Lawmakers in New Jersey are proposing financial relief for casinos in Atlantic City, in an effort to help them continue recovering from the COVID-19 pandemic. The proposal would exempt two of the industry’s fastest-growing revenue streams -internet gambling and online sports betting- from calculations on how much the casinos should pay the city.
The bill, which was advanced Monday morning by a state Senate committee, would reduce payments for some casinos, including market leader Borgata, while imposing higher payments onto others, such as Hard Rock.
The proposal is a renewal of a measure requiring casinos to make payments in lieu of taxes to Atlantic City that was first enacted five years ago, reports Associated Press. At that point, the city was reeling from the closure of five of its 12 casinos, whereas there currently are nine.
The payment in lieu of taxes bill, commonly referred to as the PILOT, was enacted to give casinos and the city certainty about their finances while in return barring gambling halls from appealing their tax assessments. Back then, casinos successfully appealed their property tax assessments year after year, which resulted in the city paying millions of dollars in refunds.
The new version of the bill is being sponsored by state Senate President Steve Sweeney. In addition to removing sports and internet gaming figures from casino payment in lieu of taxes calculations, it cuts the 2022 PILOT payment to $110 million.
The original 10-year PILOT required casinos to collectively pay $120 million in the law’s first year, in 2017. Payments in subsequent years were to be determined by total gaming revenue, including brick-and-mortar, internet and sports gaming. While payments increased to about $132 million in 2018 and $150 million in 2020, they fell in 2021 due to the pandemic.
The S4007 is the Senate version of a bill sponsored by Assemblyman John Armato, D-Atlantic, introduced in May. It generated great concern from Atlantic County officials and certain lawmakers, who allege it would hurt taxpayers: PILOT payments are shared with Atlantic County and the local school district.
“We will obviously end up back in court,” County Executive Dennis Levinson said about Sweeney’s bill moving in the Senate Community and Urban Affairs Committee, according to The Press of Atlantic City. “I’m going to fight for the taxpayer.”
“Once again, the casino industry interests are being placed before those of the hard-working middle-class families and retirees of Atlantic County,” said state Sen. Vince Polistina, R-Atlantic. Meanwhile, Atlantic City Mayor Marty Small Sr. said he was still researching the bill and not yet ready to comment.
Casinos had a rough 2020, having closed for more than three months amid pandemic-related measures. When they returned to operation, they did so under restrictions for several more months. Despite these setbacks, sports and iGaming grew, making revenues under the PILOT not fall as far as anticipated.
As venues must pay third-party operators part of their earnings from internet and sports betting, the inclusion of these revenue streams in the PILOT calculations has been protested by casinos.
Joe Lupo, president of the Casino Association of New Jersey, has commended the newly-proposed legislation, saying it is needed “as the region continues to rebuild and recover from the pandemic.” He cited official figures, which show in-person gambling revenue has decreased 7.5% from where it was before the pandemic.
Over the first nine months of 2021, internet gambling has brought in nearly $1 billion: an increase of 44% over the same period in 2020. Sports betting revenue, on the other hand, accounted for $557 million, a significant 150% increase over last year.