The Casino Reinvestment Development Authority (CRDA) lost its primary source of funding two years ago. Now, New Jersey Gov. Phil Murphy is throwing the agency a lifeline.

Last week, Murphy signed legislation allocating 1.25 percent of NJ sports betting revenue to the CRDA.

The additional tax is on top of the rates NJ sportsbooks already pay. Retail sportsbook locations pay an 8 percent tax on NJ sports betting revenue, while online and mobile sportsbooks pay 13 percent.

The sports betting tax from the casinos will be explicitly used to market and promote Atlantic City. Sports betting revenue tax from Monmouth Park Sportsbook by William Hill and the FanDuel Sportsbook at the Meadowlands will go directly to their municipalities.

Larry Sieg, CRDA director of communications and marketing, commented on the cash infusion to the Press of Atlantic City.

“After a three-year hiatus, we are looking forward to filling the void with much-needed promotion of Atlantic City as a world-class vacation destination. Our team looks forward to having the opportunity to once again get the DO AC brand into the consumer market to increase visitation and economic impact.”

Atlantic City mayor not thrilled

Financial management of the city is still under state control, and the CRDA is overseeing the process.

Atlantic City Mayor Frank Gilliam is on the board of the CRDA. Even so, Gilliam does not like seeing money from Atlantic City funneled to the CRDA.

Some of his hesitance may come from a recent report from the Governor’s Office that challenged the CRDA’s spending on Atlantic City’s behalf.

The report included examples of frivolous spending that did not support the mission of returning the management of Atlantic City to local control. The samples included:

  • An observation wheel on the Steel Pier ($14 million)
  • An art installation on the vacant lot where the Sands Casino once stood ($6 million)
  • Removal of that same art installation ($174,000)
  • Bringing the Miss America Beauty Pageant back to the Boardwalk ($4 million per year)

Gilliam commented on the recent development:

“As mayor, I’m never going to be happy with revenue generated in Atlantic City going to a state agency when it could have been used to help the city. History has shown that marketing money has not been spent wisely.”

Where the CRDA went wrong

Officials created the CRDA in 1984 to handle the large amounts of casino tax revenue due to the state. Its mission is to reinvest the funds in projects, both public and private, primarily to benefit Atlantic City.

What the recent report and the first state audit of the authority in 34 years showed is a mismanagement of funds on a massive scale.

It shouldn’t be surprising the CRDA was mismanaging funds.

The reports found that the CRDA funded projects without establishing performance metrics and modified contracts without board approval.

It also shows the recipients of millions of casino revenue tax monies went to projects that involved state officials and supporters.

At the time of the report, Gilliam said:

“Naturally, being the mayor of Atlantic City and seeing all this money going in different directions and not really being able to benefit the municipality specifically and the neighborhoods in the community that need it most, was very eye-opening. I just don’t see how those misuses of funds helped the city out at all.”

Ironically, the CRDA would have benefitted from using the funds to support and promote Atlantic City aggressively. A busier Atlantic City translates into higher casino revenue, which translates into more tax revenue for the agency.

Can the CRDA be trusted?

Murphy hired Jim Johnson, a former political rival, earlier this year to report on the state’s management of Atlantic City.

The report goes in depth into all aspects of what it will take to revitalize Atlantic City adequately. It is more than just focusing on the casinos. It requires focusing on the people of the city.

The report outlined specific strategies to reign in excessive spending and focus on activities specific to growing Atlantic City. Suggested improvements include a new management structure and the need to establish and monitor systems and processes.

There is no doubt that implementing the strategies in the report will help the CRDA and Atlantic City. Chances are Murphy is not putting more money into the CRDA without correcting the issues discovered.

In the end, the CRDA is still Atlantic City’s best chance of getting out from under state control.