NJ Assemblyman Seeks 5-year Pilot Relief For Atlantic City Casinos

Stephen Abiola
Stephen Abiola
Online Casino New Jersey

Atlantic City casinos recorded huge financial losses due to the coronavirus pandemic in 2020 and had to brace themselves for the potential economic challenges that came thereafter. Declining gambling revenue at these casinos resulted in lower tax payments to the state, a scenario that worries local officials as the state aims to stabilize the city’s finances.

With regards to this, State Assemblyman John Armato, D-Atlantic, has proposed a bill to change the 10-year casino payment in lieu of taxes (PILOT) law. The legislation aims to alter the annual amount owed by the casinos for the next five years considering the impact of the COVID-19 pandemic on the industry.

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The amount required by Atlantic City casinos in annual property taxes is directly tied to gross gambling revenue. Tax payments by casinos are based on total revenue derived from brick-and-mortar gambling, iGaming, and sports betting.

The arrangement was introduced with the PILOT bill, which was signed into law in 2016.

New Pilot Low to Amend Casino Revenue Calculations

The casino PILOT bill directly ties annual payments required from the casinos to total gambling revenue. This means that if the gambling industry grows, the amount paid out goes up.

A surge of online gambling and sports betting memberships drove enough revenue to help offset losses at brick-and-mortar casinos in 2020. However, Atlantic City casinos did not claim much of that revenue due to their third-party operators.

Due to this, Atlantic City casinos are paying taxes on revenue that does not go into their records.

AC casinos consider that to be rather unfair.

Armato’s bill seeks to exclude  sports and online gambling revenue from AC Casinos’ PILOT calculations.

“Since the implementation of the PILOT program, internet gaming and sports betting have been overwhelmingly successful. Because of this success, the casinos were exceeding the payment expectations as stated in the original PILOT program,” Armato said.

AC Casinos Seek Relief To Cushion The Impacts of Covid-19

Armato stated that AC casinos may be unable to meet up to their required annual property payments unless the PILOT law is amended.

The casino PILOT payments play a significant role in Atlantic City’s annual operating budget as they take up almost 50% of the city’s annual budget.

Atlantic City casinos reported an 80% decline in operating profits in 2020. Thousands of local residents were also out of jobs as the casinos shut their doors for almost four months.

“It’s been a long and hard year under COVID, for the residents and for the casinos,” Armato told PlayNJ. “After many discussions, we think it is in the best interest of the residents of Atlantic City to alter these last five years of payment to ensure that the casinos are able to rebound from COVID.”

Collectively, Atlantic City’s nine casinos make a significant part of New Jersey’s largest industries. They provide more than 20,000 jobs and pay millions of dollars every year in taxes and fees to the state, county, and city governments.

Armato said the aim of the bill, along with a proposed extension of the state takeover of the city would lead to long-term success.

“Before COVID, Atlantic City was on the rebound. We had two new successful casinos, community revitalization projects, and infrastructure projects underway, jobs and education were soaring in our resort town. COVID put a hold on all of that,” Armato said.

The primary focus now, he said, should be, “ensuring that our gaming and hospitality industries return to pre-COVID levels, and continue to develop.”

The cost analysis of the bill is yet to be released so it is still unclear how much the casinos will be required to pay according to the new bill.