Tropicana denied by N.J. panel

New Jersey gaming regulators on Wednesday removed Columbia Sussex Corp. as the operator of the Tropicana in Atlantic City, leaving in question the company's standing in Nevada, where it owns six hotel-casinos.

The New Jersey Casino Control Commission declined to renew the operating license for Fort Mitchell, Ky.-based Columbia Sussex, saying the company failed to meet the state's strict licensing requirements.

In a statement, commissioners, who rejected a recommendation by the state's Division of Gaming Enforcement to give Columbia Sussex a one-year temporary license, said the company showed, "a lack of business ability, a lack of financial responsibility and lack of good character, honesty and integrity."

It is the second time in the 29-year history of legalized gambling in New Jersey that the commission has denied a license.

The casino will remain open under a trustee's supervision. Columbia Sussex, however, will have to seek a buyer, commission spokesman Dan Heneghan said.

In Las Vegas, Columbia Sussex operates the Tropicana and The Westin. The company also owns the River Palms and Tropicana Express in Laughlin and the MontBleu and Horizon in Lake Tahoe.

Nevada Gaming Control Board Chairman Dennis Neilander said Wednesday that state regulators had been monitoring the events in New Jersey. Gaming agents have stepped up a presence in Nevada casinos operated by Columbia Sussex, but internal audits have not found any "material violations" of Nevada gaming regulations, Neilander said.

"We're going to take a look at what New Jersey had done in more detail," Neilander said. "There can be ramifications for a company conducting gaming outside of Nevada that has shown to have willfully violated gaming regulations."

Neilander said New Jersey has several regulatory standards that differ from Nevada, such as a general requirement that the gaming and nongaming portions of the property must be operated under first-class standards.

"It's not defined and I'm not really sure what that means," Neilander said. "We're going to have to take a closer look at what was done in New Jersey and apply our own standards based on those findings."

In Las Vegas, Columbia Sussex has come under fire because the Tropicana is the last union-represented hotel-casino on he Strip that has not reached a collective bargaining agreement with Culinary Local 226, fueling speculation of a strike by the resort's work force. Labor leaders have said Columbia Sussex has eliminated the jobs of roughly 300 union workers at the Tropicana since taking over Jan. 3.

A spokeswoman for Culinary Local 226 declined to comment on Wednesday's events.

Meanwhile, the company has been trying to renegotiate its bank loans while securing financing for a $2.5 billion redevelopment of the Tropicana. The company bought the three Tropicana casinos and a small casino in Indiana when it purchased Aztar Corp. for $2.75 billion in a high-profile bidding war in early 2006.

Deutsche Bank gaming analyst Bill Lerner said interest in the Atlantic City property will be high from potential buyers, but he expects inquiries will also be made as to the availability of the Tropicana in Las Vegas.

"The decision is on a specific property in an outside jurisdiction, so it hard to tell what carryover affect there could be to the Tropicana on the Strip, if any," Lerner said.

The New Jersey regulators also fined Columbia Sussex $750,000 for not having an independent auditing committee for nearly six months -- a crucial requirement under state law.

In a statement, Commission Chairwoman Linda Kasserkert criticized Columbia Sussex President Bill Yung III, saying he, "exhibited a lack of cooperation on a grand scale that did nothing to earn regulatory trust in his ability to operate in this marketplace. Moreover, his decision-making process was seriously flawed."

Since taking over the Tropicana Atlantic City on Jan. 3, Columbia Sussex has eliminated nearly 900 jobs -- about a quarter of its work force. That led to criticism from its largest employee union, as well as many customers, that the cuts left the Tropicana dirty and understaffed.

Paul O'Gara, a lawyer for Columbia Sussex, said the company was disappointed with the ruling and would appeal it to a state appellate court.

Robert McDevitt, president of UNITE-HERE Local 54, which has been locked in a bitter battle with the Tropicana over staffing levels, said union members were pleased.

"They're happy that this company has now been shown in the light of truth," he said. "They've been suffering under this company since January, and now the whole world knows it."

The last time the commission denied a license was in 1989, when the owners of the former Atlantis Casino Hotel were deemed to be too financially shaky.

Review-Journal reporter Arnold M. Knightly and The Associated Press contributed to this report. Contact reporter Howard Stutz at hstutz@reviewjournal.com or (702) 477-3871.