New Jersey Judge Sides With Atlantic County in Casino Tax Dispute

New Jersey Judge Sides With Atlantic County in Casino Tax Dispute

Posted on: Could 3, 2022, 01:55h.&nbsp

Last up to date on: Might 3, 2022, 01:55h.

New Jersey Superior Court Judge Michael Blee this week upheld a lower court’s ruling that discovered the state’s new payment-in-lieu-of-tax (PILOT) arrangement with the nine casinos in Atlantic City violated a 2018 consent buy.

New Jersey Atlantic County PILOT Atlantic City casino
Atlantic County Executive Dennis Levinson. Yet another New Jersey Superior Court judge has come down in favor of Atlantic County in its lawsuit against the state concerning Atlantic City casino home taxes. (Picture: New Jersey Association of Counties)

Superior Court Judge Joseph Marczyk fielded Atlantic County’s lawsuit last year against the state. The county argued that the state’s amended 2021 PILOT terms with the casinos — which removes iGaming and on the web sports activities betting revenue from the calculation utilized to decide how considerably home tax the 9 casinos collectively pay out beneath the PILOT — ran afoul of a 2018 legal final result that assured Atlantic County 13.5% of the annual tax sum.

The county estimates that the 2021 PILOT modify would reduce its casino residence tax income by $five million to $seven million annually. Marczyk at first advised the state and county enter into mediation to settle the dispute, but right after the state refused, the judge was tasked with choosing the matter.

In February, Marczyk ruled that the 2021 PILOT bill, which was signed into law by New Jersey Gov. Phil Murphy (D) in December, certainly violates the 2018 terms assured to the county. Blee this week announced that the state’s request for reconsideration has been denied.

County Victory

Atlantic County Executive Dennis Levinson says the denial for reconsideration means the state will be required to continue directing the county what it would have received underneath the earlier PILOT calculation.

Everyone in this county ought to consider a victory lap,” Levinson explained yesterday. “Now you have two judges, Marczyk and Blee, who are in agreement that the state was incorrect and that the taxpayers of this county had been becoming handled very shabbily.”

Blee and Marczyk’s rulings do not avoid the 2021 PILOT’s enactment. What it does is call for that Atlantic County carry on to obtain its 13.5% tax allocation based mostly on yearly gross gaming income that includes world wide web gaming and mobile sports betting cash flow.

The state argued that the 2018 consent order only says that Atlantic County need to acquire 13.5% of the PILOT tax, but didn’t specify what constitutes “gaming.” Attorneys representing the state’s interests explained lawmakers are totally free to decide what is included in the gaming income calculation, but the judges disagreed.

PILOT Lifeline

Following his surprising upset in the 2021 November election, then-New Jersey Senate President Stephen Sweeney (D) championed the PILOT amendment in the casinos’ favor. The longtime politician mentioned as many as four of the 9 casinos were in peril of closing unless of course the state reduced their tax obligations.

Sweeney didn’t name names relating to the four at risk of closing without tax breaks. But the New Jersey Division of Gaming Enforcement said eight of the 9 casinos had been lucrative final 12 months — Bally’s becoming the lone exception, as the Boardwalk home recently changed ownership and is amid a $one hundred million renovation. The nine casinos combined to publish a gross working profit of $174.four million in 2021.

Casino officials say their iGaming and online sportsbook income shouldn’t be integrated in the PILOT tax, as much of that revenue is shared with third-get together operators that have no physical presence in Atlantic City — or even the state.

Murphy’s office has yet to comment on this week’s ruling from Blee.

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