No dice: New Jersey casino industry set-aside program stricken by federal judge

John Curran

Wednesday, Feb. 9, 2000 | 9:15 a.m.

ATLANTIC CITY, N.J. - A federal judge Tuesday struck down as unconstitutional a set-aside program that calls for New Jersey casinos to award at least 15 percent of their contracts to companies headed by women and minorities.

In another blow to affirmative action policies governing casinos, U.S. District Judge Stephen Orlofsky granted a preliminary injunction barring the state Casino Control Commission from enforcing the program.

"It is clear that the set-aside program establishes an unequal playing field in the awarding of contracts by the casino industry," he said in a 29-page opinion. "While the regulations governing the set-aside program do not mandate specific contracting decisions, they undoubtedly have a 'concrete effect' on whether non-minority business enterprises receive contracts from casino licensees."

The injunction was sought by the Association for Fairness in Business, a group of contractors that sued Dec. 9 challenging the program. The group said New Jersey instituted the program in the 1980s without proving there had been discrimination in the awarding of contracts by casinos in the first place.

Association attorney Salvatore Perillo welcomed the ruling.

"It's certainly going to have a major impact on the casino industry. It remains to be seen what the state's response will be. That'll be the interesting thing to watch," Perillo said.

Allen Zappone, president of Fabi Construction Inc. of Absecon, the only one of 20 association members named as a plaintiff, claims that his companies have been denied contracts, despite being the lowest qualified bidder, because of the set-aside program.

He did not return telephone calls seeking comment Tuesday on the ruling.

According to the commission, 25.7 percent of the $976 million spent by the casinos in 1998 was done so with minority-owned or women-owned companies. That figure does not include utility costs or mortgage interest.

The 15 percent goal is a cumulative one; that is, a casino can use women-owned businesses for 10 percent of its business and minority-owned ones for 5 percent and still pass muster.

"I don't know about the constitutionality of the program, but certainly it's morally correct," said Bill Cradle, president of Atlantic Color Ltd., a minority-owned Pleasantville printing company that prints letterhead, invitations and other materials for Harrah's Casino Hotel and other casinos.

"We're getting less than 15 percent and that's a small amount. If you were to break out minority business from women-owned business, it's a lot less than that," Cradle said.

Casino commission spokesman Daniel Heneghan said the ruling breaks one of the main promises made to New Jersey voters when they voted to legalize casinos in 1976.

"When casinos were legalized, folks were promised there would be new jobs and new business opportunities. Nobody promised those benefits just to a limited group of people. The benefits were to be shared with as many groups as possible. And that can't happen if women or minorities don't have an equal opportunity to do business with the casinos."

Commission lawyers were still reviewing the decision and have not decided what steps to take next, he said.

The ruling marks the latest in a series of court decisions against affirmative action here: