Atlantic City Casino Property Tax Lawsuit Boils Down to Defining ‘Gross Gaming’

The Atlantic Ocean City property revenue enhancement simplification is beingness challenged past officials in Atlantic Ocean County. A tell try said today that he will soon settle the matter’s sound outcome. The reducing was passed past the New island of Jersey Legislature during its December lame-duck session and afterwards signed into natural law by Gov. Phil Murphy (D).

In 2016, New Jersey in agreement(p) to reserve Atlantic City casinos to collectively pay an one-year chunk sum total inwards change for banner attribute taxes levied on their resorts. Known as the payment-in-lieu-of-tax — or PILOT — the taxation is calculated based on the sum up 144 gaming revenue (GGR) generated past the casinos in the prior year.

The 2021 PILOT amendment removes iGaming and mobile sports betting revenue from the computation. The readjustment testament lessen the casinos’ holding taxation amount for 2022 from $165 zillion to $110 million.

In its case filed against the state, attorneys representing Atlantic County contend the alteration inward the casinos’ favor testament come up at the disbursal of residential taxpayers.

New island of Jersey Superior Margaret Court Judge Chief Joseph Marczyk plans to supply a written determination on the PILOT suit inward the coming weeks.

Judicial Verdict

Atlantic County receives 13.5 percent of the yearly Atlantic Ocean City gambling casino belongings tax. The New island of Jersey Office of Legislative Services estimates the county will lose between $5 trillion and $7 jillion yearly below the young PILOT tax structure. The PILOT arranging is to course through and through 2026.

Marczyk ab initio recommended that New island of Jersey and Atlantic County enter into mediation to settee their differences with an impartial third-party mediator. But the body politic declined to doh so, which moved the sound complaint backward to the Superior Court.

The state’s unwillingness to seek a resolving before a electroneutral intercessor is arrogant and incomprehensible,” said Atlantic County Executive Dennis Levinson. “We should follow workings to happen a reasonable and just result that will dungeon our taxpayers whole. That is what we antecedently negotiated to do.”

Marczyk heard oral arguments from both sides this week, including a prelude cease and desist order petition from the county.

Defining ‘Gross Gaming’

During oral exam arguments before Marczyk, body politic attorneys said New island of Jersey lawmakers possess the right to define “gross gaming revenue.” When the original PILOT was passed, New Jersey’s iGaming securities industry was relieve getting started, and sports betting was stock-still years away.

GGR from iGaming inward 2016 totaled $196.7 million. Last year, that figure was $1.36 billion. Online sportsbooks added another $740 billion to the tally 2021 internet GGR number.

Atlantic City casinos say such online revenue shouldn’t live included inward the PILOT tax. They title a material portion of the income is shared with third-party operators that have little or no more physical front in the casino town. County officials, however, struggle that online play revenue is ease “gross gaming revenue.”

Marczyk presented his own concerns regarding the state’s contention that it gets to determine what does and doesn’t comprise revenue gaming revenue.

“Under your argument, [the state] could hold set gross gaming revenue should follow calculated to include only when centime slots or not include one-armed bandit machines,” the jurist told St. John Lloyd, an attorney representing the state. “Or [the say could] omit a unexampled slot simple machine that is going through and through the roof, correspondent to cyberspace and sports gaming. Is that your argument?”

“I cerebrate it could [be], your honor,” Lloyd responded.