Gov. Murphy Signs Atlantic City Casinos PILOT Bill, Setting Stage For Potential Legal Challenges

Written By Derek Helling on December 28, 2021

With the stroke of New Jersey Gov. Phil Murphy‘s pen, the newest version of the Atlantic City casinos PILOT law replaces its predecessor in the state code. So, that settles the issue, right? Not so fast, Garden Staters.

In fact, a legal challenge reminiscent of one that happened amidst the birth of the Payments In Lieu Of Taxes law for AC casinos is looming on the horizon. It won’t involve the casinos set to benefit from the PILOT law, though.

Atlantic City casinos PILOT bill now law in NJ

After the bill made its rounds through the state legislature, Murphy signed it early last week. The big change in this new part of the state code is that revenue from online gambling – online casino, online poker, and online sports betting platforms – no longer counts toward the formula that figures the value of each casino’s PILOT payment each year. In that way, it’s kind of like going back in time to when casinos’ revenue only came from wagers placed in person.

Supporters of the change argued that it was necessary to keep the doors open at all nine casinos. Some of them collect far more revenue from their online gaming partnerships than others and thus paid the lion’s share of the total AC casinos PILOT whole while their counterparts that did more of their business on the ground sort of got off easy.

With the adjustments, the payments will now reflect how each casino fares within its respective four walls. It doesn’t resolve any of them of their monthly privilege tax on gaming revenue. That assessment remains the same. The PILOT payments replace property tax assessments only.

While AC casinos were supportive of the change, they didn’t do much lobbying for the bill themselves. They are also unlikely to be parties to a lawsuit that furthers the narrative of going back in time.

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State and county make it 2016 all over again

When the state first enacted the PILOT program to replace casinos’ property taxes, Atlantic County sued the state. It argued the new law left the county significantly short-changed in comparison to what it would have received had the casinos been assessed according to current property tax laws.

Two years later, the parties reached a sealed settlement. Now, the county is preparing to employ the same strategy toward the same end. It has already filed its suit, arguing it stands to lose $4 million annually under the new law.

On Dec. 23, Superior Court Judge Joseph Marczyk ordered the parties to mediation. It’s unclear who will serve as the mediator and if the findings of the mediating party will be binding for both parties.

Either way, another settlement could end this dispute as well. At that point, the terms of the PILOT program for AC casinos should be settled, at least for the next two years, anyway.

Photo by Racheal Grazias / Shutterstock
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Derek Helling

Derek Helling is a lead writer for PlayUSA and the manager of BetHer. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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