future. That's the assurance I can give 2 on behalf of Ribis and Colony. 3 Q. So -- 4 A. I don't have as much money as they do. 5 I only own ten percent, so. 6 Q. So Colony Capital will be there, as 7 needed, by Resorts? 8 A. They have been and they will be. 9 Q. Thank you, Mr. Ribis. 10 CHAIR KASSEKERT: You've answered my 11 questions. And I won't ask it again. 12 Let me ask if any of the other 13 commissioners have any. 14 COMMISSIONER FEDORKO: Is it Ribis and 15 Colony or Colony and Ribis? 16 (Laughter.) 17 THE WITNESS: To be honest with you, 18 I've tried to change it to Colony -- or Ribis 19 and Colony, but they keep pushing back at me. 20 I have a couple of things that I wanted 21 to address because you asked Tony a couple of 22 questions that I think were fair questions 23 about. Specifically and, first, I'll deal with 24 Resorts. 25 We have -- you have to look at it. What 94 RIBIS 1 is our plan for 2008 and 2009, 2000, so on and 2 so forth? We're lucky we have adjacent land, a 3 pier out in the ocean. We have a large 4 facility. So, first, we had to get the 5 operations right, which Tony and Steve 6 Callendar and their team did a spectacular job 7 over the last year. They really -- to be a 8 little above on a real cash-flow basis what 9 they were a year before in this market 10 environment was a miracle. I think that we 11 suffered greatly at our other property, not 12 because they didn't try, because of the 13 environment we are in. We all know what Tony 14 listed. Now we have laid on it a malaise that 15 has -- that's not going to pass quickly. We're 16 going to have to deal with that. But our 17 operations on a customer basis are very 18 efficient. Our customers like our properties, 19 as you've heard from the surveys, which makes 20 us very happy and proud. So that part of it is 21 taken care of. 22 We added the rooms last year. We added 23 Gallagher's. We added -- what is it? We added 24 Boogie Nights. All of it were little additions 25 to the property. This year because of our 95 RIBIS 1 liquidity, we're looking -- Tony's come up with 2 a plan for the level above the -- on the new 3 building. What is it, the second or third 4 level where the escalators will open up. 5 MR. RODIO: Second. 6 THE WITNESS: And what we're looking at 7 is doing new ballrooms up there and moving our 8 buffet into our old existing ballrooms to give 9 us more meeting space, all of which can be done 10 efficiently. Move all our food operations up 11 to that mezzanine level. And on the boardwalk, 12 as Tony preferred to -- as a matter of fact, 13 one of the reasons I'm going out West is trying 14 to finalize a transaction with a well-known 15 operator which will add a -- along the 16 boardwalk a club -- but not a club like you're 17 thinking about. A food -- food portion of it 18 which -- with a chef that will be well-known, 19 and somebody we've been working with. So 20 that's what we want to do in the old existing 21 food area. 22 So those are the three things that I 23 hope to achieve, if I'm back here next year, at 24 least we had that on the road. Just as we did 25 with the rooms. These are things we can do 96 RIBIS 1 inside the building. 2 As to the adjacent land, which nobody 3 has, we have 11 acres, plus five in the ocean, 4 for Colony, because it's coming to the end of 5 their fund, what we want to do is bring in side 6 by side a financial investor who also has 7 development capability. So that we can -- we 8 can finally do our plan. Because we know we 9 need rooms. We need amenities. We need 10 parking. All of those things will take us 11 beyond 2009, because it will take years to 12 build. The fact of the matter is, we've done 13 plans there. So now we've found the partner, 14 somebody that I know, that I have a 15 relationship with, that I'm very excited about. 16 And I think we're getting -- inching closer to 17 getting something done so that they invest in 18 Resorts and so that we have them being 19 interested in getting that development done 20 adjacent to us over the longer period of time. 21 So during this five-year license, we 22 hope to have that built, done, and it will -- 23 it will -- it may take down my ownership a 24 little bit, but it will be a much larger 25 property. And that's what we're doing in a 97 RIBIS 1 longer term basis that Tony was referring to. 2 And Tony hadn't been involved in those 3 discussions. I have with Tom and with Colony 4 because they're good for the property. But 5 he's aware of them. He handles the operations 6 and the buildings and will handle the financing 7 and the overall planning, the long-term 8 planning. 9 But that's the plan for Resorts. We're 10 not going to let it sit there because it's got 11 to compete. It's got to grow. Forget the 12 marketplace. Forget Pennsylvania. Atlantic 13 City will grow. I know I'm the eternal 14 optimist, but just look around at the money 15 situation. There's credit markets are dead. 16 Nothing is happening. I mean, nothing. 17 Nobody's going to get mortgage money for a new 18 building in this town. It just won't happen 19 unless you put up 50 or 60 percent equity, 20 which most public companies won't do in a new 21 building. 22 So what you have to do is plan. Because 23 it's as quickly as the markets went away, the 24 markets will come back. Whether it's three 25 months or six months, but they'll be back. And 98 RIBIS 1 you have to be ready when they're back to move 2 with -- with some vigor in what you're doing. 3 And as to the Atlantic City Hilton, Tony 4 had a plan on the Boardwalk, a full plan for 5 the property, a full build-out which we had 6 done with Perkins + Will, a very outstanding 7 architectural firm, which is an outstanding 8 redo of our existing building. A redo, a new 9 building, garage, theater. We looked at the 10 pricing, because, along with everything else, 11 credit market's gone away, construction prices 12 are skyrocketed. All of which will change as 13 the housing market disappears. Construction 14 markets will come back to earth, too. 15 When we looked at it, Tom and I say -- 16 Tom Barrack and I said to ourselves, let's try 17 a smaller version of that. And Tony and his 18 operational crew, working with our architects, 19 did that. And we spent a significant amount of 20 money over the course of the past year on doing 21 these architecturals. It's worthwhile. So now 22 we have a total plan and a partial plan which 23 will go into a total plan, all of which I have 24 reviewed and Tony has reviewed. We spent a lot 25 of time. Because my partner travels 360 days a 99 RIBIS 1 year, we've missed three or four meetings. But 2 it didn't may any difference because the credit 3 markets being what they are, there was no rush. 4 But we intend to let Tom decide which version 5 he likes the best and -- you know, how he wants 6 to proceed in the future. So we're ready 7 architecturally and in planning. We use -- we 8 use 2007 to plan that at the Atlantic City 9 Hilton. 10 So we haven't been sitting around, 11 saying, oh, my God, the market's have gone away 12 and customers have gone away, and they're never 13 coming back. We know what it takes to be 14 successful in these properties. They have to 15 be updated. They have to be made better. We 16 have an announcement coming shortly on a new 17 restaurant at the Atlantic City Hilton. 18 Something we've worked on, something you'll 19 know. Something we think will be very good for 20 the property like Gallagher's was for Resorts. 21 So we're aware what of what needs to be 22 done in a very tough environment, but the 23 environmental change, just have to survive this 24 downturn. But there's still plenty of people 25 interested in our -- Atlantic City. 100 RIBIS 1 You have Pinnacle building a new 2 building. You have MGM. You have Borgata's 3 expansion, Harrah's expansion. People are 4 doing things. And why? Because it's a good 5 marketplace. It's got its defects like every 6 marketplace has, but every marketplace didn't 7 survive like we did, and you didn't see the 8 investment that we've made into the 9 marketplace. 10 And just one point I do want to speak to 11 is this question of slots at the racetrack. 12 Would be unfair. It would be a breach of trust 13 and a breach of faith for the government to say 14 breeders are going to loose -- are losing too 15 much money. So, therefore, let's destroy an 16 industry where there's been $15 billion 17 invested on a contract of promise that this is 18 where gaming was going to be in New Jersey. 19 Let's put 10,000 slot machines in the 20 Meadowlands. That's just wrong. And any 21 legislature that does that to benefit another 22 industry is not being fair and hasn't looked at 23 the facts. And I think our governor is correct 24 when he says, I'm against that. And I believe 25 he'll stay against that because that's the only 101 ITEM NO. 14 1 fair thing to do. 2 CHAIR KASSEKERT: Thank you. 3 Any other questions? Commissioner 4 Sommeling? 5 VICE CHAIR SOMMELING: No questions, 6 Madame Chair. 7 CHAIR KASSEKERT: Thank you. 8 Mr. Ribis, you may step down. 9 THE WITNESS: That's it? I can't make 10 any more speeches. 11 (Laughter.) 12 THE WITNESS: I do want to thank the 13 Commission, because I know you do have a hard 14 job. And it's -- I'm glad to be here. And as 15 the Chair knows, I travel a lot. And I was 16 glad to move my travel around this week to be 17 here. 18 And I think it's -- I think it's 19 important that we look at Atlantic City 20 positively. You can get very -- I don't feel 21 negative about it, as you know. I believe that 22 we should do more in Atlantic City, not less. 23 And I think we will. 24 Thank you very much for having us. 25 CHAIR KASSEKERT: Thank you. Thank you. 102 McCARTHY - BROOKS 1 THE WITNESS: Thank you, Mary Jo. 2 MS. FLAHERTY: You're welcome. Thank 3 you, Mr. Ribis. 4 CHAIR KASSEKERT: You may call your next 5 witness. 6 MR. BROOKS: Madame Chair, call Frank 7 McCarthy. 8 CHAIR KASSEKERT: Mr. McCarthy? 9 Mr. McCarthy, Mr. Nance will swear you 10 in. 11 12 FRANCIS X. McCARTHY, was duly sworn to 13 testify in this matter. 14 15 MR. NANCE: Please state your name for 16 the record. 17 THE WITNESS: Francis X. McCarthy. 18 MR. NANCE: Thank you. 19 CHAIR KASSEKERT: You may proceed. 20 MR. BROOKS: Thank you, Madame Chair. 21 22 DIRECT EXAMINATION BY MR. BROOKS: 23 Q. Good afternoon, Mr. McCarthy. 24 A. Good afternoon. 25 Q. Mr. McCarthy, for purposes of the 103 McCARTHY - BROOKS 1 record, could you please state your position with the 2 Applicant for license renewal for Resorts 3 International Hotel, Inc. 4 A. Yes. I'm Regional Senior VP of Finance 5 for both Resorts and Hilton. 6 Q. Were you involved, Mr. McCarthy, in the 7 preparation of financial forecasts which were 8 submitted to the Commission and Division with the 9 license renewal application? 10 A. Yes, I was. 11 Q. Are there any recent economic 12 developments which have had an impact on the financial 13 forecasts as have been previously provided to the 14 Division and the Commission? 15 A. Yes. We've been the beneficiary of 16 falling interest rates. Our forecasts originally 17 envision that our rates would be in the vicinity of 18 where our rate cap was that we had with our 19 refinancing last year, which was approximately nine 20 percent. At the time of the forecasts, we were paying 21 a little over eight percent. Rates right now have us 22 paying under seven percent, closer to six and 23 three-quarters percent. So what that translates into 24 real dollars is a real savings over what we've been 25 paying historically of approximately $4 million a 104 McCARTHY - FLAHERTY 1 year. Which is for the first time in my career here 2 in Atlantic City here, is pretty good with all the 3 testimony that's been here previously. 4 So we have a floating-rate mortgage. 5 And, again, as I said earlier, we have the ability and 6 we do have a rate cap. So if circumstances were to 7 change, we max out at nine percent rate, which we had 8 in the forecast. 9 MR. BROOKS: I have no further 10 questions, Madame Chair. 11 CHAIR KASSEKERT: Thank you. 12 Miss Flaherty? 13 MS. FLAHERTY: Yes, Chair and 14 Commissioners. 15 16 CROSS-EXAMINATION BY MS. FLAHERTY: 17 Q. Good morning Mr. McCarthy. 18 A. Good morning. 19 Q. Just for the record, Resorts financing 20 is composed of $350 million in the term loan and $10 21 million in revolver; is that correct? 22 A. That's correct. 23 Q. And is there requirements under the 24 Column loan; is that correct? 25 A. Yes. 105 McCARTHY - FLAHERTY 1 Q. And there are also requirements to 2 extend the Column loan? 3 A. Yes, there are. 4 Q. Okay. Now, in regard to the Column 5 loan, there are cap-ex requirements in reserve 6 accounts. Can you discuss that on the record? 7 A. Certainly. When we closed on the 8 transaction, we put into escrow approximately $10 9 million for maintenance cap-ex. Additionally, we put 10 funding in for the rooms renovation of -- that we just 11 spoke about today, as well as the casino floor 12 renovations which include the Asian pit. We have 13 money left over, also, from an agreement that we had 14 escrowed, to take out an agreement we had with South 15 Jersey Gas that didn't materialize, approximately $5 16 million. So, as of today, we have approximately $15 17 million in escrow. We can use that money for our 18 maintenance cap-ex going into the future. We have a 19 requirement in our loan agreement to spend $10 million 20 annually in cap-ex. We have $15 million in escrow, as 21 we speak. So we're in excellent shape going forward 22 or the next few years with just the escrows we have to 23 maintain our cap-ex. 24 Q. Now, is it correct that Resorts is 25 forecasting that it will extend the Column loan in 106 McCARTHY - FLAHERTY 1 2009 and 2010? 2 A. That's correct. We have the ability in 3 our loan -- it's a two-year loan that matures in 2009. 4 However, we have three one-year terms at our option 5 that we can extend, and our forecasts shows we intend 6 to extend. 7 Q. And you are confident of your ability to 8 be able to exercise those extensions? 9 A. Yes. 10 Q. And are you also looking toward 11 extending the Column loan in 2011? 12 A. In 2011? We have -- yes, we are. 13 Q. And by 2012 you would need to refinance; 14 is that correct? 15 A. That's correct. 16 Q. And when would you be likely to start 17 that refinancing process? 18 A. Well, as Mr. Ribis mentioned earlier, 19 it's not something that you wait until 2012 for. If 20 we see that market conditions are ripe, I'm sure that 21 we will consider looking at it earlier rather than 22 later. If we extend out to the full 2012, my 23 experience has been you'll do something probably about 24 a year and a half out, start looking seriously. 25 Q. How would you describe your forecast for 107 McCARTHY - FLAHERTY 1 growth? 2 A. Our forecast for growth, I'd say, is in 3 the -- in the current situation, we forecasted a flat 4 growth for our property in 2008. Principally because, 5 as Mr. Rodio mentioned, we have the rooms benefit for 6 two-thirds of the year. That's going to help us 7 dramatically versus where we are right now. Going 8 forward, we expect to -- we expect Philadelphia to 9 affect us somewhat. But counteracting that, as both 10 Mr. Rodio and Mr. Ribis mentioned, there's growth here 11 in Atlantic City. More rooms that this marketplace 12 can get in, the more we can counteract where the 13 industry has been hit by the other competition. We 14 have something that they don't have, which is a 15 full-fledged entertainment experience. 16 Q. So you would view both the expansion of 17 the current Atlantic City facilities and any opening 18 of new facilities to be positive for Resorts? 19 A. Yes. 20 Q. Now, is the improvement in gross 21 operating profit through 2010 forecasted to be mostly 22 due to the impact of expense savings implemented next 23 year and this year? 24 A. Expense savings but also additional 25 revenue generation because of the rooms. 108 McCARTHY - FLAHERTY 1 Q. And will the operating savings that 2 you've implemented be permanent and continue 3 throughout the forecast period? 4 A. Yes, they will. 5 Q. And what expense will decrease? 6 A. You'll have a natural reduction in 7 insurance. We -- as an industry, we're affected 8 demonstratively by Hurricane Katrina a few years ago. 9 We had a significant spike in our insurance that has 10 started to settle down. We experienced a reduction in 11 the year we're in right now. We will continue to 12 see -- our forecasts show that we will continue to see 13 a significant reduction. That saves you millions of 14 dollars that we've had to spend in prior years that we 15 won't have to spend in the future. 16 As to labor, as Mr. Rodio mentioned, 17 we're continually looking at where we can save without 18 affecting our employees. Atlantic City, at least in 19 this -- at this stage, is a weekend market more so 20 than ever. So a lot of our staff are working the 21 weekends and during the week. We're keeping it 22 buttoned down as much as we can. 23 Q. Any other areas of expense? 24 A. If you continually look at your 25 marketing expense. But in this environmental, 109 McCARTHY - FLAHERTY 1 particularly the Atlantic City environment, you're not 2 really saving marketing dollars. You're 3 reapportioning them because you need to continually 4 keep your incentives to the customers fresh so that 5 you can keep business flowing. 6 Q. Do you see that in any of those expense 7 reductions will have an impact on operations or on 8 revenues? 9 A. On revenues? No. 10 Q. At the end of the third quarter of 2007, 11 is Resorts on target with its forecasts for 2007? 12 A. No. We were off -- we were off 13 forecast. From my recollection we were off forecast. 14 It was strictly in slot revenues. 15 Q. All right. And was that for the third 16 quarter or fourth quarter? 17 A. That was third quarter and fourth 18 quarter. 19 Q. And that was primarily slot revenue? 20 A. Yes. 21 Q. And that was because of overall slot 22 revenue or declines during the mid week or weekends? 23 A. It was market conditions that Mr. Rodio 24 mentioned during this testimony. 25 Q. But could you pinpoint it to any 110 McCARTHY - FLAHERTY 1 particular problem with the slot revenue as to time of 2 week? 3 A. Philadelphia. To a smaller extent. 4 Because, as Mr. Rodio mentioned, we had skew more into 5 the North Jersey, New York market. Smoking had a 6 dramatic impact. 7 Q. Uh-huh. 8 A. We also had impact from the marketing 9 from Philadelphia, and also we had impact from the 10 general economy, particularly in the fourth quarter. 11 Q. How will missing the 2007 forecast 12 impact 2008 into 2010 in terms of the forecast? 13 A. I don't see it really affecting us going 14 forward. Because, again, as I mentioned a few minutes 15 ago, we have the cushion from our forecast from the 16 interest reduction that we've seen which is, at a 17 minimum, $4 million. It could be even higher, 18 depending on where rates are headed in the coming 19 year. Which gives us a lot of flexibility. 20 Additionally, as Mr. Ribis mentioned, we had a 21 litigation settlement which gives us a nice cushion, 22 also. So we have -- from a financial flexibility 23 basis, a lot of opportunities to -- if forecast should 24 fall, we wouldn't be in trouble. 25 Q. Now, by the end of 2010, the amount of 111 McCARTHY - FLAHERTY 1 funds under the revolver loan are forecasted to 2 decrease to a limited amount. Do you think that the 3 flexibility that you see with the interest rates will 4 help you in that regard? 5 A. I'm sorry. I don't follow you. 6 Q. By the end of 2010, the amount of funds 7 which you're forecasting to be available under the 8 revolver loan would decrease to a limited amount. 9 Would the effect of the interest savings that you're 10 anticipating in light of the interest rates that are 11 now in effect help you with regard to that figure? 12 A. Well, we would have a -- I believe if I 13 remember forecasts correctly, we would have this 14 similar availability under our line of credit. But we 15 would also have a continuation of this interest 16 savings going forward. Two independent questions, 17 really. 18 Q. Now, with regard to the expense savings 19 and the growth that you forecasted into 2010, what 20 options are available if -- if the results fall short 21 or if expense savings are not realized? 22 A. Well, again, as I mentioned earlier, we 23 have the -- we have the interest savings. That's 24 real. That's definable as we speak today. 25 Q. Uh-huh. 112 McCARTHY - FLAHERTY 1 A. We also have the litigation settlement 2 we talked about. In our loan agreement we have the 3 capability to finance equipment up to an amount of, I 4 believe, around $10 million, which gives us 5 flexibility. And our line of credit is a $10 million 6 line of credit. We have some Worker's Compensation 7 lines that are against it, but we have in the vicinity 8 of $5 million available. We have a lot of 9 flexibility. 10 And, also, we have the escrow. The 11 escrow gives us a head start through, I believe, first 12 half of 2009 where we'll be drawing off of escrow 13 funds that are already in place and sitting in 14 accounts. So that we have plenty of flexibility. 15 Q. So just to summarize that, it would be 16 your view that Resorts has sufficient financial 17 flexibility -- 18 A. Yes. 19 Q. -- throughout its renewal period? 20 A. Without a doubt. 21 Q. Thank you, Mr. McCarthy. That's all I 22 have. 23 CHAIR KASSEKERT: Thank you. 24 Questions from the Commissioners? 25 Commissioner Frulio? 113 McCARTHY 1 COMMISSIONER FRULIO: No. 2 CHAIR KASSEKERT: Commissioner Fedorko? 3 COMMISSIONER FEDORKO: I just have one. 4 I know -- Mark, I think, you touch on 5 this previously, but the problems with you've 6 had with the forecast, why should we feel 7 confident about your future forecast? 8 THE WITNESS: Well, as Mr. Rodio 9 mentioned, we have a good handle on our 10 operation. I'd say an excellent handle on our 11 operation. Our costs are very predictable. We 12 are staying within our parameters by -- both 13 Tony and Steve are keeping the operation as 14 tight and functional as we possibly can, and we 15 forecasted that. I don't see any variations of 16 the marketing in the industry historically, and 17 I think it will maintain to be high. But, 18 again, as I said earlier, you keep rearranging 19 those dollars. You don't add to those 20 marketing dollars. Those dollars just get 21 reallocated to different programs you're going 22 to be doing. 23 The one variable that's out of our 24 control is the economy. That's something that, 25 you know, we have to measure as we go along. 114 McCARTHY 1 Also out of our control is really the 2 competition from the other states and 3 jurisdictions. We'll continue to monitor it. 4 As I mentioned to Miss Flaherty, we have plenty 5 of flexibility with our funding and financing 6 as well as not even going where Mr. Ribis went 7 with both he and Colony coming through to help 8 us if we fall short. 9 I feel we have sufficient vehicles that 10 we have under our control at the operating 11 level, as we speak, to allow us to really 12 weather anything that I can see in the 13 foreseeable future 14 COMMISSIONER FEDORKO: Okay. 15 CHAIR KASSEKERT: Commissioner 16 Sommeling? 17 VICE CHAIR SOMMELING: One question. 18 CHAIR KASSEKERT: Sure. 19 VICE CHAIR SOMMELING: Along the same 20 lines, I know Mr. Rodio and Mr. Ribis both have 21 addressed this same question to an extent. 22 Looking beyond the forecast period, how do you 23 view Resorts' competitive position in regard to 24 the new proposals by Revel and Pinnacle and 25 MGM, in the immediate? Not the jurisdictions 115 McCARTHY 1 or the venues outside of New Jersey, but here. 2 THE WITNESS: Well, again, we're talking 3 about into the future and those three projects, 4 by the time they get into the ground and really 5 start moving, particularly in the debt markets 6 right now, you may not see them materialize -- 7 I think they were talking 2010, 2011. It could 8 move out another year or two at this stage. 9 Very easily. The conditions in the marketplace 10 will dictate whether those projects get built 11 in the time frames that have been -- been 12 discussed. What that allows us to do as 13 Resorts is, we can continue with our planning, 14 as Mr. Ribis said. That will allow us 15 ultimately to expand on the parking lot area 16 that's adjacent to Resorts, and we can be as 17 competitive in the marketplace. We have 11 18 acres. That's a lot of acreage, prime 19 boardwalk frontage, and that will give us a 20 competitive advantage as well as the pier going 21 out into the Ocean. Nobody else in Atlantic 22 City has that at this time. 23 VICE CHAIR SOMMELING: Thank you. 24 CHAIR KASSEKERT: What do you think is a 25 better scenario, the new properties coming on 116 ITME NO. 14 1 in Atlantic City and boosting up competition 2 overall, or them taking longer and your want to 3 really kind of reorder things? 4 THE WITNESS: I'd like to have them open 5 so that -- 6 CHAIR KASSEKERT: Yeah. 7 THE WITNESS: We're so under-roomed in 8 this environment. 9 CHAIR KASSEKERT: Uh-huh. 10 THE WITNESS: That the more rooms you 11 can put into this environment, as Mr. Rodio 12 says, allows for this whole industry to expand. 13 Rooms are the key to the growth driver for this 14 industry. 15 CHAIR KASSEKERT: Thank you. 16 Any other questions? Anything on 17 redirect? 18 MR. BROOKS: No, Madame Chair. 19 CHAIR KASSEKERT: Recross? 20 MS. FLAHERTY: Nothing else. 21 Thanks, Madame Chair. 22 CHAIR KASSEKERT: Thank you very much. 23 You can call your next witness. 24 MR. BROOKS: No further witnesses, 25 Madame Chair. 117 ITME NO. 14 1 CHAIR KASSEKERT: Very good. 2 Let me ask that the Division would like 3 to make a closing statement. 4 MS. FLAHERTY: Brief statement, Madame 5 Chair. 6 Based upon its investigation in the 7 record today, the Division does not object to 8 Resorts' licensure renewal, the qualification 9 of its holding companies, entity qualifiers, or 10 the financial sources or the suitability of its 11 individual officers or directors. The Division 12 recommends the renewal of Resorts' casino and 13 CHAB licenses for a term ending January 31st, 14 2013, subject to the imposition of the 15 conditions that are contained in our January 4, 16 2008, report and the resolution which has been 17 drafted by Mr. DiGiacomo. 18 Thank you. 19 CHAIR KASSEKERT: Thank you. 20 Miss Wild? Mr. Brooks? 21 MR. BROOKS: Thank you, Madame Chair. 22 Members of the Commission. 23 In closing I would like to thank for 24 their assistance, guidance, patience and input 25 in terms of the license renewal application, 118 ITME NO. 14 1 the Division of Gaming Enforcement, in 2 particular Miss Flaherty and those who assisted 3 her, Susan Scott, Bob Latimer, Rich Brinkman, 4 Steve Dzubaty, to name a few. We'd also like 5 to thank the Commission staff, Len DiGiacomo, 6 Chris Glaum, Claire Frank, to name a few. 7 With that, I would simply conclude in 8 asking that the Commission grant the request of 9 Resorts for renewal of its casino license and 10 CHAB license for a five year term. 11 CHAIR KASSEKERT: Thank you. Let me ask 12 first if there are any comments on the draft 13 resolution? And if not, do the parties consent 14 to its adoption? 15 MR. BROOKS: On our part, Madame Chair, 16 we consent to its adoption. 17 CHAIR KASSEKERT: Thank you. 18 MS. FLAHERTY: We also consent. 19 Thank you, Madame Chair. 20 CHAIR KASSEKERT: Thank you. 21 Are there any other matters that need to 22 be brought to our attention at this time? 23 MS. FLAHERTY: No, Madame Chair. 24 MR. BROOKS: No, Madame Chair. 25 CHAIR KASSEKERT: Okay. We will take a 119 ITEM NO. 14 1 brief recess. 2 (A recess was taken from 12:14 to 12:25 3 p.m.) 4 CHAIR KASSEKERT: Thank you. We'll go 5 back on the record. 6 Resorts is before the Commission for its 7 first five-year license renewal. Between now 8 and 2013, several milestones will occur. 9 Currently, the Colony fund partnership that 10 owns Resorts will expire this November. But 11 there's every indication that the partnership 12 fund officially will be extended for another 13 year through review 2009. Further -- although 14 Mr. Ribis left -- the Commission has received 15 assurances that the Colony has the flexibility 16 to determine when to dispose of fund assets, 17 like Resorts, notwithstanding limitations on 18 the duration of the fund. 19 Moreover, by 2012, at the very latest, 20 the current $360 million mortgage loan from an 21 affiliate of Credit Suisse will come due. 22 Resorts and its parent companies are well aware 23 of that deadline and are prepared, in due 24 course, to actively pursue alternatives to 25 address the refinancing of that obligation. 120 ITEM NO. 14 1 Like most of the rest of the Atlantic City 2 casino industry, Resorts has felt the effects 3 of 2007 of increased out-of-state competition 4 and the city's partial ban on smoking. 5 Nevertheless, Resorts expects to a achieve an 6 almost 20 percent increase in gross operating 7 profits in 2007 when compared to 2006. 8 Further, for all of 2008, Resorts will have 9 available of the full complemental of the 10 recent hotel room additions which management 11 expects will further bolster gross operating 12 profit levels. 13 However, obviously, challenges for the 14 casino Resorts certainly remain given the 15 magnitude of its fixed charges. Not 16 surprisingly, those challenges prompted the 17 Commission's desire to hear from a Colony 18 representative regarding the parent companies' 19 commitment to Atlantic City. Although the 20 future is uncertain, that commitment apparently 21 remains steadfast. However, in my view, it is 22 still wholly appropriate to impose the 23 Division's recommended conditions to make sure 24 that the commensurate level of regulatory 25 oversight is maintained. 121 ITEM NO. 14 1 Based on the entire record of this 2 proceeding, I am satisfied that Resorts and its 3 affiliates have the wherewithal demanded under 4 our financial stability standard and has also 5 met all other relicensing criteria. 6 So, accordingly, I move that the 7 Commission adopt the proposed resolution and: 8 One, grant Resorts a five-year renewal of its 9 casino and casino CHAB license; 10 Two, approve the transfers regarding 11 Management 4; 12 Three, grant the relief requested in the 13 audit committee petition; 14 And, four, approve Resorts revised 15 EEBOP; 16 And, five, grant the sealing request as 17 to Exhibit D-1, all as set forth in the 18 findings, rulings, and delegations, and subject 19 to the conditions in this resolution. 20 And I so move. Is there a second?. 21 VICE CHAIR SOMMELING: Second. 22 CHAIR KASSEKERT: Motion has been made 23 and seconded. This is a roll call vote. 24 MR. NANCE: Commissioner Frulio? 25 COMMISSIONER FRULIO: Yes. 122 1 MR. NANCE: Commissioner Fedorko? 2 COMMISSIONER FEDORKO: Yes. 3 MR. NANCE: Vice Chair Sommeling? 4 VICE CHAIR SOMMELING: Yes. 5 MR. NANCE: Chair Kassekert? 6 CHAIR KASSEKERT: Yes. 7 MR. NANCE: The record will reflect that 8 the motion is unanimous. 9 CHAIR KASSEKERT: Congratulations. 10 MS. WILD: Thank you. 11 MR. BROOKS: Thank you, Madame Chair. 12 MR. NANCE: In accordance with 13 Resolution No. 07-12-12-26, the next closed 14 session of the Commission shall be held on 15 Wednesday, February 20, 2008, at 9:15 a.m. in 16 the Commission offices. 17 It is now time for the public 18 participation portion of the meeting. 19 CHAIR KASSEKERT: Is there anyone from 20 the public that wishes to be heard? 21 (No response.) 22 CHAIR KASSEKERT: Seeing no one, I'll 23 declare this portion of the meeting closed and 24 entertain a motion to adjourn. 25 VICE CHAIR SOMMELING: Motion to 123 1 adjourn. 2 COMMISSIONER FEDORKO: Second. 3 CHAIR KASSEKERT: The motion has been 4 made and seconded. All in favor? 5 (Ayes.) 6 CHAIR KASSEKERT: Opposed? 7 (No response.) 8 CHAIR KASSEKERT: Motion carries. 9 (Public Meeting 08-01-30 was adjourned 10 at 12:28 p.m.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 124 1 2 C E R T I F I C A T E 3 4 5 I, DARLENE SILLITOE, a Certified Court 6 Reporter and Notary Public of the State of New 7 Jersey, certify that the foregoing is a true 8 and accurate transcript of the proceedings. 9 10 11 I further certify that I am neither 12 attorney, of counsel for, nor related to or 13 employed by any of the parties to the action; 14 further that I am not a relative or employee of 15 any attorney or counsel employed in this case; 16 nor am I financially interested in the action. 17 18 19 DARLENE SILLITOE CCR 20 License No XI01023 21 22 Dated: February 2, 2008 23 My Commission Expires on July 10, 2009 24 ID No 2062871 25