Tuesday, March 1, 2005 | 8:59 a.m.
ATLANTIC CITY -- Is a video lottery terminal really a slot machine?
The distinction is likely to be at the heart of a battle between acting New Jersey Gov. Richard J. Codey and Atlantic City's casinos, with potentially $150 million a year in new revenues -- and the casinos' monopoly -- at stake.
In his budget address today, Codey is expected to propose installing 1,500 to 2,000 video lottery terminals at the Meadowlands Racetrack in East Rutherford, generating about $150 million annually for the state.
Codey is hoping the measure can help fill a projected $4 billion budget gap and in the process allow New Jersey to compete with racetracks in New York and Delaware, where the installation of slot machines has helped draw gamblers and propped up the faltering horse racing business.
But the proposal faces stiff opposition from the casinos, which stand to lose millions of dollars if northern New Jersey and New York-area gamblers have the option of gambling closer to home. Up to 40 percent of Atlantic City's customers come from those areas, according to casino industry officials.
If history is any indicator, the casinos will fight the initiative with a lobbying effort that paints a doomsday scenario of fewer visitors to Atlantic City, cuts in casino profits and ripple effects harming New Jersey vendors who do business with gambling halls.
The casinos' trump card may be the state constitution, which limits gambling to Atlantic City under the terms of a referendum approved by New Jersey voters in 1976. If video lottery terminals are slot machines, then voters would have to approve an amendment to the constitution allowing their installation at the northern New Jersey racetrack.
"If you have an economic interest in opposing this, that'll be the first point of attack," said former casino industry consultant Carl Zeitz. "The constitution clearly says casino gambling shall be in Atlantic City and no place else."
That raises the question: Do terminals qualify as slot machines?
To players, there's little discernible difference between a video lottery terminal and a slot machine. On video lottery terminals, players are effectively competing against others who are playing those same kind of machines, with the winner determined by an off-site computer hooked into all of them. Slot machine odds and payouts, on the other hand, are determined solely in the machine being played.
The state, which fought a similar battle with the casinos in 2003, contends that the terminals are an extension of the New Jersey State Lottery and therefore exempt from the constitutional ban.
Two years ago, when Gov. James E. McGreevey considered a similar measure, the Casino Association of New Jersey obtained a legal opinion from retired state Supreme Court Justice Robert Clifford, who was a member of the board of directors at Resorts Atlantic City casino.
Clifford said an exception in the Constitution gives the state the power to operate games that are "restricted to the selling of rights to participate ... and the awarding of prizes by drawings."
But the terminals don't qualify as lottery devices because they don't work that way, he said.
In other states, the slots vs. video lottery terminal debate has proved slippery.
"The definition of a video lottery terminal, or VLT, varies widely from jurisdiction to jurisdiction," said Rick Sorensen, a spokesman for IGT, a slot machine manufacturer in Reno.
In Rhode Island, lottery terminals must be video games that cannot dispense coins, cash or tokens. In Delaware, they can dispense coins. New York state, meanwhile, says lottery terminals cannot contain any type of mechanical display or use random number generators.
Codey spokeswoman Kelley Heck would not give details of the Codey plan.
Also unclear Monday was how a video lottery proposal could be implemented without violating the terms of an agreement last year that called for the casino industry to pay $86 million -- "purse supplements" for New Jersey horse racing tracks -- in exchange for a four-year moratorium on racetrack slots.
That agreement, between the state Casino Reinvestment Development Authority and the New Jersey Sports and Exposition Authority, was supposed to buy the casinos more time, preserving their state monopoly.
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