Atlantic City casinos are soon expected to know whether they will collectively need to pay $165 million or $110 million in property taxes next year.
State legislators and Governor Phil Murphy (D) will have the final say concerning the proposed payment-in-lieu-of-taxes (PILOT) amendment.
Backers of the effort believe gross gaming revenue (GGR) coming from mobile sports betting and iGaming need to be excluded from the property payment calculation since much of that income is shared with third-party operators such as DraftKings and FanDuel. Such iGaming entities are not nearly invested in Atlantic City’s future as the actual land-based casinos.
The fiery debate boils down to determining the fiscal health of the nine casinos and whether a tax break is required. State Senate President Stephen Sweeney (D) has made the unsubstantiated claim that four Atlantic City casinos could close without PILOT adjustment to lower their property payment commitments.
Opponents in Atlantic County contend that the PILOT adjustment would affect local taxpayers in the casino town and that the resorts are doing just fine.
Statistics from the New Jersey Division of Gaming Enforcement show that brick-and-mortar GGR remains lower than pre-pandemic 2019.
Last month, casinos won approximately $206.8 million from their retail slot machines and table games. That is $17.1 million lower, or almost 8% than November 2019. Through 11 months in 2021, land-based casino GGR totals $2.34 billion, a more than 5% loss from 2019.
However, when the GGR from sports betting and iGaming is included, casino win through November stands at more than $3.85 billion. That is significantly better than the $3.02 billion the industry won through 11 months in 2019.
The casinos claim that the bottom-line figures don’t accurately represent the health of their businesses since much of the internet gaming income goes to those third-party sportsbooks and online casino operators.
Not everyone is convinced that the casinos are hurting.
“Atlantic City’s total gaming revenue in 2021 is already the highest seen in 12 years, and it is approaching $4 billion for the first time since 2008,” James Plousis, New Jersey Casino Control Commission chair, said.
Last month, the New Jersey DGE reported that all nine Atlantic City casinos were profitable in the third quarter. The casinos collectively posted a gross operating profit of $310.8 million. Through three quarters, profits total $592.3 million.
Although gaming has returned to the pre-pandemic levels, overnight visitor numbers have not. The Q3 reports showed that of the casinos’ 15,105 hotel rooms were occupied at a rate of 81.3% last month.
Heated discussion expected
Next week, the New Jersey Senate and Assembly are scheduled to discuss the Atlantic City casino PILOT legislation. The industry claims that thousands of casino jobs are at stake without its approval.
One thing is for sure, it is difficult, if not impossible, for foreigners to determine the fiscal health of each casino. That is because of the private nature of their revenue-sharing contracts with their sportsbook and iGaming partners.
Casino Association of New Jersey President Joe Lupo, also Hard Rock Atlantic City president, has suggested that New Jersey reconsider how the DGE reports gaming revenue numbers to boost financial clarity.
Lupo said, “The November 2021 gaming results underscore the fact that land-based gaming revenue is down and not improving. Failure to pass the PILOT legislation will have a further detrimental impact on the land-based casinos, which are still recovering from this unprecedented pandemic.”
The director of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality, and Tourism, Jane Bokunewicz, says the implication of reconfiguring the PILOT legislation is largely unknown.
Bokunewicz told the Associated Press, “It is difficult to assess the statement that four casinos would close because there is limited public information available.”
Last Updated on by Ryan