Real-life Monopoly: Park Place, Icahn battle for bankrupt Claridge

John Curran

Thursday, Oct. 26, 2000 | 5:38 a.m.

ATLANTIC CITY, N.J. - New Jersey casino regulators began their inquiry Thursday into Park Place Entertainment Corp.'s proposal to take over a bankrupt casino next door, opening a three-day hearing aimed at determining whether doing so would give the "colossus" too much power over its competitors.

At issue is who gets control of the Claridge Casino Hotel, which filed for Chapter 11 last year and is now the subject of competing reorganization plans submitted by Park Place Entertainment and billionaire financier Carl Icahn.

Ultimately, U.S. Bankruptcy Court Judge Judith Wizmur will decide which gets to pull the Claridge out of bankruptcy proceedings.

In the meantime, the state Casino Control Commission is being asked to determine whether Park Place's bid - if approved by Wizmur - would result in "undue economic concentration" of the 12-casino Atlantic City market.

Park Place - which owns three Atlantic City casinos now - has bid $81 million for the Claridge. Icahn submitted a stock-heavy $105 million bid, but it has expired. The company must submit a new one by Nov. 13.

Until 1995, New Jersey's casino law banned any one casino company or individual from owning more than three casinos.

That year, the Legislature struck the three-casino limit, leaving regulators to decide on a case-by-case basis whether a multiple-owner's purchase of another casino would give it too much power over vendors and competitors.

The casino commission has yet to rule against a casino company on those grounds.

But this case poses vexing new questions, given the Claridge's position as a small, off-Boardwalk casino and the power Park Place could exert over the neighboring Sands Casino Hotel should it gain control of the Claridge.

Icahn and Park Place have battled before. Last month, in the bitterly-contested Sands bankruptcy case, Wizmur chose Icahn's plan for reorganization over Park Place's.

"We have a large casino company - some would say a colossus - seeking to become even larger at the center of the Boardwalk, the crossroads of Atlantic City," said Deputy Attorney General James Fogarty, representing the state Division of Gaming Enforcement.

The hearing began Thursday with a five-hour session peppered with courtroom-style objections, expert testimony from economists and testy exchanges between Icahn lawyer Hersh Kozlov and Park Place executive Wallace Barr.

Kozlov impugned Barr's credibility before the commission and sought to portray Park Place as a rich bully that routinely engages in anticompetitive practices to undermine its neighbors.

According to Kozlov:

-After losing out to Icahn in the Sands bankruptcy, Park Place ordered the operator of a private parking lot on Park Place property to stop accepting cars driven by people going to the Sands.

-Park Place bought the rights to show a closed-circuit broadcast of last week's Mike Tyson-Andrew Golota heavyweight boxing match to its patrons, on the condition that no other casino be allowed to show it.

-Park Place officials purposely withheld any mention of their plan to bid for the Sands when appearing before the commission last year during an "undue economic concentration" hearing related to their acquisition of Caesars.

Park Place lawyer Michael Chertoff told commission members that the company's acquisition of the Claridge would not stifle competition.

"No market increase of any material degree will occur as a result of this purchase," he said.

"This acquisition will be in the interest of Atlantic City, it will not pose an undue economic concentration, it will be in the best interest of the Claridge, and it will be a step forward in strengthening the weakest casino in Atlantic City," Chertoff said.

Park Place and Icahn submitted reports from experts bolstering their respective positions.

The Division of Gaming Enforcement, meanwhile, submitted an expert's report that made no finding as to economic concentration, instead recommending conditions that should be attached in either case.

The hearing resumes Friday.