By a 4-1 vote, the commission said Columbia-Sussex and its chief executive officer, William J. Yung III, had failed to meet the state's strict operating standards for financial responsibility, character and integrity.
"In a word, Tropicana's regulatory performance over the past year has been abysmal," commission chairwoman Linda Kassekert said in announcing the decision. She cited, in particular, the casino's failure to create an independent audit committee, a critical regulatory requirement for Atlantic City casino operators.
The commission also imposed its highest fine ever on a casino: $750,000.
Kassekert said the decision should "reinforce the commission's reputation as one of the toughest in the country."
Gaming analyst Andrew Zarnett of Deutsche Bank AG in New York said the commission "is saying: 'Work within the regulations that are set forth. You have the freedom to make business decisions on how to run your business. Disobey the regulations, and the consequences can be significant.' "
The Tropicana had the seventh-largest revenue among Atlantic City's 11 casinos for the first 11 months of 2007. That revenue of $373.5 million was down from $421 million during the same period in 2006, when it was Atlantic City's sixth-largest casino revenue.
Although Columbia-Sussex is a private company, it has public corporate debt, and, after the announcement, the firm's bonds were trading down 10 percent to 15 percent.
Officials said former New Jersey State Supreme Court Justice Gary Stein, who was appointed a year ago as trustee when Columbia-Sussex first applied for an interim casino license, will now be the effective chief executive of the casino until a buyer can assume control.
"The casino will remain open and operating under Stein's direction," Kassekert said.
Columbia-Sussex executives, including Yung, had left the commission hearing room before the decision was announced because their attorneys had informed them of the results.
