Playboy magazine founder Hugh M. Hefner and his Playboy Enterprises Inc. were denied a permanent New Jersey casino license today, casting a giant shadow on his company's future in the Atlantic City gambling market.
The state Casino Control Commission rejected the application of Hefner and Playboy, voting 3 to 2 in favor of the license but with four votes needed for license approval under state law.
The gaming panel did vote 5 to 0 to approve a license for Elsinore Associates, Playboy's partner in the $135 million Playboy Hotel-Casino in Atlantic City. Commissioners Martin Danziger and Carl Zeitz said they voted against Hefner's application because of his alleged involvement in a scheme to bribe two New York state officials to obtain a liquor license for Playboy's New York City club in the early 1960s.
Zeitz said he would consider licensing Playboy if Hefner left the firm. But Danzinger said that possibility was remote since Hefner owns 66 percent of Playboy stock.
After hearings earlier this year, the state Division of Gaming Enforcement urged the commission to reject the license applications of Hefner and Playboy, arguing that a past corporate history of allegedly illegal and unethical conduct left both Hefner and Playboy "unwelcome and unfit" to operate a gambling hall in New Jersey.
The division also had accused Playboy of extensive violations of British gaming law at the firm's three London casinos. Hefner and other officials contended the firm was a victim of "extortion" in New York and said they never knew about the British problems until authorities moved to close the casinos.
The division did not object to a license for Elsinore, which is a subsidiary of Hyatt Corp. of Rosemont, Ill., but asked the commission to require the company to end all loan dealings with a controversial Teamsters pension fund.
For Playboy, the rejection was the latest in a string of financial setbacks that in recent years have led to the closing or sale of several corporate divisions. The company was forced to sell its London gaming operation last year because of the alleged gaming law violations and recently sold its non-casino resort hotels in New Jersey and Wisconsin.