TRENTON, N.J. (AP) — A bill that would give tax relief to Atlantic City’s casinos — and possibly prevent the closure of as many as four of them — is now in the hands of New Jersey’s governor.
The state Legislature passed a bill shortly before midnight Monday making changes to an existing law enabling the nine casinos to make payments in lieu of property taxes to Atlantic City, Atlantic County and the school system.
It now goes to Democratic Gov. Phil Murphy, who said Monday that the approach and direction of the bill “are all good by me.”
“I hope the governor signs it as quickly as possible,” said Steve Sweeney, the outgoing Democratic president of the state Senate.
Sweeney has said that as many as four of Atlantic City’s nine casinos would be in danger of closing if the bill is not passed and signed into law. He has offered little evidence for the statement, and no casino has publicly made that claim.
Known as the PILOT bill, it is intended to help the casinos recover from the coronavirus pandemic by reducing large increases in payments in lieu of property taxes that would take effect if the bill is not passed.
The casinos would still pay more to the city, county and schools next year even if the bill is enacted; it just reduces the amount of the increase.
The casinos collectively expect to pay about $10 million to $15 million more next year if the bill passes. Without it, they say, their payments are due to rise by 50%.
Revenue figures reported by the state show the casinos’ overall numbers continuing to rise this year. But the casinos say those figures paint a distorted picture of their true financial condition by including money from internet gambling and sports betting with the money won from in-person gamblers.
Online and sports betting money must be shared with third party providers like technology platforms and sports books.
That is one big reason the bill excludes those two revenue streams — the fastest growing in Atlantic City’s casino industry — from calculations on how much the casinos must pay in lieu of taxes.
The casinos say their core business — winning money from in-person gamblers — is down significantly from 2019, the year before the pandemic hit.
While the two newest casinos, Hard Rock and Ocean, have seen their in-person revenue increase since 2019, the seven other casinos are down a collective 22% since then, according to the Casino Association of New Jersey, the Atlantic City casinos’ trade group.
The first version of the bill was passed five years ago when Atlantic City was reeling from the closure of five of its 12 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 law prevented them from appealing in return for the certainty of knowing what their financial responsibilities would be for years to come.
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.