It has been five years since New Jersey lawmakers passed a bill shifting Atlantic City casino operators from traditional property taxes to PILOTS, or payments in lieu of taxes.
The casinos agreed to pay a set amount of at least $120 million annually, with government officials gaining the advantage of a defined stream of revenue. Previously, casinos repeatedly fought for, and won, decreases in their tax bills based on what were found to be outdated and too-high assessments of the properties.
Much has changed in those five years, including a stabilization of the total number of casinos at nine since 2018. But with a vacant state Senate seat up for election in the Atlantic City region, PILOTs once again are on the radar politically.
“In Atlantic City, things hit the fan pretty hard with four casinos closed” in 2014, Democratic candidate Vince Mazzeo told The Press of Atlantic City editorial board earlier this month. “We as the majority party put together a couple of pieces of legislation that saved Atlantic City. I took a lot of heat, but the PILOT bill took away tax appeals and gave the city steady revenue.
“The PILOT has been a savior in Atlantic City,” Mazzeo added during a recent debate with Republican candidate Vince Polistina.
Taxing apples like oranges?
Casino operators in the city have complained about online casino revenue and sports betting revenue getting lumped in with traditional brick-and-mortar earnings as equivalent revenue. The casinos take in some revenue on sports betting through their retail sportsbooks, but the online casino deals are just partnerships with other operators that keep a majority of the revenue for themselves.
Hard Rock Atlantic City President Joe Lupo made the case for the casinos earlier this year, saying, “I don’t know why there isn’t more transparency in the reporting. This metric that we’re reporting all of the licensee revenues under the casinos isn’t giving the proper validity, and I think it’s hurting the perception” of the economic health of the casinos.
Mazzeo has expressed some sympathy for the casino owners’ plight, but Polistina disagreed.