N.J. urged to OK Park Place bid for Claridge hotel

John Curran

Thursday, Dec. 21, 2000 | 11:09 a.m.

ATLANTIC CITY -- One of the founding fathers of casino gambling in New Jersey urged regulators Wednesday to endorse Park Place Entertainment Corp.'s controversial plan to buy the bankrupt Claridge Casino Hotel, saying that to do otherwise would stymie further casino development here.

Steven Perskie, who helped sell voters on Atlantic City casinos in 1976, told the state Casino Control Commission there is no compelling reason Las Vegas-based Park Place should be denied the opportunity to buy the struggling off-Boardwalk casino.

"To deny Atlantic City's most aggressive investor the opportunity to extend its commitment to the Atlantic City market and to deploy its capital resources in that effort as it sees fit will serve as a significant disincentive, not only to current operators but also to potential entrants into the Atlantic City market," said Perskie, who represents about 1,000 bondholders who own about $85 million in Claridge debt.

Park Place's top lawyer, meanwhile, told regulators that vigorous competition for customers would continue even if Park Place -- which owns three casinos already -- is allowed to buy the 70-year-old Claridge.

"The acquisition of this very small property by Park Place Entertainment is not going to change that vigorous competition one whit," said Clive Cummis.

The remarks came during the final day of a six-day hearing aimed at determining whether the proposed purchase would violate the Casino Control Act's subjective rule banning any one casino operator from having "undue economic concentration" over the market.

The Claridge, which filed for Chapter 11 last year, is now the subject of competing reorganization plans submitted by Park Place Entertainment and billionaire financier Carl Icahn, who owns the Sands Hotel & Casino next door.

A U.S. Bankruptcy Court judge will decide which gets to pull the Claridge out of bankruptcy proceedings.

But the casino commission is being asked to determine whether Park Place ownership of the Claridge would give the world's largest casino company too much power in the 12-casino Atlantic City market.

Park Place owns Bally's Park Place, the Atlantic City Hilton and Caesars Atlantic City Hotel Casino, as well as the Wild, Wild West, which operates under the same license as Bally's Park Place.

Park Place should be rewarded for its successes, not blamed, Cummis told the panel.

Icahn's lawyer has said Park Place routinely bullies its smaller competitors and would be a bigger threat to do so if it gained control of the Claridge.

The lawyer, Hersh Kozlov, told regulators in his closing arguments Wednesday that no testimony had been presented at the six-day hearing to bolster Park Place's contention that the Claridge purchase would benefit the market, the city as a whole or anyone besides Park Place.

But Cummis said that if the commission rules that Park Place cannot buy the Claridge, it would allow Icahn to buy the Sands at a "bargain price," harming Claridge bondholders.

Meanwhile, the Division of Gaming Enforcement, the state agency that enforces casino law in New Jersey, finally took a position on the takeover -- and it was an unusual one.

Division Director J.P. Suarez said Park Place should be allowed to buy the Claridge, but only if it pledges to develop the long-dormant Traymore site, an eight-acre Boardwalk parcel across the street from the Claridge that has gone undeveloped for more than 20 years.

"If development of the Traymore site isn't in their plans, then those plans aren't good for Atlantic City," Suarez said.

The proposal contradicted the division's own expert economist, who testified last week that the best solution would be to let Park Place buy the Claridge on the condition that it sell off the Traymore site.

Cummis dismissed the idea as "social engineering" and said he doubted it would be permitted by law.

The casino commission will rule on the Park Place-Claridge deal late next month, spokesman Daniel Heneghan said.