Later today, the Legislature is set to vote on a number of proposed bills seeking to reduce casino payments instead of taxes, as some lawmakers continue to claim the casino industry has not provided them with enough information they need to make an informed vote.
A few days ago, the chief of staff of Senator Troy Singleton, Jennifer Crea Auydjian, shared in a statement that serious concerns regarding the circulation of revenue in the aforementioned piece of legislation had been shared by the State Senator. According to the Senator, the gambling industry was supposed to provide an explanation of those concerns but it had not done so to date.
State Senator Troy Singleton and Senator Michael Testa have criticized the local casino industry for not giving testimony during committee hearings at the time when the discussions regarding the bills have been held.
At the same time, a couple of local Assemblymen – John Armato and Vince Mazzeo – explained they have not decided how they will vote yet. Armato was the original sponsor of the Assembly version of the bill that had set the basic PILOT at $125 million, with the piece of legislation then amended to correspond to the version of the Senate bill.
On the other hand, some representatives of the gambling sector, such as the President of Hard Rock Hotel & Casino Atlantic City – Joe Lupo – said they have not heard of issues about any unanswered questions. Mr. Lupo said there was plenty of information provided by the industry and blamed any confusion on media coverage of the controversial issue.
Financial Difficulties Set to Occur Due to New PILOT Bill That Applies to the Local Casino Industry
Under the provisions of the new piece of legislation, sports and online gaming revenues are removed from the calculation of the casinos’ tax in a basic PILOT, lowering the amount from the estimated $165 million under the current law to about $110 million under the new bill.
According to Mr. Lupo, casinos are required to share their revenue from sports betting and online gambling services with a number of independent companies that operate certain parts of their businesses, so basing the PILOT on gross revenues would not be fair.
The Office of Legislative Services has provided a new fiscal estimate between $30 million and $50 million for the state’s annual local revenue loss from the new PILOT bill. Projections say that Atlantic County would lose about $3 million from that amount in 2022.
Steve Sweeney, who is the President of the Senate, has previously projected that four casino venues will close in case the local Legislature makes some changes in the existing legislation that has been in effect for 4 years now. However, neither he nor the gambling sector have identified which casinos would be at risk. In addition, several officials from Murphy Administration, who asked not to be named because they are not allowed to speak about the issue, revealed that two casino venues could be forced to cease operation without passage of the revisions of the PILOT scheme.
The financial difficulties occur mostly because under the provisions of the original PILOT bill that is set to come into force next year Atlantic City casinos would no longer be able to keep part of the collected investment alternative taxes, as they were able to do under the current PILOT. For the time being, state casinos pay investment alternative taxes of 1.25% of their retail gaming revenues and 2.5% of their online gaming revenues. However, the losses that are expected to be faced by Atlantic City under the new piece of legislation are set to be offset by increased investment alternative tax revenues and a combined $5-million payment that is set to be made by all casinos in the period between 2024 and 2026.
Under the new bill, the taxes are set to be redirected to Atlantic City and to the Casino Reinvestment Development Authority. Any additional funds could be paid to two newly-created funds for the beautification of the city and for public safety.