The Tale of Two New Jersey Shutdowns and How They Impacted the Casino Industry

Had it not been for the astuteness of the former New Jersey Governor Jon Corzine, the casino industry in the state would have suffered a huge financial loss in the three-day state shutdown that ended on July 3, 2017. Corzine, a former CEO of Goldman Sachs, had signed a law in 2008 during his stint as the Governor of New Jersey that prevented the state’s casinos from closure even during a state shutdown.

Corzine was quoted as describing himself as “someone who is not encumbered by an old culture, historical entanglements and the status quo.” That is precisely the mindset needed when you’re confronted with a problem. Governor Corzine’s farsightedness during the first state shutdown when he was the Governor has saved the industry from staring at huge losses this time around. Let’s explore the two shutdowns in detail.

2006 New Jersey State Shutdown

The state of New Jersey experienced its first state shutdown from the midnight of July 1, 2006. This basically meant that all non-essential services were to be closed in the state. Casinos were caught in the imbroglio because their services were categorized as non-essential.

The shutdown lasted for eight days and ended with the adoption of the budget on July 8, 2006. As reported by the New York Times, the state ended up losing $1.2 million in casino tax revenue and $2 million a day in revenue from lottery.

2017 New Jersey State Shutdown

History repeated itself on July 1, 2017 and the man at the helm this time around was Governor Chris Christie. This second state shutdown led to the closure of state parks, beaches and other non-essential services. There was a lot of uncertainty around whether the casino industry would be affected by this.

"This is a market that’s very sensitive to external forces, and we’ve been on a nice little uptick here. You could lose everything you’ve gained over the last year in a very short period of time," said David Rebuck, Director of the State Division of Gaming Enforcement.

Fortunately, lessons were learnt from the first shutdown. Following the shutdown in 2006, Governor Corzine played a key role in the passing of new state law in 2008 that permitted casinos to function even during a state shutdown, albeit for a maximum of seven days.

The casino industry in Atlantic City had already been reeling under declining revenues and it was only in January 2017 that it registered its first revenue boost in 10 years. The number of casinos declined from 12 in 2006 to 7 in 2017. One of the biggest closures was that of the Taj Mahal, a casino owned by Donald Trump that was shut down in October 2016. A shutdown could have crushed the New Jersey casino industry. However, the 2008 legislation signed by Governor Corzine proved to be the saving grace, preventing the New Jersey casino industry from a severe blow that it may not have recovered from.