Carl Icahn says the new casino bill is unconstitutional.
The New Jersey State Legislature plan to pass a bill this week to punish billionaire investor Carl Icahn for closing the Trump Taj Mahal in October. If the bill sitting in the General Assembly passes, it will impose a five-year license suspension against anyone who shuts down a casino in New Jersey.
The 5-year rule is going to be retroactive to January 2016. Since Trump Taj Mahal was the only casino closed in the state this past year, it means he is the only casino operator affected.
Believe Icahn Closed Casino to Fire Union
State lawmakers believe Carl Icahn closed the Trump Taj Mahal with the intention of ridding the casino of its troublesome union workers, perhaps with the intention of reopening at a later time without the union’s workers. About 1,000 of the 3,000 employees at the Trump Taj Mahal belonged to the Local 54 of the UNITE-Here union. The Local 54 launched a strike on Fourth of July Weekend 2016 which continued for weeks.
Amidst the strike, Carl Icahn announced that Tropicana Resorts would close the Trump Taj Mahal, effective in October. Icahn and his subordinates blamed the union workers for the closure, while refusing any attempts to keep the casino open.
Key members of the state Assembly suggested at the time of the announcement that Carl Icahn was planning a closure in order to rid himself of the union. Later, he could reopen under a different name and continue his casino operations, because Icahn has an active casino license. He also owns Tropicana Resort in Atlantic City.
Bought Trump Taj Mahal in March 2016
Carl Icahn acquired the property in a bankruptcy court in March. He had controlled the casino’s decision making for over a year prior to the formal acquisition, because he was the casino’s top creditors during its bankruptcy period.
Prior to acquiring control of the Trump Taj Mahal, the casino’s board of directors won a court case against the Local 54. A New Jersey judge gave Trump Entertainment the right to waive most of the workers’ pension and health care benefits, because of the financial distress the casino faced.
Armed with that court decision, Carl Icahn played hardball with the casino over the benefits. While three other Atlantic City casinos agreed to terms with the Local 54 just days before the strike deadline in July 2016, Trump Taj Mahal refused to budge on its terms. One of the three casinos which signed with the Local 54 was Carl Icahn’s Tropicana Resort, though Tropicana did not have the court’s authority to change the collective bargaining contract’s terms.
Icahn Says New Casino Bill Is Unconstitutional
Carl Icahn says the new bill is unconstitutional. That suggests he might challenge the legislature’s proposal in a court of law. Any judge could see that the bill is targeted at one person, but that does not mean it is illegal or unconstitutional to write laws to target those whom the legislature believes are dealing in bad faith.
Icahn also criticized the bill on economic grounds. He said a punitive law would discourage investments in the Atlantic City casino industry in the future. Icahn also hinted that the bill likely would end any desire he might have to reopen the casino, as he highlighted the difficulties it would cause in ever opening the casino again.
Carl Icahn’s Time at Tropicana
The New York City billionaire’s time as the chairman of Tropicana has received rave reviews. When he took over the distressed Atlantic City casino in 2010, it looked like the Tropicana was doomed.
Instead, Carl Icahn invested money in upgrading the casino, while restoring a sense of energy and purpose in the management and staff. Tropicana began to turn a profit in 2015 and is now one of the city’s success stories.
Trump Taj Mahal History
The Trump Taj Mahal opened in 1990 after Donald Trump bought the casino from the head of the Hilton fortune. Throughout the 1990s, the Taj Mahal was a venue for world-class concerts and world championship boxing matches. The casino began to falter in the 2000’s, as Trump Entertainment did not invest in the kind of renovations which would have kept the casino an elite enterprise.
When the Global Recession hit in late 2008 and early 2009, the board of directors forced Donald Trump to resign as CEO. The current president-elect came to a licensing deal with the Trump Entertainment Resorts board of directors to keep his name on the building in exchange for a 10% interest in the casino.
The Closure of Trump Taj Mahal
The problem never went away, though. Faced with lack of capitalization, Trump Taj Mahal began to be seen as a dilipidated property when it came close to closing in November 2014. Instead, Carl Icahn stepped in to keep the casino afloat with a $20 million loan.
At the time, Carl Icahn promised to pay $100 million for renovations for the Trump Taj Mahal. Later, he backed off those remarks when it appeared that the people of New Jersey might vote for the North Jersey casino initiative. At the time, no one assumed he would close the casino.
