State lawmakers are pushing ahead with a bill that would reduce taxes across the board for New Jersey’s nine casinos in Atlantic City, a move proponents argue is vital to help the gaming palaces recover from the pandemic.
Opponents, though, warn that the lower taxes on the casinos would hurt residents of what is already one of the state’s poorest communities.
Under Senate Bill 4007, the state would cut the amount of payments in lieu of property taxes that the casinos pay to the struggling resort town in 2022 to $110 million, and remove online gambling and sports betting from the tax calculations.
The proposal, sponsored by outgoing Senate President Stephen Sweeney, D-3rd District, has the backing of the casinos. It was approved Nov. 15 by the Senate Community and Urban Affairs Committee.
Sweeney narrowly lost his seat to Edward Durr, a Republican and career truck driver who has never held public office.
The PILOT remittances were held up in court for years after the state’s casinos argued that the Great Recession and ensuing decrease in casino patronage meant their properties were worth less than what they were initially assessed for.
That posed a problem for Atlantic City, which budgeted for revenues that essentially vanished, and pushed the seaside town to the brink of financial ruin. The state took over the city’s finances in 2016, oversight that continues to this day.
“Atlantic City has had its ups and downs, and this PILOT we’re referring to has actually saved Atlantic City,” Caesars Entertainment Regional Vice President for Government Relations Joe Tyrell told lawmakers on Nov. 15. “Without the PILOT, you wouldn’t have had Hard Rock open. You wouldn’t have Revel – now Ocean – open.”
In Atlantic City, Caesars currently owns its namesake casino resort, as well as the Tropicana and Harrah’s.
New Jersey’s casinos were hit hard by the COVID-19 pandemic, shutting their doors for three months last year. It was only late this spring when they could fully resume in-person operations.
But local officials have criticized the legislation and threatened legal action. “It will benefit the casinos at the expense of the non-casino taxpayers by removing a huge and steadily increasing portion of the revenues,” Atlantic County Executive Dennis Levinson said in a May statement. “We want the casinos to survive and thrive. But no industry should do so at the expense of the taxpayers.”
The original legislation from 2016 capped the casino’s annual PILOT payments at $150 million a year, and this bill would lower that top amount to $135 million a year.
The exclusion of internet gambling from the calculations was particularly worrying “when you have a large segment of casino revenue now coming from internet sports and gambling,” Sen. Christopher Connors, R-9th District, said on Nov. 15.
Figures from the New Jersey Division of Gaming Enforcement, which regulates the nine casinos, show that out of the $3.1 billion the casinos made as of September, nearly $989 million was from internet gaming.
Meanwhile, out of the nearly $7.2 billion wagered at New Jersey’s sportsbooks, $6.5 billion was bet either online or via mobile phone apps, according to regulators.
“The exclusion of [internet gaming] is significant,” said Sen. Troy Singleton, D-7th District, who chaired the Nov. 15 Senate committee hearing. “I know that members will want to have a deeper discussion … on that very particular point… because of the advent of internet gaming. I’m deeply concerned about this.”