New Jersey eyes financial break for Atlantic City casinos
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ATLANTIC CITY, N.J. – New Jersey lawmakers are proposing financial relief for Atlantic City’s casinos to help them continue to recover from the coronavirus pandemic by exempting two of the industry’s fastest-growing revenue streams from calculations on how much the casinos should pay the city.
It would reduce payments for some casinos, including the Borgata, while imposing higher payments onto others, including Hard Rock.
The bill, which was advanced Monday morning by a state Senate committee, is a renewal of a measure requiring the casinos to make payments in lieu of taxes to Atlantic City that was first enacted five years ago, when the city was reeling from the closure of five of its 12 casinos.
There currently are nine casinos.
Easily able back then to show that their businesses were worth less in a declining market, the casinos successfully appealed their property tax assessments year after year, helping to blow huge holes in Atlantic City’s budget.
The payment in lieu of taxes bill, known as the PILOT, was enacted to give the casinos and the city certainty about their finances in return for barring the gambling halls from appealing their tax assessments.
“The PILOT bill has actually saved Atlantic City,” said Joe Tyrell, a regional vice president with Caesars Entertainment, which owns Caesars, Harrah’s and the Tropicana in Atlantic City. “Without the PILOT, you would not have had Hard Rock open, you would not have had Revel reopen as Ocean. The casinos were appealing their taxes.”
The latest version of the bill, sponsored by outgoing Senate President Steve Sweeney, exempts internet gambling and online sports betting revenue from calculations on how much the casinos have to pay to the city, its school system, and Atlantic County.
It also would reduce the overall amount of payments to $110 million next year, down from about $120 million under previous calculations.
Joe Lupo, president of the Casino Association of New Jersey, said Atlantic City’s in-person gambling revenue is down 7.5% from where it was before the pandemic hit. He said the legislation is needed “through this economic recession as the region continues to rebuild and recover from the pandemic.”
Lupo is also president of Hard Rock, which stands to see one its PILOT payments more than double under the legislation, which he did not address.
The bill gives big discounts on payments to some of the city’s most successful casinos, including its top performer, the Borgata.
According to figures obtained by The Associated Press that are not spelled out in the legislation, the Borgata’s payments would decrease from $29 million this year to $22.8 million in 2025.
Caesars would go from $17.5 million this year to $9.3 million in 2025; and Harrah’s would go from $25.6 million to $17.8 million.
Hard Rock, on the other hand, would see its PILOT payments rise from $7.7 million this year to $15.9 million in 2025. Tropicana would go from $8.3 million to $11 million; Bally’s would go from $5.3 million to $7.7 million; Golden Nugget would go from $4.8 million to $6.2 million; Ocean would go from $7.5 million to $11 million, and Resorts would go from $3.5 million to $8 million.
The bill does not affect the state taxes casinos must pay on internet gambling revenue (15%) and online sports betting revenue (13%), nor the 9.25% tax on in-person casino revenue.
The bill still needs to be considered by the full Senate, and has not been acted on in the Assembly.
State Sen. Troy Singleton, chairman of the Senate’s Community and Urban Affairs committee, said he has serious concerns about removing internet and sports betting revenue from the calculations on how much the casinos should pay the city and county, given the rapid growth of both categories.
Over the first nine months of this year, internet gambling has brought in nearly $1 billion, an increase of 44% over the same period a year ago. Sports betting revenue – more than 80% of which comes from online betting – accounted for $557 million, an increase of 150% over that same period.
But casino executives argue that they must share a significant portion of their online winnings with tech and other partners, and that it is unfair that they bear the full tax liability of money that is only partially theirs to keep.
