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Casino Gets License Renewed

February 26, 1985

LAWRENCE TOWNSHIP, N.J. (AP) _ A state commission renewed Resorts International Inc.‘s gaming license for its Atlantic City casino Tuesday, rejecting a recommendation by investigators that the permit be revoked because of the owners’ business dealings in the Bahamas.

Those dealings include a total of $421,000 in payments that indirectly reached the Bahamian prime minister when Resorts was negotiating to open a casino hotel in Freeport.

The Casino Control Commission voted 3-1 to renew the license with minor conditions they said were designed to improve internal company controls. The vote capped 12 days of hearings on the Resorts license, which was to expire at midnight Tuesday.

State Attorney General Irwin I. Kimmelman said he would consider appealing the decision to the courts and that questions about the conduct of some of the company’s top executives had not been fully resolved.

The vote was greeted by applause and Resorts attorney Joel Sterns said: ″The conditions are conditions we readily accept ... I am reasonably confident we won’t have these problems with anybody again.″

All four commissioners criticized business practices by Resorts, which opened the first casino hotel in Atlantic City in 1978, a year after the state legalized casino gambling in the seaside resort.

″The evidence presented at this hearing reveals a degree of general corporate laxity and imprudence which, while not so serious as to provide a basis for denying relicensure, is clearly inappropriate for a company operating in this most regulated of all industries,″ said Vice Chairman E. Kenneth Burdge.

Chairman Walter N. Read cast the dissenting vote, saying he ws ″particularly troubled by what I perceive to be a lack of business prudence and financial responsibility.″

He said Resorts’ top officials ″facilitated, even unwittingly, highly questionable payments″ to a Bahamian businessman and ″ultimately to the prime minister.″

In renewing the permit, the casino commisson said that by Resorts’ annual stockholders meeting in May, half of the board of directors must be from outside the company. The five current members of the six-position board are all from within the company.

The casino commission also said that board Chairman James Crosby and President I.G. ″Jack″ Davis must resign from Resorts’ audit committee and that the group must be composed of outside directors.

The hearings focused on payments from Resorts and a group of investors, including Crosby, that indirectly reached Bahamian Prime Minister Lynden O. Pindling in 1980 and 1981.

At the time, Resorts was negotiating with the government Hotel Corp. of the Bahamas, which Pindling heads, to operate a casino hotel.

Sterns said the money was given to Resorts’ lawyers for legal fees on other matters, and company executives did not know the money was being funneled to Pindling.

Thomas O’Brien, the director of the state Division of Gaming, had recommended that the license be revoked. He said the commission could draw ″reasonable inferrences″ that Resorts and its officials knew Pindling was a recipient of the funds.

Pindling has been unavailable for comment and his secretary said Monday he would not be in his office in the Bahamas this week.

The Resorts International Hotel Casino employs about 3,900 people in its $158.8 million Boardwalk facility. During 1984, gamblers lost $256.2 million - about $700,000 a day - at the casino, which has taken in $1.5 billion in gross casino revenues since opening.

The state taxes 8 percent of the money casinos win and Resorts paid $20.3 million during 1984, bringing to $129.2 million the sum the company has added to the fund that is used to defray utility and pharmaceutical bills for the elderly and handicapped.

Had the license renewal been denied, the Casino Control Act provides for appointment of a conservator to run gaming operations while an appeal is pursued or a buyer who could obtain a license is found.

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