NJ Proposes Renewed Bill to Provide Millions in Breaks to Some Atlantic City Casinos
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New Jersey lawmakers are proposing to renew a bill that will provide financial relief for Atlantic City casinos trying to recover from losses as a result of the COVID-19 pandemic.
The bill renewal was advanced Monday by a state Senate committee and would exempt two of the industry's fastest-growing revenue streams from tax calculations of how much the casinos must pay the city.
The latest version of the bill that is sponsored by outgoing Senate President Steve Sweeney will exempt internet gambling and online sports betting revenue from the tax calculations.
The bill will require casinos to make payment in lieu of taxes to Atlantic City, and should reduce costs from some casinos such as the Borgata but cause an increased payment amount for some casinos such as the Hard Rock.
The bill was first enacted five years ago, when five of the 12 casinos in the city closed. There are currently nine casinos in Atlantic City, which under the new bill should see a reduced amount of the overall tax payments to $110 million a year instead of the previous $120 million.
The bill is seeking approval from the full Senate and has not been acted on in the Assembly.
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 some 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 bill would give big discounts on payments to some of the city's most successful casinos, including its top performer, the Borgata.
According to figures obtained by AP 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 more than double 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 significant state taxes casinos must pay on internet gambling revenue (15 percent) and online sports betting revenue (13 percent), nor the 9.25 percent tax on in-person casino revenue.
State Senator Troy Singleton, chair of the senate 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 percent over the same period a year ago. Sports betting revenue—more than 80 percent of which comes from online betting—accounted for $557 million, an increase of 150 percent 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.
