Posted on: December 6, 2021, 01:42h.
Last updated on: December 6, 2021, 02:02h.
Atlantic City casinos could save around $55 million by way of reduced property tax obligations that they would receive under a legislative effort in the New Jersey Trenton capital.
Christmas might be coming early for Atlantic City casinos. An effort in New Jersey by Senate President Stephen Sweeney seeks to reduce the amount of property payments the casinos must pay. (Image: Casino.org)
Lame duck Senate President Stephen Sweeney (D), a longtime advocate of legislation that helps the Atlantic City gaming industry, says the state’s original payment-in-lieu-of-taxes (PILOT) program, signed into law in 2016, needs adjusting.
Sweeney, who was one of the authors of the original PILOT, has crafted a new property bill plan as he readies to exit elected office after 20 years. The 2021 PILOT, S4007, would eliminate iGaming gross gaming revenue and online sports betting income from being factored into the calculations used to determine how much the nine casinos must collectively pay the state and county each year.
The New Jersey Senate Budget and Appropriations Committee passed S4007 today by an 8-1 vote. Now, with the support of two Senate committees, the PILOT legislation moves to the full Senate floor for further consideration.
Four Casinos Could Close
Sweeney warned this morning that as many as four Atlantic City casinos are at risk of closing under the current PILOT program. Easing their property payments, the outdoing Democratic lawmaker opines, will allow the market to remain a nine-casino town.
New Jersey’s Office of Legislative Services (OLS) released a nonpartisan fiscal review of amending the PILOT program for Atlantic City’s nine casinos late last week.
The OLS report concluded that eliminating iGaming and online sportsbook revenue from the PILOT calculation would result in the nine casinos collectively paying $55 million less in property payments in 2022. The gaming resorts would additionally save between $30 million and $60 million each year through 2026.
The current PILOT requires the casinos to jointly pay the state and Atlantic County a property payment that is based on a gradual scale that is dependent on total gross gaming revenue. The casinos argue that iGaming and mobile sportsbook income shouldn’t be included, as a substantial portion of that revenue is given to their third-party online gaming operators. Online sports betting was not legal when the original PILOT was approved.
Based on gaming numbers experienced this year, the current PILOT would require the casinos to mutually render $165 million to the state and county next year. Under S4007 and the present gross gaming revenue (GGR) numbers with iGaming and online sports gambling excluded, that number would be slashed to $110 million.
There are plenty of critics to handing casinos such a significant tax break. Sen. Vince Polistina (R-Atlantic) said the casinos made a deal with the state that already reduced their property tax responsibilities, and that deal should be upheld.
This is completely unfair given the promises made to Atlantic County taxpayers and the many challenges we have in this region,” Polistina declared.
The original PILOT came after five casinos in Atlantic City closed between 2014 and 2016. The remaining casinos continually appealed their property tax assessments, which resulted in the state and country not receiving such payments as expected. PILOT reduced their property taxes from their assessed values, but guaranteed at least $120 million annually from the casinos to the state and county.