A look back at the history of the casino PILOT lawsuit

Your browser does not support the audio element. Digital Editor Nicholas Huba and Pro Publica Fellow Allison Burd talk about changes to casino PILOTs.

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A New Jersey Superior Court judge has struck down a state law that would have given Atlantic City casinos tens of millions of dollars in tax breaks.

The ruling, handed down Monday, is a blow to Gov. Phil Murphy and state legislative leaders who fast-tracked the bill last year. It's also a rebuke to the gaming industry, which had argued it was necessary as it struggles during the COVID-19 pandemic.

At issue in the case are changes to a local tax program known as PILOTs, or payments in lieu of property taxes. Since 2016, instead of paying property taxes, casinos have paid a share of the industry's assessed value, which is distributed to Atlantic City, its school district and the county to fund various operations. The figure is calculated based on total gaming revenue from the previous year. But last year, the gaming industry pushed for and won a key change to the law that would have excluded fast-growing online gaming from the program. The change reduced gaming companies' total PILOT contributions this year by $55 million, a revenue loss that disproportionately affected Atlantic City, one of the state's hardest-hit cities.

A conservative nonprofit called Liberty and Prosperity 1776 challenged the constitutionality of the law, arguing that the state's founding documents prohibit tax breaks. The state countered that the new law serves a "permissible public purpose," making it exempt from the ban. On Monday, Atlantic County Judge Michael Bree sided with the nonprofits, ruling that the casinos' tax burden could be increased, adding tens of millions of dollars to local coffers.

"This Court holds that the amendment was enacted to assist the casino industry and not for a public purpose," Bree wrote in his ruling.

Appellate Court grants stay to state in PILOT suit, won't have to pay millions this month

The appeals court granted the state a temporary stay on parts of the high court's July 29 ruling.

At the time the bill was passed, the state council and leaders in the industry argued that despite the soaring online gaming, it was necessary to change the financial crisis. "There is a danger that four casinos will be closed," said Steve Sueny at the time without a specific explanation.

However, as the Atlantic City and Propabrica reported in June, the casino industry claimed tax reduction, but has already recovered from the great recession. Despite the financial difficulties, the Atlantic City casinos have reached a total of $ 767 million dollars in 2021. According to the financial report, the income from the fac e-t o-face gambling exceeded the level before the epidemic. Through the latest data, the first six months of 2022, Atlantic City's nine casinos have recorded $ 339 million, more than 17 % exceeding the same period of the previous year.

"There is no evidence that the casino could not fulfill the pilot obligation of the original law," Breley wrote. He concluded that the law was "in fact to help the industry, which was revived." This is the same as the results of The Press of Atlantic City and Propublica, and calculates the tax burden on each casino if the Pilot method is not changed.

Gaming analysts and former regulatory officials verified their analysis results, and said that the atlantic City's nine casinos were able to survive the tax increase and continue their business.

The New Jersey Casino Association refused to comment on the ruling because of the policy of not mentioning the dispute lawsuit. The association had previously needed the Pilot Law revision last year to the Pres of Atlantic City and Propublica. "If you neglect Pilot, the industry that is still fighting for the recovery from COVID-19 will be imposed on terrible, inappropriate, and unfair to any industry. It would be a statement, "said the organization.

Liberty and Prosperity's Seth Groseman said he was satisfied with the decision of the judge to cancel the revision of the Pilot program and leave the original law. "In short, if a tough economic situation is in a tough economic situation, all businesses will be affected, saying," In other words, giving a preferential treatment and increasing the burden on other industries is to help the economy. Not only the "slump" industry. "

Lawsuit challenging constitutionality of casino PILOT awaits decision

Atlantic County is in a court struggle to get the share of negotiations with the state.

Murphy also stated that a "intense lawsuit" would be held over the judge's ruling.

In fact, Murphy's spokeswoman Ariana Alfalo Post said to the Press of Atlantic City and Propabrica on Tuesday, saying, "The states are planning to appeal to Judge Brie, and the ruling will be overturned. I'm optimistic. "

This is the second decision that has been disadvantaged by the Pilot method in recent months. The judge had previously alleged Atlantic County in another lawsuit claiming that Atlantic county violated the 2018 consent agreement. The county claimed that changing the Pilot system would result in a loss of about $ 5 million a year.

This month, Brie ordered Atlantic County for millions of dollars and urged the state to pay for lawyer and other costs. The state has appealed to the ruling as a complaint, and on Monday, he won a suspension order from the court for damages while passing the appeal.

If these two trials are combined, the burden of taxes, which will be the casino industry, remains uncertain. The state regulatory authorities, which claim and collect Pilot payments, did not immediately respond to the request for explanation.

Atlantic County Secretary Dennis Levinson called on Murphy to exercise the Pilot bill last year, but this week's ruling indicates that the State Congress should have left the Pilot program. He said it was a signal.

"Before and after the PILOT revision plan is passed during the 4th of Christmas, if the Governor responded to our concerns, such a situation could be avoided, and the New Jersey taxpayers were hundreds of thousands of dollars. Levinson stated on Tuesday statements.

Atlantic County seeks millions in damages over state's breach of PILOT settlement

Governor Phil Murphy gave a lecture at the N. J. Chamber of Commerce on April 13 at Atlantic City's Borgata Hotel Hotel Casino & Spa.

Atlantic Cit y-Atlantic County Lawyers have violated the states on Wednesday in 2018, when Council passed the law to revise the Atlantic City's Casino Industry's Tax Exemption Program on Wednesday, in the agreement in 2018. He said he was obliged to pay for the $ 10, 000 and pay for the lawsuit.

Lonald Richo, a representative of the county, was on Wednesday, the county was $ 4725, 000, that is, the county would have been received in 2022 if the law was not changed, and the new Pilot system was the same year this year. He said he should receive the difference from the amount to be assigned and the lawyer fee that had occurred after the initiative of the last year's litigation.

According to James Ferguson Advisor, these costs have already exceeded $ 300, 000.

Richo has claimed an unspecified number of damages from 2023 to 2026.

Governor Phil Murphy signed a bill submitted by Former Senator Steve Swoney and demanded sanctions on the state.

"What happened here is an unreasonableness, threatening three powers, weakening the rule of the law, and ignoring the completeness of the court order in the form of a judge's judgment. I would like to ask for sanctions. " "If the court's order is ignored by the governor, anyone can follow the governor's instructions.

Judge rules in county's favor in request for PILOT law reconsideration

On Monday, the high court judge supported the former judge's ruling to change the payment.

Judge Michael J. Brie said it would make a decision on damages within 30 days.

However, Ron Israeli on the state argued that Richo's description was "emotional political claims" and not legal.

In December, Murphy signed a bill to change Pilot and filed a state. The new law has reduced the total amount of basic PILOT paid by the industry, and deleted income from Internet gambling and online sports bets from the formula for determining Pilot.

Joseph Marchiku ruled in February that the new law would violate the consent order in June 2018, which was agreed by the state and county, and Brie supported his predecessor in May.

Israel and John Lloyd, also representative of the state, did not particularly mention the amount proposed by Richoo, but Lloyd is paid by the state with the damages to be paid to the county, and Atlantic City is Pilot. He said it would not affect what he gained.

Lloyd also spent a part of the 9 0-minute hearing in a reconciliation of the discussion in court.

Atlantic City casino PILOT hearing set for April 25

Atlantic Cit y-A month later, lawyers on the state persuade Atlantic County.

"The consent order does not stare at the Internet income." The parties intended to exist at the time. Neither clearly mentions "Internet income", but before the settlement agreement, gaming execution was executed. The category mentioned the gross gaming income that was defined for both actual stores and online gaming income.

The original law used three factors to determine each casino's PILOT contribution: total gaming revenue, including revenue from online gaming, number of hotel rooms, and square footage. According to an investigation by the Press of Atlantic City and ProPublica, under the new PILOT, the local gaming industry will pay $55 million less in 2022 than it would have if the law had not changed. Atlantic City will also get $91. 7 million from local taxes on casinos in 2022, $5 million less than last year.

Casinos have been paying PILOT instead of traditional property taxes since 2017, a measure taken by the state Legislature to stave off Atlantic City's bankruptcy. Atlantic County therefore filed a lawsuit to ensure that it would receive the same percentage of PILOT tax revenue as it received from previous property taxes. A settlement agreement between the two parties in 2018 established a formula to determine the county's share of the PILOT. Atlantic County would get 13. 5% of total PILOT payments from 2019 through 2024, and 12% in 2025 and 2026.

Casinos pled poverty to get a huge tax break; Atlantic City is paying the price

This article was produced in partnership with The Press of Atlantic City for ProPublica's Local Reporting Network.

Last fall, in the second year of the pandemic, Atlantic City casino operators painted a dire picture for the New Jersey Legislature. Brick-and-mortar casinos were struggling, and they said casinos were losing most of their revenue to companies that run internet gambling sites, despite a thriving online gaming business.

If policymakers didn't ease the casinos' tax burden, industry leaders predicted a "major crisis" awaited. The state Senate president went even further, warning that four of the city's nine casinos could close.

The pitch worked. Fearing closures and layoffs, lawmakers moved quickly to ease the tax burden, with few questions asked. "Governor Phil Murphy signed the bill on Dec. 21, the day after both legislatures passed it.

The bill changes the formula that determines how much operating fees casinos pay to cities, school districts and counties. The changes will reduce the amount casino companies pay these entities by a combined $55 million this year.

The problem? Casinos were in a slump, but business is picking up.

While casinos are seeking tax cuts, the gaming companies have already recovered from the sluggish pandemic (global trend), and have surpassed the level of 2019. Casino's parent company also spends billions of dollars to buy online game companies, which is a useful acquisition to guarantee more income from online gambling.

Atlantic City's casino industry recorded a gross profit of about $ 767 million in 2021. However, as a result of the revision of the law, it paid $ 110 million as a major local tax, which was the smallest in taxation history five years ago, less than the previous year.

Former Secretar y-General Jim Kennedy, former secretar y-general of the Casino Remark Development Bureau, coaching to invest gaming tax revenue in economic development projects, said, "How do you make such a larg e-scale tax cut?"

The center of the discussion is a taxable program known as Pilot (payment instead of property tax). The system was adopted in 2016 to the casino opposition to the asset assessment with Atlantic City and solved the hig h-priced struggle that drove Atlantic City on the verge of bankruptcy. Instead, each casino paid the share of the entire industry calculated based on the total gaming income of the previous year. Since this system was introduced, Atlantic City has received the most Pilot, which accounts for about on e-third of the city's annual budget. But this year, the casino company did not want Pilot to increase. One of the reasons is that another tax incentive measures expire at the same time. While the

The turnaround of the casino business is in contrast to the reality of Atlantic City, which has been struggling to get out of the bankruptcy since 2016, when New Jersey imposed the acquisition of the state. Atlantic City, which has a 38, 000 population of 38, 000 people this year, with high inflation and costs, has estimated $ 91. 7 million from the regional tax on the casino, which is $ 5 million less than last year. It may not be a big deal for the city, but the leaders expected this year's casino tax revenue to increase from last year. In fact, if the lawmakers did not change the tax law, Atlantic City would have obtained $ 133 million (about 41 million yen) this year.

Casino PILOT Payments Are a Big Part of Atlantic City’s Budget

Source Atlantic City Revenge Finance Department

And Atlantic City needs cash.

More than on e-third of the Atlantic City residents are black and hiss bread, and they are poverty. The infant mortality rate is surprisingly high, and the latest state reports are higher for Atlantic City's children in any other area in New Jersey. There is a ful l-service grocery store in the glittering casino tower shadow scattered in the famous fou r-mile board walk.

Atlantic counties, which have the highest holding rate in the United States, may also feel a pinch. According to the county estimates, the new taxation method will reduce the tax revenue to the county in the next five years than expected. County authorities, which are appealing to states to maintain tax revenue, have said that this reduction has hindered some public health programs, veterans, the elderly, and disabled services.

On the other hand, the industry defends the new law.

Hard Rock Hotel & Casino Atlantic City President Joe Lupo

Edward Lee (Staff Photographer)

Joe Lup, the representative of the New Jersey Casino Association and the president of the hard rock hotel & casino atlantic city, has earned a lot of money from Internet gaming to our interview. He said that the rising profits were distorted the soundness of the industry. "If we neglected pilot adjustments, the industry that was still fighting to recover from COVID-19 would have imposed terrible, inappropriate, and inappropriate taxes for any industry. The organization stated in a statement.

According to the industry's latest financial report released by state regulators last month, revenue from in-person gambling has surpassed pre-pandemic levels.

MGM Resorts International, parent company of Atlantic City's market leader, Borgata Hotel Casino & Spa, also defended the PILOT changes. "We take our position as a large company and a leader in the community very seriously and have committed significant effort and resources to the economic success and future of Atlantic City," a spokesman said in a statement. "When it comes to taxes, our priority is to ensure that businesses pay their fair share."

Former South Jersey Sen. Steve Sweeney, who led last year's legislation, supported his own actions. "The casinos would have been closed. We made the best of a bad situation. We saved Atlantic City and got it back on its feet."

Murphy, through a spokesman, declined to comment.

Despite policymakers' promises for more than 40 years that legalizing gambling would revitalize Atlantic City, there's been a long-running debate about whether Atlantic City is being treated unfairly.

"There's a difference between being a good partner and being taken advantage of," said City Councilman Jesse Kurtz (R-Ward), who opposed the bill.

A New Tax System for Atlantic City

A fire hydrant emerges from the ground in a vacant lot behind Atlantic Avenue, between Indiana Avenue and Martin Luther King Jr. Boulevard, Sunday, March 13, 2022, in Atlantic City, New Jersey. Credit: Kriston Jae Bethel

Ever since New Jersey's first casino opened in Atlantic City in 1978, Atlantic City's fortunes have been tied to gaming. The casino industry has expanded rapidly, growing to 12 properties, almost all along the world-famous Boardwalk, and posting year-over-year gains for nearly three decades. Taxes and related fees from casino operations sent billions of dollars to the state. Money flowed directly into Atlantic City in two other ways: property taxes, which became the single largest source of city revenue, and taxes used to fund community projects. The latter tax, known as the Investment Alternative Tax (IAT), was created in 1984 to ensure that the industry would invest in Atlantic City amid concerns that the casinos were ripping off the city.

These include the Great Financial Crisis of 2008, Superstorm Sandy in 2012, and the expansion of legal gambling in neighboring states. County records show that revenues plummeted from a high of $13. 7 billion in 2008, when 11 casinos were open, to $3. 2 billion in 2016, when only seven facilities were in operation. As a result, local tax revenues plummeted and municipal debt ballooned, most of it to cover the cost of property tax refunds owed to casinos. (Today, about two-thirds of Atlantic City's $456 million in debt comes from bonds sold to cover these refunds.) This debt has limited the city's ability to invest in infrastructure and services, with fire departments borrowing trucks from neighboring communities while they wait for new equipment. The city also downsized its police force, cutting dozens of officers.

With the city on the brink of insolvency, gaming companies developed a replacement tax proposal and pitched it for several years before it gained enough support to pass in Trenton in 2016. For the next decade, casinos would not pay traditional property taxes, but would make payments based on other factors, such as the number of hotel rooms and total gaming revenue.

A billboard advertising the Caesars Sportsbook app on the roof of a Cedar Basic Foods grocery store in Atlantic City, New Jersey, on Saturday, March 12, 2022. Credit: Kriston Jae Bethel

Kriston Jae Bethel

The bill, drafted by the New Jersey Casino Association, would set the total amount paid in 2017 at $120 million, and for the remaining nine years, would tie the total PILOT payments to industry performance: if industry revenues decline, the payments would decline.

The 2016 bill also included another tax reduction measures for gaming companies as incentives for all casinos to participate in the Pilot system. This gave the casino a discount on investment tax paid to raise the community project. This change hits Atlantic City in the short term, but the members guarantee that tax cuts do not last forever: tax reduction measures ended in the middle of the Pilot program, and in 2022. Measures are applied in full.

Governor Chris Christie (then) signed the Pilot bill in 2016. Since 1938, to avoid New Jersey's first local government bankruptcy, Governor Christie has placed Atlantic City under the state's administration and gave the state to the state of most local governments, including budgets.

But the bad era for casinos did not last. The two closed facilities, Trump Taj Mahal and Level Casino Hotels, changed their owners and reopened in mi d-2018 as hard rock and ocean casino resort. Online games, on the other hand, bloomed and injects hundreds of millions of dollars into the industry. It was legalized in 2013 and was required to place a computer server in Atlantic City, but in New Jersey, sales were nearly four times, and $ 123 million to 483 million in 2019. Grew to $ 10, 000. In the latter half of 2018, the rise of the rise was accelerated in the latter half of 2018.

On Sunday, March 13, 2022, there is a motorcycle cart outside the entrance of the Ballies Casino's boardwalk in Atlantic City, New Jersey, which emphasizes the partnership with the Funduel Sports Book. Credit: Kriston JAE BETHEL

Kriston JAE BETHEL

As a result, the total gaming income rose in 2018 and increased in 2019. Pilot's payment was also the same, reaching $ 152 million in 2020, far exceeding the initial $ 120 million, which was expected to be a type of upper limit.

For some industry leaders, the Pilot program had begun to be a disadvantageous bet.

So they looked at an important ally.

For more than 10 years, Steve Swney has taken over New Jersey's politics as Chairman of the State Supreme. South Jersey's Democratic Democratic Party, which has been thought to be the second most powerful in the state, has brokered all projects, from schools to public pensions and renewable energy.

However, last year, the Republican waves were rushing, and in November's election, he was reversed by an unknown truck driver with no political experience and achieved the end as a politician. With the remaining term of his term, he returned to Trenton to work on the work left behind. The challenge was the tax reduction to the game industry.

Gaming Industry Pushes for Change

Specifically, Swney has submitted a bill that excludes all online game revenues from the Pilot method.

The bill opposed the industry leaders who have neglected the profits of online games for several months. Lupo, a hard rock, has led this initiative, developing an important claim that casino technology partners are crushing most of online gambling.

A spokeswoman for the New Jersey Casino Association said that 20 % to 25 % of New Jersey's online revenue was based on casinos. However, according to a review of PresS of Atlantic City/Propublica, this figure is expected to rise during the Pilot program period.

At a press conference in late November, Atlantic City's Mayor Marty Small supported the movement of the industry to change Pilot.

"We will not be worse than the previous year," said Mayor Small.

Beside it, a former judge who enacted a casino management law to legalize gambling in Atlantic City, a former member of the Congress, Stephen P-Persky, was ahead of his advisor. Perskey quoted a "comprehensive" financial analysis of the pilot tax conducted by the state. "The impact of the tax increase in 2022 will lead to a significant financial difficulty in the industry," he told reporters.

Persky said the new Pilot bill would help prevent it.

Indeed, this change means a decrease in Pilot funds to Atlantic City. However, the mayor estimated that the loss would be offset by an increase in investment tax. However, small predictions will eventually come off. According to the annual budget for the city, this year is expected to decrease by $ 5 million from the previous year, including the two sources of income.

Small did not respond to the comments and did not answer the written questions from the press. Neither of them submitted evidence of Pilot analysis they cited.

However, as the bill passes through the state council, other local administrative officers, such as Dennis Levinson administrative officers in Atlantic County, are paying attention to the new financial reports published by the gaming execution department, the state institution in charge of casino regulations. did.

At nine casinos in the city, the fac e-t o-face betting money decreased by 5 % over the same period of 2019 through the first 10 months of 2021, but online geming to $ 3. 5 billion. It was pushed up. Regarding the gross profit of the regulatory authorities as "widely accepted profitable scale", the industry has recorded $ 592 million in the first quarter of 2021, and in the last 10 years. It was the best pace.

Online games have been booming while the hits of COVID-19 have drastically reduced face-to-face gambling. At present, the ratio of online games to the total income of the casino industry is increasing.

The face-to-face gambling has dropped dramatically due to the hit of COVID-19, but online games are booming. The ratio of the casino industry's total income is increasing.

Revenue Has Jumped in the Atlantic City Casino Industry

Note: Income is dollars after inflation adjustment in 2022.

Note: Profit for dollars after inflation adjustment in 2022. Source: New Jersey Division of Gaming ENFORCEMENT New Jersey Gaming Executive Department

Quoting the gaming report, Levinson requested Murphy to oppose the Pilot bill.

"It's mysterious to be able to claim that the casino is in trouble, but it has been reported that the casino has updated a profit record," Levinson wrote in the letter on December 2. On the same day, Moody's Investors Service published Atlantic City's credit rating, and said, "Municipal management has no plans to close the casino."

Levinson also stated in this letter that changing the taxation method would violate the past reconciliation agreement with the state, which specifies the Pilot tax revenue received by Atlantic County until 2026. He threatened to file a lawsuit if it was established.

According to Levinson, there was no reply from the governor. Murphy refused to comment through the spokesman.

A man walking in the backyard of the New Jersey Council in Trenton.

Kriston JAE BETHEL

Big Action, Few Questions in the Legislature

In early December, the bill has gained momentum as Swney sued the bill at the State Supreme Budget and Expenditure Committee.

The casino industry is Atlantic County's largest employer, employing more than 19, 000 people. When the four casinos closed in 2014, nearly 9, 000 workers were laid off. But no lawmakers pressed Sweeney on his case, and the bill passed the state Legislature with little debate.

In fact, less than four minutes were spent on the PILOT change bill during a Dec. 13 hearing. Nearly half of that time was taken up by Sue Altman, state director of the New Jersey Working Families Party, a progressive coalition that opposes the bill.

"We're tired of seeing a hugely successful and profitable industry like casinos paying less than their fair share of taxes," she said.

The Ocean Casino is seen from across town in Atlantic City, New Jersey, on Sunday, March 13, 2022. Credit: Kriston Jae Bethel

Kriston Jae Bethel

Peter Chen, an analyst at the left-leaning think tank New Jersey Policy Perspectives, agrees. "The formula adopted by lawmakers in 2016 takes into account the possibility of unfavorable financial circumstances," he said. "It's unclear why new changes beyond current law are needed to reduce the amount casinos pay."

Only four Democrats ultimately voted against the bill, including state Assembly members Vince Mazzeo and John Armato, who represent Atlantic City and much of Atlantic County. Armato's departure from the party was especially notable because he was the sponsor of the Assembly version of the PILOT bill. Unusually, he removed his name from the bill before the final vote. "I needed more information to move forward, and I didn't get it, which made me very unhappy," he told Atlantic City Press and ProPublica.

Today, New Jersey faces the consequences of the new law.

Atlantic County's administrative officer said that the new PILOT method was dangerous to some county programs, including opioid measures, influenza and COVID-19 vaccination initiatives, elderly people, disabled people, and traffic services for veterans. He threatened to appeal to the state, saying that there was a possibility of exposure.

“When Are We Going to Get Our Fair Share”

In late February, a ruling to support Atlantic County was found to have violated the previous settlement agreement. However, the state has not made a concession and will be appealing.

Atlantic City has hardly improved since the property tax alternative system began. With the chronic high poverty rate and unemployment rate, the budget is as flat as usual.

In March, Small, who supported the Pilot method despite the decline in sales, stayed in Trenton and called for an increase in gaming money to the city. He requested a member of the Diet to support the bill to send sports gambling taxes to Atlantic City, not the state organization. The funds will be used to reduce the property tax of local residents, whose tax rate has increased in the past decade.

"We modified the Pilot bill and supported it," But we are paying attention to when we can get a fair division. "

Monday, March 14, 2022, a playground peer shopping mall overlooking the Beach of Atlantic City, New Jersey. Credit: Kriston JAE BETHEL

Kriston JAE BETHEL

In fact, the impact of the bill is now on a greater debate on gaming tax in New Jersey.

In late February, a ruling to support Atlantic County was found to have violated the previous settlement agreement. However, the state has not made a concession and will be appealing.

Atlantic City has hardly improved since the property tax alternative system began. With the chronic high poverty rate and unemployment rate, the budget is as flat as usual.

"We modified the Pilot bill and supported it," But we are paying attention to when we can get a fair division. "

Monday, March 14, 2022, a playground peer shopping mall overlooking the Beach of Atlantic City, New Jersey. Credit: Kriston JAE BETHEL

New Jersey officials refused to provide the numbers behind new casino tax breaks, so we did the math

This article was produced in partnership with The Press of Atlantic City for ProPublica's Local Reporting Network.

In fact, the impact of the bill is now on a greater debate on gaming tax in New Jersey.

In late February, a ruling to support Atlantic County was found to have violated the previous settlement agreement. However, the state has not made a concession and will be appealing.

Atlantic City has hardly improved since the property tax alternative system began. With the chronic high poverty rate and unemployment rate, the budget is as flat as usual.

"We modified the Pilot bill and supported it," But we are paying attention to when we can get a fair division. "

Monday, March 14, 2022, a playground peer shopping mall overlooking the Beach of Atlantic City, New Jersey. Credit: Kriston JAE BETHEL

Kriston JAE BETHEL

In fact, the impact of the bill is now on a greater debate on gaming tax in New Jersey.

Don Guardian, a Republican State Congress, is the former mayor of Atlantic City and Atlantic County, and is the first time as a state parliament. Industrial officials believe that New Jersey is the only casin o-friendly state after Nevada. "Let's start taking into account what the world has changed." I need to review the whole problem again.

On the other hand, some of the state council members who initially supported the change of Pilot questioned why the change was needed. "As data on the health and vitality of the casino industry increases, it has become clear that the idea that casinos are closed rather than the truth, rather than the truth." Democratic Senator Troy Sington, the Democratic Party chairman, said.

At a hearing of the Senate Committee in March, Atlantic City, who voted against the bill in December, and the Republican Republican Republican Vince Polistina, a republic of Atlantic County, gave a sharper opinion to his colleagues. Ta. The new law said, "I am assuming that it is a fake."

If you register for Dispatches, you can receive it as soon as such an article is published.

Casinos Will Pay Millions Less in PILOT Under New Legislation

This article was created in collaboration with The Press of Atlantic City for Propublica's Local Reporting Network.

On March 12, 2022, a house located between the Ocean Casino Resort, the highest building in the vacant lot and the highest building in Atlantic City. Credit: Kriston JAE BETHEL

Kriston JAE BETHEL

When New Jersey officials passed a significant tax cut on Atlantic City last year, they showed a rough assertion, but have little evidence.

The problem is how much tax in the casino industry will increase under a system that determines the amount paid by a casino instead of property tax.

"There is a danger that four casinos will be closed," said Steve Swoney, Senior Chairman of State (then), not specifically.

Similarly, Judge Stephen P-Perskey, a former member of the Atlantic City adviser and enacted the Casino Legalization Law, predicted the miserable consequences. "The impact of raising prices in 2022 will make a significant financial difficulty in the industry," quoted the "comprehensive" financial analysis conducted by the state.

However, when he asked the New Jersey Regional Problem Bureau, which is a direct director of Atlantic City, he did not submit it. In an interview, Swoney also refused to show evidence of the possibility of closure.

So, that was the case.

For the past few months, the Press of Atlantic City and Propublica have requested a series of official documents to local and state agencies to calculate the casino tax debt that the state has refused to reveal.

One is a tax called Pilot (Payment in Lieu of Taxes), and the other is an investment alternative tax.

“A Fair Number Transparently Arrived at”?

Pilot was designed to be replaced by a general property tax from 2017 after the casino has been disgusted many times for the annual evaluation, and the money collected under this system is the city, its school district, and county. It was distributed to. In addition, investment alternative taxes are lon g-term taxation, which is used for community investment in Atlantic City and other states, and casinos have been temporarily reduced. The main reasons for the increase in casino revenue were to rise in 2022.

Last year, under the Pilot system before the law was revised, the news agency collected three important data on each casino to determine the amount that the casino industry would have paid. Then, these numbers were applied to the formula described in the 1 3-page tax law, and the results were confirmed with the state. As a result, it was found that the authorities' claims of financial collapse remain questions. (For more information, see the last section of this article).

According to our analysis, nine facilities in the gaming industry paid a total of $ 165 million in 2022, an increase of $ 35 million compared to 2021. Of the nine casinos in the city, two casinos will decrease Pilot.

Note: The amount paid by the casino in 2022 under the 2021 law and under the old law was provided by the State Community Bureau to the Press of Atlantic City and Propublica. If the 2016 law was still enforced, the amount of the casino would have paid Pilot in 2022 was calculated by The Press of Atlantic City and Propublica.

Apart from this, it has been found that the industry has paid $ 66 million as an investment substitute tax. The state has reduced the tax burden for the past five years, but this measure has expired in 2022.

Roger Gross, a publisher of the industry magazine Global Gaming Business Magazine, said this number has not shown any casinos.

There is also skeptical opinion that multiple casinos are closed, and this claim is a common business trick.

"The industry is always trying to use the negotiations, as a whole," he is a former leader of the Gaming Executive Office, which is responsible for regulating casinos, and is currently a casino industry consultant. Says Robert Star Jess. "Is that really the case? That wouldn't be the case."

Certainly, gaming experts who verified the news agency Pilot analyzed have expressed concerns about the impact on resort casino hotels, one of the casinos that are greatly dependent on online games. The casino paid more than twice the pilot of the previous year, and experts said that the resulting financial burden could be dangerous.

The resort did not respond to the comments.

Casino Giants Are Buying Online Gaming Firms

The New Jersey Casino Association praised the Pilot bill and Governor of Murphy in a statement. ........ If you neglect to adjust the pilot, not only the industry that is still fighting for the recovery from COVID-19, but is terrible, inappropriate, and unfair to any industry. It would have been done. "

John Lloyd, a consultant at the State Community Bureau, said he had analyzed a "concerned" tax increase at the time. "Several casinos will have a double hit of pure liability under pure Pilot, and will be able to receive more IAT taxes than 2017," he said.

Swoney did not respond to a comment request for our analysis. Perskey refused to answer the question.

Roger Gross, a publisher of the industry magazine Global Gaming Business Magazine, said this number has not shown any casinos.

There is also skeptical opinion that multiple casinos are closed, and this claim is a common business trick.

How We Calculated PILOT Liability

The resort did not respond to the comments.

John Lloyd, a consultant at the State Community Bureau, said he had analyzed a "concern" tax increase at the time. "Several casinos will have a double hit of pure liability under pure Pilot, and will be able to receive more IAT taxes than 2017," he said.

Swoney did not respond to a comment request for our analysis. Perskey refused to answer the question.

Last year, the industry called for tax reduction and raised a problem of tax increase. The Press of Atlantic City and Propublica have asked five gaming analysts and former regulatory officials to analyze the effects of these two taxes on each casino. Everyone states that the Atlantic City's nine casinos have survived the tax hike and continued their business.

Roger Gross, a publisher of the industry magazine Global Gaming Business Magazine, said this number has not shown any casinos.

There is also skeptical opinion that multiple casinos are closed, and this claim is a common business trick.

Calculating What 2022 PILOT Liability Would Have Been Under the 2016 Legislation

Monday, March 14, 2022, a playground peer shopping mall overlooking the Beach of Atlantic City, New Jersey. Credit: Kriston JAE BETHEL

Atlantic County to ask NJ Supreme Court to take PILOT lawsuit

Swoney did not respond to a comment request for our analysis. Perskey refused to answer the question.

Last year, the industry called for tax reduction and raised a problem of tax increase.

The main reason is that it contains profits from rapidly growing online games in pandemic (global trends). According to Joe Lup, the representative of the New Jersey Casino Association and a president of hard rock hotels and casino Atlantic City, the problem in the casino industry is most of the casino technology partner for most of the income from the Internet gambling. It is monopoly. As a result, Lupo argues that the gaming company has to pay the entire tax, despite the fact that his partner companies have earned most of their income.

There is no public means to verify Lupi's claim. A specific casino online gambling arrangement is not usually stated in the financial report of the gaming company that is open to the public.

However, at least one facility, Golden Nugget Atlantic City, seems to have signed a pilot burden. According to the company's SEC submission documents, the Internet gaming partner will pay the Pilot sharing generated by the online license. Both companies did not respond to comment requests. In response to a news agency's question whether more casinos could pay the Internet partner the Pilot sharing, Lupo replied, "it's not a matter of contract conditions."

How a small group called Liberty and Prosperity took on the casino PILOT and won

On March 12, 2022 (Saturday), there is a billboard for advertising the Golden Nugget Casino online gambling app along the Route 30 on the way out of Atlantic City, New Jersey. Credit: Kriston JAE BETHEL

Kriston JAE BETHEL

THE PRESS OF ATLANTIC CITY and D Propublica have asked companies that operate the other eight casinos in Atlantic City to details about tax arrangements and profits. Neither of them refused to explain or requested comments.

The gaming execution department also refused to provide detailed distributions between the casino and their online partners.

The bureau has combined the betting on the casino's unique digital platform and the bets performed by the third party's app, publishing the total income of online games as a single number. The bureau did not answer the question, and the information provided by the casino to the government was confidential, and the public report was "reflecting the legal requirements" under the Casino Management Law.

"The lack of information makes it hard for policymakers to evaluate the industry's claims when crafting tax policy," said Jim Kennedy, former head of the state's Casino Reinvestment Development Authority.

The question is, "Do we have transparent, fair numbers?" Kennedy said. "I don't know if we have fair numbers, but we certainly don't have transparent numbers."

As Lawmakers Mull Big Tax Breaks, New Proof Shows Atlantic City Casinos Doing Just Fine

The casino industry instead uses 2019 — the year before the pandemic — as its reference point, and even that comparison shows casinos doing much better in 2021, bolstered by sports betting and internet gambling winnings

Published December 16, 2021 • Updated on December 17, 2021 at 7:41 am

A spokesman for the New Jersey Casino Association said that generally, only 20% to 25% of New Jersey's total online gaming revenue is attributable to casinos' own platforms. But a Press of Atlantic City/ProPublica investigation found that this figure is expected to rise during the PILOT program as gaming companies move to reduce or eliminate third-party costs.

MGM Resorts International, which owns the Borgata Hotel Casino & Spa in Atlantic City, formed a 50-50 joint venture with U. K.-based Entain PLC in 2018 to create online gambling platform BetMGM.

The Borgata Casino and Water Club Hotel, located in the north part of the island in Atlantic City, New Jersey, on Saturday, March 12, 2022. Credit: Kriston Jae Bethel

By 2021, Caesars Entertainment Corp. (parent company of Caesars Atlantic City, Harrah's Resort Atlantic City and Tropicana Atlantic City) had gone further, clearing several hurdles to acquire one of its online betting partners, U. K.-based William Hill PLC. The deal closed last April for about $4 billion, bringing the company under Caesars umbrella.

Bally's has made similar moves, acquiring a number of betting sites to support its expansion into the online gambling sector. When Bally's released its preliminary first-quarter financial results in April 2021, it also revealed plans to acquire British online gaming operator Gamesys Group PLC for $2. 7 billion. The acquisition closed in October, one of a series of acquisitions to bring its internet gaming business fully in-house.

Four Atlantic City Casinos May Close If State Doesn't Pass Aid Bill, Lawmaker Says

Both Caesars Entertainment and Bally's Corp. will incur some fixed costs associated with online support services, such as site hosting and digital cloud space, but otherwise "keep all the remaining economics in their own platforms," which represents 85% to 90% of revenue, said Jeffrey Stanshall, a gaming analyst at investment banking firm Stifel. "Their technology is virtually entirely in-house at this point." Neither company responded to questions about their online divisions.

New Jersey Eyes Financial Break for Atlantic City Casinos

Lupo did not mention the acquisitions in his public remarks and denied them in interviews with The Atlantic City Press and ProPublica. "That's not relevant to my argument," he said.

The bill that created the PILOT program in 2016 established a multi-step process for calculating how much each casino owes in lieu of property taxes. Under the bill, the industry-wide payment is determined by a tiered system based on the previous year's total gaming revenue. Lawmakers set the maximum at $3. 4 billion to $3. 8 billion, resulting in an industry-wide payment of $165 million. The PILOT amount would remain the same for any revenue above that range. Atlantic City's nine casinos would then share that amount based on other criteria. Here's how each casino's PILOT contribution would be calculated for 2022 if the law hadn't been amended:

Calculate the total gaming revenue for the previous year ($4. 2 billion in 2021) to determine the industry-wide PILOT payment. Based on the tiers established in the 2016 bill, the overall PILOT payment would be $165 million.

Calculate each casino's share of the prior year's gross gaming revenue as a percentage of the industry-wide gross gaming revenue.

Calculate each casino's hotel room share of the industry's total hotel rooms.

Calculate each casino's square footage share of the industry's total square footage.

For each casino, average the percentages from steps 2, 3, and 4.

Multiply the industry-wide PILOT payment from step 1 by each casino's average from step 5. The result is each casino's individual PILOT payment under the 2016 rules.

Source: Hotel rooms and square footage from state Department of Community Affairs; gross gaming revenue from state Division of Gaming Enforcement.

Note: Total gaming revenue reflects revenue generated from in-person and online wagering, including those associated with each casino's third-party operators. Tropicana hotel room count excludes non-casino hotel rooms, which are assessed under traditional property taxes rather than PILOT.

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Liberty and Prosperity founder Seth Grossman talks about how he and his small nonprofit have been fighting the casino industry and the governor over the new PILOT law, with success.

Atlantic County will ask the state Supreme Court to hear an appeal of its 2021 casino PILOT law reform lawsuit, saving time and money by skipping the appeals process.

"The appeals process will take 12 to 18 months. It's pretty clear from both sides' perspectives that whoever loses is going to go to the state Supreme Court anyway," said county counsel Jim Ferguson at the Atlantic County Commission on Tuesday.

Ferguson said the state Supreme Court can voluntarily accept direct appeals from the high court if the issues raised in the case are of great public importance.

The county is suing the state over changes to the PILOT law passed by the Legislature that provided tens of millions of dollars in tax breaks to the casino industry after Gov. Phil Murphy signed them at the end of 2021.

High court Judge Michael Bly ruled that the state violated a 2018 consent decree related to an earlier lawsuit and ordered the state to pay the county what it would have been entitled to under the original PILOT law.

The state is appealing the ruling.

Elim Poon - Journalist, Creative Writer

Last modified: 27.08.2024

spent US $66 million in one day in a Macau casino, and was sued for around US $ million by a casino in Singapore in November for. Behind the glitter loomed extraordinary financial problems. The Taj and Trump's two other casinos labored under a total of $ billion in. The head of one of Trump's casinos was notified of the indictment in October , but Trump continued using Weichselbaum—conduct that again.

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