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Museum of Gaming History An Educational Project of The Casino Chip & Gaming Token Collectors Club, Inc. An IRS approved 501 (c) (3) Tax Exempt Not-For-Profit Corporation
Dedicated to the preservation and education of Gaming History
Gaming in Atlantic City..............
A History of Legal Gambling in New Jersey -
Part Three -- By Stephen Piccolo
In the spring of 1977, Clifford Perlman and other members of Caesars
Board of Directors spent two days in Atlantic City meeting with state and
county officials. Before long an announcement was made that Caesars would be
coming to Atlantic City and would build a major new facility. This came just
eight days after the state of Nevada passed a law allowing Nevada casino
owners to invest in gaming outside the state of Nevada. I believe this
rescinded the law passed in the late 1950's when Cuba was threatening to take
business away from Nevada. Many operators were saved by this law as the
revolution in 1960 would have cost them millions.
Instead of starting from scratch, Caesars leased the eleven year old
Howard Johnson's Regency Motor Hotel. Caesars then announced that it would
re-model the existing 425 room structure into a modern facility and add 123
rooms in a new five story tower plus a 52,000 square foot casino with
extensive recreation, convention and shopping areas. The cost to Caesars was
between $50-$100 million. Caesars did save millions of dollars and precious
time by being allowed to renovate and expand rather than start from scratch.
The Commission cited the "relatively new construction" of the Howard
Johnson's facility in allowing Caesars to renovate which was contrary to what
the governor's office wanted. Once complete, the property was named Caesars
Boardwalk Regency. In May of 1979, Caesars was granted a temporary license to
operate after Clifford Perlman agreed to relinquish most of his New Jersey
activities. Temporary licensing was granted to many operators in the early
days to speed up the openings of the casinos before the long process of
permanent licensing was complete. Now a little background into the beginnings
of Caesars World.
In May of 1956, brothers Clifford and Stuart Perlman invested $12,000
in a Miami Beach hot dog stand and in five years had expanded it into a fast-
food chain called Lum's. Eight years later Lum's bought out Caesars World
Inc. And in ten years the company mushroomed into a half-billion dollar
gaming empire. When the Perlman's first took over Caesars in 1969, the only
casino it owned was Caesars Palace in Las Vegas which opened three years
earlier in 1966. Caesars, at the time, had a savory past which seemed to
continue under the Perlman's ownership. A few shady real estate deals
involving the Perlman's would end up as their downfall in New Jersey.
The Boardwalk Regency opened its doors on June 26, 1979 thus ending the
monopoly Resorts had enjoyed on the boardwalk, and was an immediate success.
Caesars operated for fourteen months on the temporary license when its
hearings for a permanent license finally began in September of 1980. The
hearings went on for six weeks with the DGE (Division of Gaming Enforcement)
bringing up the Perlman's past dealings with "unsavory" characters and their
possible mob connections while the attorneys for Caesars calling in witness
after witness attesting to the excellent reputation and sterling character of
the Perlmans. On the final day of the hearings, the state charged that four
directors of Caesars World, Clifford and Stuart Perlman, William McElna and
Jay Lishaw were unsuitable for licensing. Together these four individuals
controlled twenty percent of Caesars stock. One week later the Commission
rendered its decision.
Caesars Boardwalk Regency was granted a permanent license on the condition
that Clifford and Stuart Perlman were placed on immediate, unpaid leave from
any position in the company. They agreed to a one month leave and appealed
the decision to the courts which upheld the Commission's ruling. McElna
resigned and sold his stock to the Perlmans. The fight with the Commission
dragged on till December of 1981 before Caesars and the Perlmans came up with
a solution that the Commission found partly satisfactory. Caesars World
agreed to buy back the Perlmans stock and Clifford Perlman was to be retained
as board chairman and CEO of Caesars Palace in Las Vegas with an annual pay
of $350,000. The Commission approved of the stock buy-back plan but denied
the employment clause. The Perlmans were out and Caesars stayed in New
Jersey. It's ironic that in April of 1983, the Nevada Gaming Commission found
the Perlmans suitable for a gaming license when they attempted to buy the
Dunes Hotel in Las Vegas. This was just one of the "differences of opinion"
between Nevada and New Jersey Commission rulings.
Caesars also bought the old Traymore Hotel, raised it, and had plans to
build another "Caesars Palace" on the site. This never came to pass. In 1987,
the "Boardwalk Regency" part of the name was dropped and the property became
known as just Caesars Atlantic City. In 1994, ITT Sheraton purchased all of
Caesars World and had no problem in obtaining a New Jersey license. They have
since announced a major addition to the Atlantic City Caesars to expand the
number of rooms at the hotel. As we head into the late 90's, Caesars has
firmed up its position as one of the top casino operators in Atlantic City.
In June of 1977, Bally incorporated a New Jersey subsidiary and later
one in Delaware, both named Bally Park Place, with the parent company holding
83% of the shares in the new subsidiary offered by the end of 1979. Bally
came to Atlantic City with the usual fan fare. Bally bought the old
Marlborough-Blenheim hotel and leveled the place in no time. Hoards of
construction workers were working around-the-clock to build what Bally's
promised to be the most expensive and extravagant casino complex on the
boardwalk. Again going against the state's mandate to build "new" hotels,
Bally paid $4 million for the old Dennis hotel and spent another $7 million
to restore 507 of its rooms to qualify for the 500-room minimum required by
the state. To Bally's credit, the commission, after touring the complex
before opening were extremely impressed with the renovation job Ballys had
done on the old Dennis. The projected cost of the entire project was $160
million for the new casino, restaurants, theater and the restoration of the
Dennis. What it ended up costing, according to Bally, was $300 million plus.
All was ready in early December 1979. All Bally needed to do to obtain a
temporary license was to have it's board chairman, William T. O'Donnell, step
aside and sever all ties to Park Place and Bally Manufacturing and place his
stock in a voting trust till the commission completed its investigation.
Bally's European representative, Alex Wilms and his family were to do the
same. Once again a company had to remove its chief executive to operate in
Back in 1946, William O'Donnell became sales manager for Lion
Manufacturing, a manufacturer of slot machines. In 1962, Lion became
available for purchase so O'Donnell and six other `visible owners' each put
up $200,000 plus they borrowed $1.2 million to close the deal. In March of
1968, O'Donnell and the others decided to go public with the company. To
sever all ties to Lion's checkered past, the company name was changed to the
Bally Manufacturing Corporation. After an investigation, the SEC reported
Bally was free of mob money and approved its stock offering.
Over the next fourteen years - through alleged mob links and
unscrupulous business practices - Bally took the old Lion company from
the verge of bankruptcy to a giant, multinational corporation with
annual revenues of nearly $400 million. Beside slots and pinball
machine sales worldwide, Bally had an estimated 80% of the domestic
slot market. By 1977, O'Donnell was the only one of the original
investors on Bally's board of directors when it initially aimed for a
spot on the boardwalk.
The DGE investigation took two and one-half years to complete.
During that time, Bally began to do a few things to polish its image
and garner some positive publicity by going out and hiring people who
would make a difference. Bally also contributed to many charitable
organizations that were in desperate straits, all highly publicized.
Replacing O'Donnell as chairman and president of Bally was Robert E.
Mullane. Bally's Park Place opened under its temporary license on
December 30, 1979. It would be another year before hearings would begin
on its permanent license. During the hearings, the state won out again
as O'Donnell was forced to sell his stock back to the company and Bally
received its permanent license. This made two of the first three
companies that had to have its chief officer(s) sell off their stock
and totally divest themselves from the company in order to do business
in Atlantic City.
During Ballys initial construction, a number of design elements
were included that would ease future expansion. Part of this expansion
was the 1989 opening of the Tower at Bally's Park Place. The tower
added 800 rooms to Park Place's inventory and made Park Place the first
hotel/casino in Atlantic City to surpass 1,000 rooms. Just this year,
Bally was sold to the Hilton Corporation. It will be interesting to see
what changes/improvements the Hilton people will have in store for
Next issue : The Brighton and Harrah's Marina - casinos #4 and