A New Jersey judge has struck down the Atlantic City casino tax exemption law, deeming it unconstitutional. [Image: Shutterstock.com]
Violation of the constitution
A New Jersey Supreme Court judge has struck down a new state law that gives Atlantic City casinos tax breaks worth tens of millions of dollars.
Explaining Monday’s ruling, Atlantic District Judge Michael Bley said lawmakers passed the unconstitutional law for questionable reasons. If his decision stands, the casinos will add millions more to the local state coffers.
I helped the casino business for no good reason
A conservative, not-for-profit group called Liberty and Prosperity 1776 challenged the constitutionality of the law. She claimed that the state constitution forbade any form of preferential tax treatment. In response, officials said the new law served a “permissible public purpose.” However, Judge Blei ruled that he helped the casino sector for no good reason.
Freedom and Prosperity welcomed the court’s decision in a statement issued on Tuesday. One representative considered it unfair to provide additional support to one struggling industry over another during difficult economic times.
Increase your tax obligations
Lawmakers passed the polarizing tax exemption law in December of last year after an extended voting session. Casinos have requested tax breaks to help them deal with the impact of the COVID-19 pandemic, which has had a detrimental effect on personal gambling. Some lawmakers have claimed that failure to help casinos will lead to permanent property closures.
Atlantic City casinos have certainly had their problems this year. They have only recently avoided employee strikes by agreeing to “big increases” for their employees. Meanwhile, New York City will soon host three new casinos which will pose a challenge to customers.
The legislation essentially excluded online gaming revenue from the casino’s total gaming revenue when calculating the payment in lieu of property taxes (PILOT). As a result of this change, the total liability of PILOT for Atlantic City casinos has decreased by $55 million this year.
The New Jersey Casino Association has not yet commented on the court’s ruling. Onlookers expect more litigation, as the state is reported to be considering an appeal.
Powerful Recovery for AC Casinos
Although executives and lawmakers have argued that the AC gambling sector is in a precarious position, casinos were already showing strong signs of recovery when the tax exemption law was passed. Last year, Atlantic City Casinos reported a total operating profit of $767 million. Personal gambling returns have surpassed pre-pandemic figures.
The total operating profit of the nine casinos in Atlantic City was $339 million
In the first half of 2022, the total operating profit of the nine Atlantic City casinos was $339 million, an increase of 17% year-over-year.
Which prompted Judge Bailey to state in his decision on Monday, reported by ProPublicathat there is no evidence to suggest that casinos cannot meet PILOT’s obligations as a “revolving industry”.
