MGM Resorts International, the parent company of the Borgata Hotel Casino & Spa, the market leader in Atlantic City, also defended the changes to PILOT. The industry’s most recent financial reports, released by state regulators last month, show revenue from in-person gambling has surpassed pre-pandemic levels. “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,” the group said in a statement. In response to our reporting, Joe Lupo, head of the Casino Association of New Jersey and president of Hard Rock Hotel & Casino Atlantic City, said the soaring revenue figures give a distorted picture of the industry’s health because its online partners get a large chunk of the money from internet gaming. Joe Lupo, head of the Casino Association of New Jersey and president of Hard Rock Hotel & Casino Atlantic City Credit: County officials, who are suing the state to maintain their share of tax revenue, say the reduction will hinder several public health programs and services for veterans, seniors and disabled residents.įor its part, the industry defends the new law. The new tax formula will result in approximately $19.3 million less than expected coming to the jurisdiction over the next five years, county estimates show. In the shadow of the gleaming casino towers that dot its famous four-mile boardwalk lies a single full-service grocery store.Ītlantic County, which has one of the highest foreclosure rates in the nation, could also feel the pinch. Its infant mortality rate is alarmingly high, and its children have higher levels of lead in their blood than kids almost anywhere else in New Jersey, according to the most recent state reports. More than a third of its residents, who are mostly Black and Hispanic, live in poverty. In fact, had lawmakers not changed the tax law, Atlantic City would have seen $133 million this year - $41 million more than the city is actually getting, according to state and city projections.
That might not sound like a lot of money for a city, but leaders had expected this year’s casino tax revenues to rise compared to last year. This year, at a time of high inflation and rising costs, the city of 38,000 estimates it will get $91.7 million from local taxes on casinos, $5 million less than it did last year. The upturn in business for the casinos contrasts sharply with the reality of Atlantic City, which has been struggling to emerge from near financial ruin since 2016, when New Jersey imposed a state takeover. But this year, the casino companies didn’t want to see their PILOT levies rise, in part because a separate tax break was simultaneously expiring. Since the system was implemented, Atlantic City has received the largest share of PILOT, with payments making up about a third of the city’s annual budget. Instead, each casino now pays a share of an industrywide assessment calculated based on the prior year’s total gaming revenue. The plan was adopted in 2016 to resolve the costly fights that casinos waged with Atlantic City to dispute their property assessments, battles that nearly bankrupted the city. The debate centers around a taxing program known as PILOT, or payment in lieu of property taxes.
“How do you do a tax decrease of that magnitude while they’re registering those kinds of profits on their books?” said Jim Kennedy, former executive director of the Casino Reinvestment Development Authority, the state agency that oversees the investment of gaming tax revenue for economic development projects. (See how we calculated casinos' tax burden.) But, as a result of the change in the law, it will pay $110 million in a key local tax - the smallest amount in the history of the five-year-old levy and $20 million less than the year before. The industry in Atlantic City reported roughly $767 million in gross operating profit in 2021, its best year in more than a decade.
The casinos’ parent companies were also spending billions of dollars to purchase online gaming companies, acquisitions that will help assure them more revenue from online wagers, according to a Press of Atlantic City and ProPublica review of state and federal financial filings, as well as public statements by casino representatives. Īs they pushed for tax relief, gaming companies were already on the rebound from the pandemic slump, recording profits above 2019 levels. The problem? Although the casinos cried poor, business is back.
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