A New Jersey Senate committee meeting on Monday will consider a bill to exclude iGaming and sports from casino payments instead of tax settlements. The bill also seeks to reduce PILOT payments in 2022 to $110 million.
New Jersey considers paying taxes on gambling activities
The Senate version (S4007), sponsored by Senate President Steve Sweeney, is similar to the bill introduced in the Assembly by John Armato. It immediately sparked controversy from Atlantic County officials in May, saying it would harm taxpayers. Armato's bill (A5587) differs from Sweeney's in that it sets the amount the casino will pay in 2022 at $125 million.
"Obviously, we're going back to court," County Executive Dennis Levinson said in response to Sweeney's bill being introduced in the Senate Community and Urban Affairs Committee. "I will fight for the taxpayer."
PILOT payments would be split between Atlantic County, local school districts and the county.
According to the text of the bill, the changes are designed to prevent the financial problems of casinos recovering from the COVID-19 pandemic.
State Senator Vince Polistina R-Atlantic added: "Once again, the interests of the casino industry are being put before the interests of hard-working middle-class families and retirees in Atlantic County. A last-minute attempt to pass this bill is exactly what was attempted in May, and is a prime example of the type of lawmakers that voters rejected on November 2."
Sweeney was ousted after 18 years, but he has weeks of legislative sessions to pass bills he likes. His office declined to comment.
Marty Small Sr, mayor of Atlantic City, said he was still reviewing the bill and was not prepared to make any comment.
Atlantic City casinos trying to rebuild
The casinos have had a challenging 2020. They closed for more than three months and then continued to operate with restrictions for several more months. This year they have made significant improvements, but are still far behind where they hoped they would be.
The original 10-year 2017 PILOT Act, approved to stabilise Atlantic City's finances, required casinos to collectively pay out $120 million in 2017. Payouts for subsequent years would be determined based on total gaming revenue. This included land-based as well as internet and sports gambling. PILOT payouts increased to $132 million in 2018 and $150 million by 2020. Payouts dropped slightly in 2021 as a result of the pandemic. However, sports and internet gaming helped offset the decline.
In 2017, the county sued the state to recover 13.5% of the promised PILOT payments. In most years it was about that percentage.
Jim Ferguson, county counsel, said the settlement agreement reached between the state and the county was based on "the understanding that the amounts listed in the bill would remain at those levels or increase under the original legislation. "
The increase in payments would be based on revenue from regular gaming. Each casino would have to pay $5 million - a total of $45 million a year for all nine hotels in Atlantic City until 2026.
The casinos would close their doors from March to June 2020. Their operations were also restricted for several months. However, the growth of internet gaming and sports meant that PILOT gaming revenues did not fall as predicted.
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According to industry publications: casinos claim they should pay a percentage of what they earn online and from sports games to a third-party operator. They also question the fairness and inclusion of this data in PILOT calculations.
According to New Jersey's Gaming Enforcement Division, total gaming revenue after the second quarter of this year was 33% higher than at the start of 2019. However, revenue from land-based casinos was down about 12% from 2019.
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