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Borgata Casino in Atlantic City is in hot water with New Jersey gambling regulators for allegedly underpaying its internet gambling taxes on two separate occasions.
According to the regulators, the casino took advantage of a loophole to claim excessive credits, amounting to an allegedly illegitimate excess of $15 million. That led to a tax shortfall of $1.1 million.
The incident is raising concerns about the casino’s financial practices. Regulators are looking deeper into the issue to ensure that there are no other compliance failures.
Key takeaways
- Borgata Casino is in trouble for underpaying its New Jersey gambling taxes.
- The NJDGE has cracked down on Borgata, ordering it to pay $1.3 million in back taxes, penalties, and interest.
- Despite facing regulatory challenges, Borgata Atlantic City performs well financially.
- NJ online casino revenue for July 2024 was the second-highest monthly total in state history.
Borgata Casino’s repeated mistakes raise red flags for regulators
In a sternly worded letter to the Borgata, the Acting Director of the Division Mary Jo Flaherty stressed the gravity of the casino’s repeated oversights. She pointed out the casino’s disturbing pattern of underreporting its gross revenue, first by nearly $10 million.
According to an AP News story, Flaherty said: “The Division views this matter as serious.
The original violation was an understatement of gross revenue by almost $10 million. This second understatement of gross revenue was in an amount of over $4.5 million.”
July 2024 also saw Borgata’s parent company, MGM Resorts International (NYSE: MGM), get into trouble as a software upgrade caused the system to go rogue, allocating $4.5 million in credits for player bonuses that never existed. This error cost them $365,000 in taxes and over $33,000 in fines and interest.
Nonetheless, the Garden State regulators verified that MGM has made the required software fixes to ensure this mistake does not happen again.
Borgata’s financial troubles can be traced back to March 2023. The casino incorrectly included $9.8 million in table game bonuses with deductions intended for slot games. This led to a $787,000 tax underpayment.
As a result, the casino got hit with a fine of nearly $128,000, including interest and penalties.
NJDGE takes action against Borgata with a $1.3 million penalty
For this recent underpayment of its internet gambling taxes, the New Jersey Division of Gaming Enforcement (NJDGE) cracked down on Borgata Casino by issuing a directive to pay the full tax amount, inclusing taxes, penalties, and interest, totaling $1.3 million.
In response to the regulatory action, the casino promptly settled the outstanding balance, including a civil penalty of $75,000, bringing the matter to a close. Flaherty wrote:
“The fact that this conduct was repeated less than 18 months after the Division warned an additional violation of this type could result in a civil penalty is also to be considered.”
Despite facing a string of challenges in recent months, Borgata Atlantic City has continued to perform well financially. It led the pack among all Atlantic City casinos in July, showing gaming win of $75.9 million.
This success story is not limited to brick-and-mortar casinos alone. New Jersey online casinos also shattered records in July. They achieved the second-highest monthly win total for online casino gaming in New Jersey’s history.
These results reveal that players poured $195.4 million into online casinos in July, indicating a healthy gaming industry in the state.
