Atlantic County Decides to Challenge Atlantic City Casino Tax Break
A new tax break approved by lawmakers for Atlantic City casinos is now being challenged by Atlantic County.
Just a few days ago, we saw lawmakers in Atlantic City approve a measure that will give casinos a tax break of around $55 million. The goal of the law was to cut down on the amount the casinos pay to the state, city, and county as the venues try to recover from the COVID-19 pandemic. Atlantic County was not happy with the outcome and have decided to challenge the law in court. The county feels that the deal is in violation of the law and should be rejected during a court hearing.
Lawsuit Threat Now a Reality
Dennis Levinson, an Atlantic County Executive, said that he would bring a lawsuit against the state if Governor Phil Murphy signed the new legislation into law. The bill removed the online sports betting revenues along with online gaming totals in determining how much the casinos will pay via the PILOT program.
Just a few hours after the bill was signed by Murphy, Levinson filed the suit. He named New Jersey as the defendant. For Atlantic County, the region will lose around $4 million based on the new law. However, Levinson says the amount is more than the prediction by the state Office of Legislative Services and would come in at around $5 to $7 million.
Legal counsel for the county says that the amendment is in violation of the PILOT agreement from 2016 that was signed by the state and gaming venues. The arrangement was made after five casinos closed in Atlantic City. The casinos that remained in operation said that the annual property tax amounts were unfair and too high. The new PILOT program was a way for everyone to compromise and still receive payment.
With the change in the law, certain considerations are removed. It cuts the amount the casinos will pay, removing the online element. Casinos say they don’t make as much from online gaming as it seems because they have to share the revenues with third-party operators that help provide their services.
The industry also says that operations continue to be tricky as the COVID-19 pandemic still exists and is an issue. If an outbreak of the virus were to take place again, the casinos could take another revenue hit.
Who Will Win?
Senate President Stephen Sweeney was behind the PILOT change and says it was needed to stop several casinos from shutting down. Sweeney said that at up to four casinos were at risk of closing. Since 2020, the casinos have suffered due to reduced tourism and convention cancellations.
Legal analysts looking at the case say that the county might have a leg to stand on. The county may have a strong argument that the law is in violation of the settlement agreement with the state. We could see a new settlement made, one where the county receives more funds to cover the losses connected to the new law.
New Jersey Superior Court Judge Joseph Marczyk will review the details of the case and make a ruling based on the PILOT changes. If the judge feels there is a case to be made, we could see a temporary restraining order placed on the enactment of the new law. It is unclear if a decision will be made on the case soon or if it will be halted until the New Year due to the holiday season. We shall see soon though if the changes to the act will stand or if casinos will have to wait and see if the tax breaks are actually going to come to fruition.