Atlantic City Casinos Tax Situation Unsettled Again

Written By Derek Helling on August 31, 2022
new jersey casinos pilot law case

Almost nine months after New Jersey casinos had gotten somewhat of a reprieve on their local and state taxes, their assessments are again up in the air. A state court struck down a late 2021 amendment to the law that allows casinos in Atlantic City to make revenue-sharing payments instead of paying property taxes.

Superior Court Judge Michael Blee‘s ruling won’t be the final say on the matter. For the moment, though, the nine casinos face having to start from scratch on any alterations to the framework of their annual tax liabilities.

Ruling negates tax break for New Jersey casinos

According to Michelle Brunetti and Alison Burdo of The Press of Atlantic City, Blee issued his ruling Monday in a lawsuit brought against Gov. Phil Murphy by a nonprofit group. At issue in the dispute was a December 2021 amendment to New Jersey’s PILOT (Payments In Lieu Of Taxes) program for Atlantic City’s nine casinos.

That amendment exempted revenue from online gambling from the equation that determines how much each casino pays the state each year instead of property taxes. An estimate suggested that could mean a reduction of over $50 million for the casinos this year. Proponents of the change argued that since the casinos only get a percentage of that revenue, it’s unfair for the state to assess them for the whole.

The plaintiffs in the case contend the amendment represented illegal favoritism for the casinos and the casinos are not in need of tax relief. To their point, revenue from in-person gambling at the nine Atlantic City casinos just nearly eclipsed $300 million in a month for the first time in almost six years.

The amendment came under immediate fire after its passage. Atlantic County sued the state in December, arguing the new calculation would result in an annual loss of $5 million for its coffers. A different state judge ordered mediation in that separate dispute.

It doesn’t appear the plaintiffs in the dispute that Blee ruled on Monday will settle their complaint, however. Blee’s ruling seems to have merely set the stage for more litigation. The question is whether this situation will see a resolution in a timely manner.

Appeals could draw dispute out

The judge awarded damages to the county because his ruling nullified the amendment. However, Blee also granted a request from the state to stay those damages while it is appealing his overall ruling.

It’s unclear how quickly an appeal will occur and if the party that loses at the next level will further appeal to the state’s supreme court. Should that be the case, it could be months in limbo for the casinos as far as how to figure their PILOT payments goes.

Should those appeal(s) uphold Blee’s ruling, the state could try drafting another similar amendment. In the meantime, though, PILOT payments will come due for the casino. Eventually, they will have to make some kind of decision. The quicker the courts process the appeals, the easier those decisions become.

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Derek Helling

Derek Helling is a lead writer for PlayUSA. Helling focuses on breaking news, including legislation and litigation in the gaming industry. He enjoys reading hundreds of pages of a gambling bill or lawsuit for his audience. Helling completed his journalism degree at the University of Iowa.

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