As Atlantic City casinos are rebounding from the pandemic and getting a good grip, with some casinos even undergoing multi-million-dollar renovations, the state of New Jersey is making a push to sign a long-term tax agreement with the casinos that would slash their property tax liability in 2022. That is why Atlantic County officials are ready to launch a lawsuit against the state if the bill is passed.
Property Taxes Could Be Lowered by A Third
The bill, that is set to be revised is the Casino Property Tax Stabilization Act, which sets the amount that casinos need to pay to Atlantic County, the school system, and the city itself. Atlantic County receives 13.5% of the casinos’ payment-in-lieu-of-taxes (PILOT) annually.
PILOT was established in 2016 after the closure of five casinos between 2014 and 2016 and it determines the collective tax amount that casinos need to pay, and it’s based on the revenues of the previous year. Those revenues encompass land-based gaming, sports betting, and iGaming.
However, suggested changes now want to see online sports betting and iGaming revenues cut from the calculations. Those changes would need to be signed by the state’s governor, currently Phil Murphy. Murphy supports a revised PILOT which would lower the tax liability of casinos in Atlantic City for 2022 and cut the amounts paid to the state from $165 million to $110 million.
When the bill cleared a Senate committee last Monday, the president of the Senate, Stephen Sweeney, stated that the state is doing this to keep the city thriving and keep people in business. According to him, there’s a risk of four casinos closing if they aren’t financially relieved with the new bill.
Some Argue That the Changes Will Come at The Expense of Taxpayers
Dennis Levinson, Atlantic County executive, hasn’t been on good terms with the state of NJ ever since PILOT was passed. He opposes the most recent changes in the legislation as he thinks that these “efforts to assist casinos” will be at the expense of taxpayers.
Instead of removing iGaming and online sports betting revenue from the equation, which, according to the New Jersey Office of Legislative Services (OLS) will save casinos $30-50 million each year through the PILOT termination in 2026, Levinson thinks that casinos should adhere to the terms from 2016. With the amendments, casinos could save an additional $55 million in 2022.
In a letter to Murphy, Levinson said that the proposed changes favor the interests of the casinos, Atlantic City, and the state over the taxpayers. He also asked why residents were ignored. Hence, Levinson is asking Murphy to stick with the original agreement of taxes.
Moreover, he said that Sweeney’s prediction on the four casinos closing is preposterous and that it all comes down to “money-grabbing.”
Joe Lupo, the president of the Casino Association of New Jersey, thinks that casinos have paid their fair share since 2016 in terms of property taxes, despite the devastating blows from the pandemic.
As for the taxes, the OLS predicts that if PILOT is re-structured, instead of receiving $20.5 million, Atlantic County will net around $17.5 million. Levinson noted that the residents can expect a minimum of $5 million that are missed out by the county each year.