New Jersey Governor Cries Foul on Atlantic City Casino Tax Breaks

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Governor of New Jersey, Phil Murphy, speaks during a black-tie dinner. Andrew Caballero-Reynolds/AFP

The nine Atlantic City’s Boardwalk casinos, which have majorly contributed to the growth of gambling in New Jersey, have been saving massive amounts, all thanks to a tax program that was designed to help the gambling palaces through the pandemic and into a post-pandemic recovery.

However, New Jersey Governor Phil Murphy is fighting to have the bill amended.

Payments In Lieu Of Taxes

The PILOT program, aka Payments In Lieu Of Taxes, has been a volatile subject in Atlantic City over the last few years, and the politicians are leaning heavily on the side of the taxpayers and against the casinos that are reaping huge tax benefits because of it.

The program was initially designed to tax revenues instead of forcing the casinos to pay traditional property assessments on their operations and real estate.

The three factors in determining how much each casino paid were based on gross gaming revenue (including money from online gaming), the number of hotel rooms, and the total acreage of the property.

Changes to The Original Agreement

It was supposed to be a win/win for everyone, but in 2021 the casinos changed the game when they got revenue derived from online gambling removed from the formula, pushing the narrative that the revenues from online gambling differed from casino to casino so it wouldn’t be fair to those adversely affected.

Naturally, the Casino Association of New Jersey endorsed the changes to the PILOT law by stating, “Failing to adjust the PILOT would have resulted in egregious, inappropriate, and inequitable taxes for any industry, let alone an industry that is still fighting to recover from COVID-19”

However, Governor Murphy said, “Tax fairness is really important to us, and it has been from day one. And if we don’t quite get it right, we’ll come back at it and do everything we can to get it right.”

Liberty and Prosperity Fight Back

The conservative non-profit group, Liberty and Prosperity 1776, argued to the courts that Atlantic City casinos should not be exempt from any kinds of taxes, including those from online gambling, and any ruling to the contrary would violate the state constitution.

Atlantic County Assignment Judge Michael Blee agreed and ruled in favor of the group in striking down the hastily crafted amendment that shielded the Boardwalk casinos from the online gaming tax provision.

Group Argues Amendment Shows Favoritism

Judge Blee ruled, “There is no evidence to suggest that casinos could not meet their PILOT obligations under the Original Act.” Blee added that the amendment to the original PILOT law was intended “to aid what was actually a resurging industry.”

Seth Grossman of Liberty and Prosperity 1776 reacted to the favorable ruling by stating, “The bottom line is when you have tough economic times, every business is affected. So, to say you’re going to give one industry a break by making everybody else pay more, that’s not helping the economy. It’s just helping one ‘ailing’ industry.”

Casino Operators Hope to Fight Ruling

However, a January 18th brief to the Superior Court of New Jersey Appellate Division on behalf of keeping the amendment is waiting for Liberty and Prosperity 1776 to respond by the February 20th deadline.

Bookmakers Review will continue to monitor this story and keep our readers updated as events unfold.