Mass. couple promote new craft beer business model

BELMONT, Mass. — Kate Baker and Suzanne Schalow founded Craft Beer Cellar in Belmont in 2010, and today, at any given time, its 1,500 square feet of retail space are filled with more than 1,000 beers from 350 breweries. Beers are organized by region, from Worcester to the West Coast, with an emphasis on local brews. Employees have jobs like Head Beer Geek, Ambassador of Fine Ales and Lagers, and Hoptologist and wear hooded sweat shirts emblazoned with the words "Beer Geek."

"People take two steps in the door and they don't know how to proceed," says Brian Shaw, who opened a Craft Beer Cellar in Newton Centre recently, joining franchises in Winchester, Westford, and Braintree. "People say, 'Oh my God, I didn't know there was this much beer.'?"

Is there ever. And now Baker and Schalow are betting their model can work elsewhere as they expand to New Hampshire and Vermont, as well as Florida, St. Louis, and maybe Seattle. Their goal is to make people think about whether to buy a Pretty Things Jack D'Or or a Sierra Nevada Pale Ale as carefully as they would wrestle between a cabernet or a merlot.

It is a risky quest. Despite craft beer's popularity boom, creating a national franchise of specialty beer stores has not been done. One reason could be that craft beers accounted for only 10 percent of the dollars in total beer sales in the United States in 2012.

Craft Beer Cellar stores carry flavorful ales and lagers that are brewed to traditional standards and can be hard to find.

Baker and Schalow prefer to focus on other numbers, like the 2,403 brewers that operated in the United States in 2012, the most since the 1880s, according to the Brewers Association. Schalow and Baker hope to capitalize on this explosion by packing each small, service-oriented store with carefully curated beer while leaving out nips, cigarettes, and jugs of wine.

"Beer store is still not a 'category' in the world," says Schalow. "No one has done this. No one has put everything on the line and said, 'I can teach people about great beer.'?"

Schalow and Baker, partners in life as well as business, met in 2002 when Schalow, then a manager at Cambridge Common restaurant, hired Baker. The first beer Baker consumed in front of Schalow was a Budweiser.

"I almost fell over," Schalow says.

Around that time, Schalow wanted to take Blue Moon, a MillerCoors product, off the bar's tap list. When ownership said no, she challenged her staff to "sell the heck" out of something else, and Magic Hat's Circus Boy, a craft beer, eventually replaced Blue Moon.

Baker and Schalow married in 2010, and the couple decided that year to leave the restaurant and open the beer store.

"When I told her craft beer store, she was a lot supportive and a little skeptical," says Schalow. "I told her, 'If we make it amazing, they will come, it doesn't matter where it is.'?"

The pair have scoured the region looking for craft beer from hard-to-find brewers. Stores carry multiple styles from brewers like Northampton's Brewmaster Jack, Everett's Night Shift Brewing, and Plymouth's Mayflower Brewing, as well as beers from Belgium, Italy, and France.

"It's all about building and cultivating the relationships," says Baker. "And it could be with a distributor, or a bartender, or a homebrewer who has visions of creating their brewery."

"They're really in tune with the culture of craft beer," says Mark Vasconcelos, craft brand manager for Burke Distributing, a Massachusetts company that delivers 37 craft brands to stores around the state, in addition to larger brands like Coors Light. "They're proactive in letting us know if there's something that's going to be in demand by the consumers."

Carrying 350 beer brands is not without challenges. "Beer is the least marked up drinkable thing," Baker says. "There's a reason why no one has done this before."

A big reason is that light beer, in particular, remains hugely popular.

"We celebrate the beer renaissance currently taking place, and we are proud to offer beer drinkers a portfolio of great beers for every drinking occasion," Karina Diehl, a spokeswoman for MillerCoors, said in a statement. "Light beer is the largest segment in the American beer industry for a reason."

John Libonati and Chris Schutte own Social Wines in South Boston, which carries only premium beer, but also wine and spirits. They acknowledge the higher markups on wine make it easier to not carry the big-name beers.

"The growth of the craft beer market right now isn't being fueled by people who only want beer," says Jeff Wharton, co-founder of DrinkCraftbeer.com. "I think the world is ready for more liquor stores with a craft beer ethos."

Craft beer, by definition, means small, independently owned, and brewed to traditional standards; it accounted for 6.5 percent of the volume of all beer sold in 2012, according to the Brewers Association. Schalow knows craft beer is not yet on everyone's radar.

"We're the crazy hippies with the headbands, screaming and shouting and carrying the torches," she says.

To better reach the masses, the store has tried to engage potential customers through social media. Lee Movic, who runs Craft Beer Cellar's social media accounts, positions himself as an advocate for craft beer, not just the store. Movic attends events, even for competing stores, pushing craft. He tweets about those events, new beer arrivals, and generally positive messages like, "Good morning, beer geeks. We hope you have a great day today."

He is luring new customers the only way he knows how. "Everyone loves great customer service," he says, "so we start with that."

Franchising was not always the plan, says Baker. The pair spent "close to 50 hours" scouting store locations in St. Louis before hiring a real estate developer to help. They admittedly don't know the Brandon, Fla., market as they know Belmont. Selecting new franchise sites and owners has taken them away from their base.

"The first couple months were humbly painful," says Schalow. She says the store's regular customers weren't used to seeing them less.

Movic says the store's brand is intrinsically linked to Baker and Schalow. "But it is already becoming much more than that," he adds.

Despite early challenges, the owners — with a staff of about 30 people and growing — remain devoted to spreading their motto of "Don't drink crap beer." Schalow talks in great detail about educating her staff and the public ("If you can't buy good beer from me, just buy good beer," she says), and several staffers eagerly share their "a-ha" moments of talking dazed and confused customers "down from that scary place" and converting them into regulars.

Shaw, the Newton Centre store owner, says business has been brisk since the opening on Oct. 30. Kay Lorenz, one of the owners of the Braintree Craft Beer Cellar, says she has "been welcomed with open arms" by neighboring retailers. On a day in late November, a new 20-something employee introduced himself to Schalow on his first day.

"This is so much fun," he says, his voice rising in pitch with excitement. "I just love working here!"

Schalow smiles. "You'll fit right in."

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‘First look’ gives homebuyers an edge over investors

WASHINGTON — An important resource for first-time and other homebuyers who find themselves in unfair competition with deep-pocket investors bearing cash just got better: The two biggest players in the mortgage market, Fannie Mae and Freddie Mac, are now giving non-investor shoppers 20-day exclusive rights to bid on and buy new listings they are selling.

During the 20-day "first look" period, investors will be excluded from submitting bids. To qualify, non-investor buyers will need to commit to make the home their principal residence for at least a year. The idea, according to Fannie and Freddie officials, is to encourage greater owner-occupancy, stabilize neighborhoods that have seen significant numbers of foreclosures and generally help out shoppers who find it difficult to outbid all-cash investors.

All-cash purchases of homes hit a high mark last month, according to a new report from RealtyTrac, a housing data firm. A stunning 42 percent of all residential sales nationwide went to buyers who paid cash — the highest rate since RealtyTrac began measuring the phenomenon in early 2011, and nearly double what it was as recently as May.

First-time buyers looking for affordably priced homes have been hit especially hard by the profusion of investors waving cash at sellers. They locate a home that fits their budget, make an offer with a mortgage contingency and then lose the sale to an investor who has no financing requirements. A mortgage contingency ties the contract to the ability of the bidder to obtain a loan, which slows the process and often makes the offer less attractive to the seller.

Fannie and Freddie have large inventories of previously foreclosed homes for sale — byproducts of the economic woes of 2008-10. As of last week, Fannie had roughly 35,000 houses listed for sale around the country through its "HomePath" (HomePath.com) program. Freddie Mac had 13,000 active listings in its "HomeSteps" (HomeSteps.com) program. Buyers can access the listings online by state, city and price range, then submit offers through a participating realty agent.

In California, for example, Fannie had 2,136 properties listed, many below $200,000. Current listings range from a $139,000, two-bedroom single-family house in Big Bear City to a $700,000 three-bedroom home in South San Francisco. In Washington state, Fannie had nearly 1,900 listings. Shoppers in Virginia had 742 houses to choose from. Freddie also has active listings in every state through HomeSteps, ranging from a three-bedroom single-family home in Key Largo, Fla., for $485,000 to a $99,900 condo in Silver Spring, Md.

Both companies offer mortgage deals on some, but not all, properties. Freddie's financing includes features such as 5 percent down payments, no required appraisals, and no mortgage insurance. Freddie also provides up to $500 toward new purchasers' home warranty policies.

Fannie's financing deals start at 5 percent down with no mortgage insurance or appraisal costs. HomePath listings that need some fix-up may also be eligible for "renovation mortgages," where the loan amount includes funds for the purchase itself plus the estimated money needed for improvements.

Here's the deal on "first look" exclusions of investors from bidding. On all homes listed on or after Dec. 17 (Freddie) and Jan. 2 (Fannie), owner-occupant buyers will get a shot at viewing houses and submitting bids with no competition from investors for 20 days after listing. Currently the exclusion is for the first 15 days.

If Fannie or Freddie receives acceptable offers from owner-occupant bidders, they will sign contracts to sell without seeing any competing bids from investors. Chris Bowden, Freddie Mac's senior vice president for HomeSteps, said the extra time for exclusive bidding could be "especially important for buyers in markets where home inventories are shrinking."

So if you or someone you know is thinking of a home purchase, check out HomeSteps and HomePath listings online. If you qualify and keep your eye on the clock, you just may get a chance to buy a new home with mortgage terms you can afford — without worrying about fat-cat investors muscling in and outbidding you with cash.

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Market Basket’s CEO blasts board’s website

Market Basket CEO Arthur T. Demoulas has taken the grocery chain's contentious board to task over alleged inaccuracies on a website that it's using to communicate with workers.

In a letter to chairman Keith Cowan that Demoulas shared with employees, he stated his opposition to the "unprecedented" website and highlighted information on it that he said is significantly "wrong." He also asked the board to shut down the site.

"I am completely opposed to the board having a website," Demoulas said in the letter to Cowan. "Any company should speak to its associates, its customers and the public through its CEO. I urge you to promptly either close the website or, at a minimum, fix the site and eliminate the half-truths and inaccuracies."

Demoulas said the site takes the position of so-called "A" directors aligned with his rival, Arthur S. 
Demoulas, who waged an earlier campaign to remove his cousin from the CEO's post and rein in his duties amid a long-running family feud.

The board, meanwhile, has made only one of Demoulas' recommended changes to the site's "frequently asked questions" page, but updated others. It acknowledged that it's hired an executive search firm to "assure that both corporate succession planning and the identification and development of additional executive talent is an integral part of long-term planning ... The search firm is not looking for a new president."

The board has no intention to take down the site, according to a board spokeswoman. "The board has made it clear why it created the website, and the board will continue to use this vehicle to provide factual information to the company's stakeholders," she said.

A spokeswoman for 
Arthur T. Demoulas said he declined comment. In his letter to employees, Demoulas said he was forwarding the Cowan letter to "set the record straight."

"It is important that when the company decides to communicate with its associates, it do so truthfully," he said in the letter.

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Briar Group card breach investigated

An investigation of a new credit card security breach at the Briar Group will include ensuring the Boston restaurant chain complied with security measures outlined in a settlement with the state Attorney General's office after a 2009 data breach.

As part of its probe of reports that thieves had stolen and used the credit card information of Seaport District workers and visitors, the Attorney General's office said it had urged the Briar Group to determine if its payment system had been illegally accessed.

"We continue to work with the Briar Group and will review the findings of its internal investigation now that a breach has been determined in its systems," Christopher Loh, a spokesman for Attorney General Martha Coakley, said in a statement. "Data breaches are a serious concern, and we expect the Briar Group to assist consumers impacted by this breach."

The Briar Group, whose 10 restaurants and bars include Ned Devine's, Harp and Anthem, as well as M.J. O'Connor's and City Bar in the Seaport District, said that hackers had gained access to its customers' credit card information.

The company has not pinpointed the exact dates of the latest breach, but believes it occurred from sometime in October to early November. It also couldn't confirm yesterday how many customers were affected. A Briar Group spokeswoman said it was in compliance with both the settlement agreement and payment card industry data security standards.

"We feel confident that, based on the information we know to date, that it's no longer possible for the person who originally infiltrated this system to continue taking data," spokeswoman Diana Pisciotta said.

In 2011, the Briar Group agreed to pay $110,000 to settle a lawsuit filed by Coakley for its failure to secure customers' personal information during the 2009 security breach. A malicious software code had been installed on its point-of-sales computer system that April and was not removed until December. The judgment required the Briar Group to comply with Massachusetts data security regulations and the PCI standards, and to set up and maintain an enhanced computer network security system.

"We've put in completely new security systems and are working regularly with a company called McGladrey, who updates our system on a very regular basis," Pisciotta said.

McGladrey started investigating a possible breach in mid-November and installed additional security safeguards at that time, said Pisciotta, who had no information to share about the source of the breach and how it occurred.

The company is not offering free credit monitoring for affected customers.

The breach follows a massive one announced Dec. 19 by Target Corp. in which hackers got access to up to 40 million customer credit and debit cards from Nov. 27 to Dec. 15.

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In governor's races, Democrats eye wage increase

HARRISBURG, Pa. — Republican governors running for re-election next year are looking to capitalize on distaste for Washington gridlock and President Barack Obama's dropping public approval amid the bumpy rollout of his signature health care law — and Democratic challengers may need to respond with a popular cause.

A minimum wage increase could be the answer.

Democrats vying to challenge a slew of Republican governors, particularly those seeking re-election in states that Obama won last year, are talking up an increase as their campaigns get off the ground 11 months before the election.

Polls say it's publicly popular, it revives the message of economic inequality that Obama wielded effectively last year, and it comes wrapped in a broader jobs and economic message that touches on the top priority of many voting Americans.

In Pennsylvania, championing a minimum wage increase is already popular among the big field of Democrats vying to challenge the re-election bid of Gov. Tom Corbett.

Now, Katie McGinty, a onetime environmental policy adviser to the Clinton White House and Corbett's Democratic predecessor, is distinguishing herself by telling audiences and potential donors that she was the first Democrat in the Pennsylvania field to make it an issue.

"This is core for me," McGinty said. "I think it is fundamentally true across the centuries that one of the things that can really bring a nation down is the increasing chasm in terms of income."

Thus far, the Republicans whom Democrats view as most vulnerable aren't changing their minds and supporting it.

In addition to Corbett, the Democrats' list of most vulnerable includes Maine's Paul LePage, Michigan's Rick Snyder and Wisconsin's Scott Walker. Florida's Rick Scott and Ohio's John Kasich might be insulated because their states' laws boost minimum wage with inflation and Iowa's Terry Branstad, New Mexico's Susanna Martinez and Nevada's Brian Sandoval aren't viewed as sufficiently endangered.

All of those governors won a first term in the national Republican sweep of 2010, and most have had strong Republican representation in their legislatures to support them.

But LePage was tasked with facing a Democrat-controlled legislature, and in July he vetoed a bill to incrementally raise the state's minimum wage.

For his likely Democratic challenger, U.S. Rep. Mike Michaud, increasing the minimum wage is an issue the onetime paper mill worker from northern Maine discusses often, said campaign adviser David Farmer.

"He is closely aligned with working- and middle-class families," Farmer said. "He's not a millionaire."

Still, it would not be unheard of for a Republican to advocate a minimum wage increase. New Jersey Gov. Chris Christie, who leads the Washington, D.C.-based Republican Governors Association, and New Mexico's Martinez each vetoed their legislature's minimum wage bill, but not without making a counteroffer of a more modest increase.

Republican governors are focused on lightening tax and regulatory burdens for businesses to improve wages, said Jon Thompson, a spokesman for the Republican Governors Association. But he also seemed to acknowledge the occasional political necessity for Republicans to embrace a minimum wage increase.

"It's complicated because there are some states that a minimum wage increase could be more helpful and useful than other states," Thompson said in an email.

For Democrats, campaign advisers and strategists say there's no mandate from national party leaders to wield the issue as a weapon next year. But there's no denying it's popular and salient to the political battlefield, said Danny Kanner, spokesman for the Democratic Governors Association.

"The defining issue in every single one of these races is who is fighting for the middle class," he said.

Democrats are pairing their advocacy of a minimum wage increase with criticism of cuts to corporate tax rates, public pensions or education aid that Republican governors pushed through. They also contend that it'll revive the economy by flushing more money into the hands of consumers who spend it and reduce reliance on food stamps or other government programs for the poor.

If vulnerable Republicans aren't budging on the issue, neither are the big-business groups that tend to back them. The U.S. Chamber of Commerce warns that small employers will have the hardest time absorbing higher labor costs, while the National Federation of Independent Business warned of job losses.

"We're not going to waver," said NFIB spokeswoman Jean Card. "It's the kind of thing that sounds good, but rarely are polling questions backed up with the kind of economic downside that's inevitable."

For Democrats, Obama got the ball rolling on the issue by calling for an increase in his February budget speech, and union-organized demonstrations in front of profitable mega-chains such as Wal-Mart and McDonald's have kept it in the public eye.

And it's not only a popular issue with the labor unions that often provide money and volunteers to help power Democrats' campaigns — the public warmly embraces it, too.

An NBC News/Wall Street Journal survey this month found that more than six in 10 voting-age adults said they would support an increase of the federal minimum wage from $7.25, where it was last raised in 2009, to $10.10 an hour. Support to raise it to $12.50 fell to about four in 10 and fewer than three in 10 supported an increase to $15 an hour. A CBS News poll in November found that just one in four would like the federal minimum wage to remain at $7.25.

Some Democrats may nevertheless approach the issue with caution.

Mary Burke, who is expected to win the Democratic nomination to challenge Wisconsin's Walker, said she supports legislation there to increase the minimum wage by a relatively modest 35 cents an hour to $7.60.

Beyond that, the former state commerce secretary and daughter of Trek Bicycle's founder said a gradual and fair increase in the minimum wage could avoid economic harm. While she wasn't prepared to say what that is, the subject will be prominent in her campaign, Burke said.

"This race is going to be about jobs and people being able to support themselves," Burke said, "and that is an important way we can help more people move toward economic independence."

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Report: NSA intercepts computer deliveries

LONDON — A German magazine has lifted the lid on the operations of the National Security Agency's hacker unit, revealing how American spies intercepted computer deliveries, exploited hardware vulnerabilities, and even hijacked Microsoft's bug report system to spy on their targets.

Der Spiegel's revelations relate to a division of the NSA known as Tailored Access Operations, or TAO, which is painted as an elite team of hackers specializing in stealing data from the toughest of targets.

Citing internal NSA documents, the magazine said Sunday that TAO's mission was "Getting the ungettable," and quoted an official as saying that TAO had won "some of the most significant intelligence our country has ever seen."

Der Spiegel has published a series of NSA stories based on documents leaked by former intelligence worker Edward Snowden.

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Worker abuse by diplomats a problem, advocates say

NEW YORK — The arrest of an Indian consular official in New York accused of forcing her maid to toil for little pay has highlighted a problem advocates say is all too common — workers for foreign governments who bring along the baggage of human trafficking to the U.S.

Anti-trafficking lawyer Dana Sussman says the claims of abuse are made against international workers of all levels. She is representing the housekeeper.

The most recent case has caused tension between the U.S. and India. The country's deputy consul general in New York was arrested on charges accusing her of lying on a visa form by stating she paid her housekeeper $4,500 a month, but actually paid her less than $3 per hour.

She has denied the charges.

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Pitfalls abound as legal pot sales begin

DENVER — Colorado and Washington state are launching the world's first legal recreational marijuana markets in 2014. Though pot has been sold for three decades at coffee shops in the Netherlands, the two states are the first to regulate and allow a full industry.

Being first to allow growing it, processing it and selling it doesn't come without risks. The states face plenty, from a potential crackdown over a drug that's still illegal under federal law to threats to public health.

A look at some of the pitfalls the two states will want to avoid as Big Weed tries to go mainstream:

YOUTH USE: The U.S. Department of Justice has told the states it won't interfere with state marijuana laws as long as they keep the drug away from those without permission to use it. Top of that list: children. Neither state will allow people under 21 to buy pot.

HEALTH: Some doctors warn that increased marijuana use will result in more emergency-room visits. There's not enough data to show if that is happening, though some hospitals have reported spikes in child admissions for pot overdoses. With no Food and Drug Administration oversight, the two states are producing their own product-safety standards to make sure pot is as potent as labeled and doesn't contain harmful molds or other contaminants.

SMUGGLING: The states have also been told they must keep legal pot out of other states and off federal property. That's no small task in Western states with huge swaths of federal property, such as parks and ski areas. The states will allow visitors to buy pot, but also warn them about where they can and can't take it.

CRIME: Legalization opponents say residency requirements won't prevent criminal cartels from setting up straw-man growing operations. The states also have tracking systems to make sure what is grown ends up sold legally. Colorado, however, also allows people to grow pot at home, making it impossible to keep track of where it is coming from and where it's going.

DRIVING: The states set up marijuana analogies to drunk-driving laws, setting driver blood limits for pot's psychoactive chemical, THC. The laws are new, and it's too soon to say whether legal pot has made highways more dangerous in Colorado and Washington. Both states report seeing more positive driving-high tests, but it's not clear whether that's because of increased driver use or increased testing.

TAXES: Nobody knows how and at what level to tax marijuana. Too low, and the states won't be able to afford intense regulatory supervision of the industry. Too high, and pot users may stay in the black market.

DEMAND: Guessing marijuana demand is a tricky proposition. Colorado growers warn that early demand could lead to sky-high prices and shortages, with state production caps still uncertain. In Washington, regulators are taking a new look at supply needs after a recently released study produced a demand estimate that far outstripped earlier guesses.

BANKING: Marijuana legalization hasn't taken away one black-market aspect for the drug in Colorado and Washington: Cash runs the business. Financial services as simple as checking accounts and credit cards are off-limits because of federal guidance to financial institutions. Colorado officials say they're optimistic the U.S. Treasury Department will loosen those rules next year, but it's unclear what that would look like.

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Federal health market surpasses 1 million signups

HONOLULU — A December surge propelled health care sign-ups through the government's rehabilitated website past the 1 million mark, the Obama administration said Sunday, reflecting new vigor for the problem-plagued federal insurance exchange.

Of the more than 1.1 million people now enrolled, nearly 1 million signed up in December, with the majority coming days before a pre-Christmas deadline for coverage to start in January. Compare that to a paltry 27,000 in October —the website's first, error-prone month — or 137,000 in November.

The figures tell only part of the story. The administration has yet to provide a December update on the 14 states running their own exchanges, as the new online insurance markets are called. While California, New York, Washington, Kentucky and Connecticut have performed well, some are struggling.

Still, the end-of-year spike suggests that with HealthCare.Gov now functioning better, the federal market serving 36 states may be starting to pull its weight. The windfall comes at a critical moment for President Barack Obama's sweeping health care law, which becomes "real" for many Americans on Jan. 1 as coverage through the exchanges and key patient protections kick in.

"We experienced a welcome surge in enrollment as millions of Americans seek access to affordable health care coverage," Marilyn Tavenner, the head of the Center for Medicare and Medicaid Services, said in a blog post.

The fledgling insurance markets are still likely to fall short of the administration's own targets for 2013. That's a concern because Obama needs millions of mostly younger, healthy Americans to sign up to keep costs low for everyone. Officials had projected more than 3.3 million overall would be enrolled through federal and state exchanges by the end of the year.

Tavenner said fixes to the website, which underwent a major overhaul to address widespread outages and glitches, contributed to December's figures. But the problems haven't totally disappeared. Thousands of people wound up waiting on hold for telephone help on Christmas Eve for a multitude of reasons, including technical difficulties.

"We have been a little bit behind the curve," acknowledged Rep. Joaquin Castro, D-Texas, whose state has the highest proportion of uninsured residents. Nonetheless, the strong December sign-ups send a message. "The Affordable Care Act is something that's good for the country," said Castro.

"Obamacare is a reality," conceded one of the law's opponents, Rep. Darrell Issa, R-Calif., who as House oversight committee chair has been investigating the rollout problems. However, he predicted it will only pile on costs.

"The fact that people well into the middle class are going to get subsidies is going to cause them to look at healthcare...sort of in a Third World way of do we get subsidies from the government for our milk, for our gasoline and, oh, by the way, for our healthcare," said Issa.

For consumers who successfully selected one of the new insurance plans by Dec. 24, coverage should start on New Year's Day. That's provided they pay their first month's premium by the due date, extended until Jan. 10 in most cases.

But insurers have complained that another set of technical problems, largely hidden from consumers, has resulted in the government passing along inaccurate data on enrollees. With a flood of signups that must be processed in just days, it remains unclear whether last-minute enrollees will encounter a seamless experience if they try to use their new benefits come Jan. 1.

The White House says the error rate has been significantly reduced, but the political fallout from website woes could pale in comparison to the heat that Obama might take if Americans who signed up and paid their premiums arrive at the pharmacy or the emergency room and find there's no record of their coverage.

Officials are also working to prevent gaps in coverage for at least 4.7 million Americans whose individual policies were canceled this fall because they fell short of the law's requirements. The administration has said that even if those individuals don't sign up for new plans, they won't face the law's tax penalty for remaining uninsured.

The new enrollment figures were released Sunday while Obama was vacationing in Hawaii. Although the president has spent most of his time relaxing with friends and family, he stepped into work mode late Friday for an update from aides on his signature domestic policy achievement. The White House said Obama told his team to focus on minimizing disruptions for those switching plans.

A few states offering their own updates have also posted encouraging totals, including New York, where more than 200,000 have enrolled either through the state exchange or through Medicaid, a government program expanded under Obama's health law to cover more people. In California, a tally released Friday showed nearly 430,000 have enrolled through the exchange so far.

A key indicator of whether state-run markets are keeping pace with the federal exchange will come next month, when the administration releases full December figures. Overall, the goal is to sign up 7 million people before the first-year open enrollment period closes at the end of March.

Castro and Issa spoke on NBC's "Meet The Press."

___

Reach Josh Lederman at http://twitter.com/joshledermanAP

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'14 starts ominously for NJ casinos as gov watches

ATLANTIC CITY, N.J. — The new year is a crucial one for Atlantic City's future, and 2014 won't start auspiciously.

This is the fourth year of a five-year grace period New Jersey Gov. Chris Christie has given the seaside gambling resort to turn around its struggling fortunes before considering expanding casinos to other parts of the state — something casino executives fear will decimate the already wobbly market.

And it will begin with the closing of one of the city's 12 casinos, the Atlantic Club Casino Hotel, which is shutting its doors on Jan. 13, the victim of a takedown in bankruptcy court. Two national gambling companies with casinos in Atlantic City, Tropicana Entertainment and Caesars Entertainment, are paying a combined $23.4 million for the business, and the right to strip it for parts and close it down.

Tropicana is taking the slot machines, table games and customer lists, while Caesars is getting the property and its 801-room hotel. Neither has any desire to operate the casino in the now diminished Atlantic City market.

In remarks made the day before the Atlantic Club closing was announced, Christie said 2014 is time for Atlantic City to start putting up measurable results.

"It's obviously a critical year because we need to begin to see progress in Atlantic City or we're going to start considering alternatives," he said. That means considering the once-unthinkable: allowing casinos at the Meadowlands sports complex in northern New Jersey and possibly elsewhere in the state. Currently, state law restricts casino gambling to Atlantic City, along the state's southern coast.

"It's a year when we have to show some significant results," Christie said.

The state legislature wants to approve a commission to study the impact of gambling at the Meadowlands.

"Frankly, New Jersey's gaming industry in Atlantic City is at a crossroads," Tony Rodio, president of the Tropicana Casino and Resort and head of the Casino Association of New Jersey, wrote in a letter to state lawmakers earlier this month opposing the gambling expansion study.

He cited private investment in nongambling attractions like the Steel Pier amusement park, the Margaritaville restaurant and entertainment complex, and the downtown outlet shops; a five-year, $150 million casino-funded advertising and "Do AC" re-branding campaign; and the state-run tourism district focusing additional police and sanitation efforts along the Boardwalk, beach, shopping and marina areas. That progress will be jeopardized if investors think cheaper, convenience-based casinos will pop up in other places.

Many casino workers and outside observers fear the Atlantic Club closing could be the first of several in a resort that analysts have long said has too many casinos to support in a shrinking Northeast gambling market. Wayne Schaffel, a former Atlantic City casino publicist in the 1980s, sees more of the same on the horizon, particularly with rival companies preying on weaker competitors.

"It is very likely that this same strategy will be used to take out Trump Plaza, perhaps the Golden Nugget and maybe even the Showboat," he said. "It will undoubtedly shore up the balance sheets for the remaining 8 to 11 properties, but it will also take out anywhere from 1,500 to 3,000 rooms. At the end of the day, the winners will be the few remaining casino companies. The losers will be the thousands of employees who lose their jobs; the state, which will suffer from ever lower revenue and taxes, and Atlantic City itself."

And the $2.4 billion Revel Casino Hotel could be sold or make a second bankruptcy filing this year.

This will be the first full year of Internet gambling in New Jersey, which the state launched in late November to provide another source of revenue for the casinos. The big question is whether it brings in new money or just diverts it away from spending at the brick-and-mortar casinos. Nearly 110,000 online gambling accounts have been created in New Jersey thus far; the first Internet gambling revenue report will be issued in two weeks.

The state should also decide this year whether to try to take its thus-far unsuccessful effort to overturn a federal ban on sports betting to the U.S. Supreme Court.

Liza Cartmell, head of the Atlantic City Alliance which markets the resort, said Christie should grant a one-year extension of his deadline for an Atlantic City turnaround, noting that the lingering effects of Superstorm Sandy in Oct. 2012 set back tourism in Atlantic City and much of the Jersey shore by more than a year. She also said continuing investment in non-casino attractions proves the resort has a future.

"There are people who believe this island, this magical place, is a gem," she said. "It's very rough but it's continuing to be polished. It just needs some time."

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Wayne Parry can be reached at http://twitter.com/WayneParryAC

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