Atlantic City Casinos Will ‘Pay Fair Share,’ New Jersey Governor Assures
Posted on: February 13, 2023, 10:07h.
Last updated on: February 13, 2023, 03:58h.
Atlantic City casinos were dealt a winning hand by the New Jersey Legislature in 2021 when the state agreed to significantly lower the nine resorts’ annual property tax.
Atlantic City casinos have paid a collective property tax since 2016. The tax arrangement, known as payment-in-lieu-of-tax (PILOT), was orchestrated after five casinos in town closed between 2014 and 2016. The remaining casinos argued that their property value assessments were far too high after the local economy unraveled.
PILOT requires casinos to pay a tax based on their annual gross gaming revenue (GGR).
In 2021, the casinos successfully convinced state lawmakers — with outgoing state Senate President Stephen Sweeney championing the effort — to lower their PILOT responsibility. The reduced tax came from lawmakers agreeing to remove iGaming and online sports betting revenue from the calculation used to determine the PILOT payment.
The adjustment resulted in the nine Atlantic City casinos saving about $55 million in taxes last year. A legal challenge to the constitutionality of the PILOT amendment remains ongoing. Still, New Jersey Gov. Phil Murphy (D) said recently that he will make sure that the casinos “pay their fair share.”
State Backs PILOT Change
Conservative nonprofit Liberty & Prosperity 1776 is behind the legal challenge to the 2021 PILOT law. The organization contends that the state cannot provide a tax benefit to a specific industry unless it provides a “public purpose.”
New Jersey Superior Court Judge Michael Blee in August agreed. He issued a stay of the PILOT calculation adjustment while the legal matter plays out. State attorneys are appealing Blee’s ruling.
Regardless of the outcome, Murphy told listeners on his “Ask Governor Murphy” radio show on WNYC earlier this month that he will hold the casinos responsible for their full, legal tax bills.
“Tax fairness is really important to us, and it has been from day one. And if we don’t quite get it right, we’ll come back at it and do everything we can to get it right,” Murphy said.
The governor believes Atlantic City is alive and well despite continued competition throughout the northeast and a recent pandemic.
“When I think of where Atlantic City was in 2008, 2009, 2010, and where it is today, and when you put a pandemic in the middle of that timeline, the city, including the casinos, is on a really impressive trajectory,” the governor explained. “We will make sure as a state that the casinos pay their fair share.”
Industry Appropriately Sized
A key buzzword in Atlantic City during the city’s resurgence is that the town needed to “right-size” itself. State and local officials, including Murphy, believe the town is finally there at a nine-casino market.
Hard Rock and Ocean — formerly Trump Taj Mahal and Revel — opened in June 2018.
We want the casinos in Atlantic City, but we want it right-sized,” Murphy explained. “I think one of the issues we had back before the Great Recession of 2008 was that there were too many casinos.”
“I think at the moment it feels like it’s in the right neighborhood,” the governor concluded.
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