These online casinos appealed against the tax demands
Atlantic City: Would a Tax Cut be the Only Chance of Survival for Four Casinos?
There is little sign of the casino boom of the 70s and 80s in the US gambling metropolis of Atlantic City today. Four of the nine remaining casinos are now on the verge of going out of business. US media reported on Monday that a bill currently being discussed in New Jersey that would exempt the casinos from property taxes promises salvation.
At yesterday’s New Jersey Senate budget briefing, Senate President Steve Sweeney appealed to legislators to vote for the bill. If adopted, casinos would pay alternative taxes to the city and county instead of property taxes to the state. These would then benefit the local education system in particular.
The Property Tax Discussion
The property tax has caused much discussion in recent years. After a whole five casinos in the city had to close in 2014, the market value of the remaining nine gambling temples had plummeted. The casinos, therefore, appealed against the tax demands and were proven correct in several cases in court.
As Sweeney explained in his speech yesterday, a large financial hole had arisen for Atlantic City due to the property tax, which had not been paid anyway. Therefore, alternative levies were the right way to go, even if this meant that the casinos would have to pay less overall. Under the new legislation, casinos would pay USD 110 million in taxes in 2022.
This is 55 million USD less than the corresponding property tax demand.
The additional taxes paid by the casinos to the State of New Jersey would remain unaffected. Thus, tax rates of 15 % on online gambling revenues, 13 % on sports betting revenues, and 9.25 % on revenues generated by stationary casino gaming would continue to apply.
However, the future levies to the county and city would not include the revenues from online gambling and sports betting. Thus, the casinos would have to explain that they have very high costs in these areas, for example, because commissions would be paid to partnered technology companies.
A Fair Solution for All?
As Joe Lupo, President of the Casino Association of New Jersey (CANJ) and Chairman of Hard Rock Casino, explains, the casinos are not trying to avoid their obligations. The casinos are willing to make a reasonable contribution. However, to survive, more stability is needed. The bill would create this.
Sweeney, who is in close communication with the CANJ, commented:
Four casinos are in danger of having to close. They have been able to demonstrate this very clearly. We don’t want that to happen. I don’t want a situation like, “I told you this establishment was going to close, and now it’s closed.”
However, he said the bill was not all approved. Don Guardian, a former mayor of Atlantic City and prospective member of the House of Commons, has been critical, he said. The casinos pay less in taxes ultimately fall on the rest of the taxpayers, Guardian said.
Summary
The Senate is expected to vote on the bill this month. The bill would then be submitted to the House of Commons if approved. Whether the tax burden of casinos will be redistributed in the near future remains to be seen.