Economist: Park Place takeover of Claridge wouldn’t hurt market

John Curran

Wednesday, Dec. 13, 2000 | 5:54 a.m.

ATLANTIC CITY, N.J. - An expert economist told New Jersey casino regulators Wednesday that gamblers here won't lose out if Park Place Entertainment Corp. wins control of the bankrupt Claridge Casino Hotel.

If Park Place tries to boost prices or cut service after acquiring the Claridge, it would drive customers to other properties and hurt the company's bottom line, according to William Hall.

The testimony came in a state Casino Control Commission hearing aimed at determining whether Park Place's proposed takeover of the city's smallest casino would give Park Place "undue economic concentration" of the market.

Park Place and Sands owner Carl Icahn are vying for control of the Claridge, which filed for Chapter 11 last year but remains open and operating.

Ultimately, U.S. Bankruptcy Judge Judith Wizmur will decide which company's bid is better for Claridge bondholders, employees and customers.

In the meantime, the New Jersey regulators are trying to answer the dicey question of how much is too much.

Park Place, the world's largest casino company, owns three casinos in Atlantic City - Bally's Park Place, the Atlantic City Hilton and Caesars Atlantic City Hotel Casino.

Icahn says Park Place already acts like a rich bully and that if it were to get control of the Claridge, the casino market would suffer, gamblers could see price increases and the Sands could eventually be boxed in by Park Place properties.

Hall, a former anti-trust expert with the U.S. Justice Department who now runs his own private consulting firm in Washington, D.C., testified on behalf of Park Place.

He said competition in Atlantic City's casino market - with seven companies operating 12 casinos - is too keen for that to happen.

"Customers are extremely mobile. They can go very easily from one casino to another in search of the best offerings," he said. "Any casino that attempts to raise prices or lower the level of service would be very quickly hit with a migration of its customers to other casinos."

An increase in the company's market share, which is now about 30 percent, wouldn't stifle competition because there would still be five other operators in business, not counting The Borgata, a 2,000-room casino hotel now under construction, he said.

He said the Atlantic City casino market is now more concentrated - with fewer owners - than it was in 1988, but that the number of rooms given away as complimentaries and the percentage of money bet in slot machines that is returned to gamblers in jackpots are both higher now.

"The customers seem to be doing much better," Hall said.

The hearing resumes Thursday, with another economist - this one hired by Icahn - expected to testify that the market would suffer if Park Place got control of the Claridge.