The state of New Jersey is expected to address the court and ask it to reconsider a local judge’s decision from February 25th, under which the law restructuring casino payments in lieu of taxes violates a 2018 consent order.
On March 15th, the Superior Court Judge Joseph Marczyk, who has been handling the case until now, moved to the Appellate Division.
As revealed at the beginning of the week by the Atlantic County Executive Dennis Levinson, last week, the state’s representatives used a conference call to tell the country that a motion for reconsideration would be filed. The filing, which the court is supposed to receive by March 17th, would be with Michael J. Blee, an Atlantic County Assignment Judge.
In a March 11th letter to the court, the legal representative of the state and Governor Phil Murphy has confirmed that reconsideration would be requested.
As confirmed by George Coan, who is an Atlantic/Cape Vicinage Civil Division Manager, the paperwork has not been received by the court so far but such a filing is expected. After this happens, the county has until March 25th to issue a response, while the state has until March 29th to reply in further support of the aforementioned motion.
New Jersey State Not Banned from Implementation of New PILOT Law under Previous Judge’s Order
In his controversial order announced on February 25th, Judge Marczyk did not ban the state from implementing the new PILOT law except to the extent such an implementation is subject to damages or sanctions to be determined in a hearing before the Atlantic County Assignment Judge Michael J. Blee. At the time, Dennis Levinson explained that the court was set to decide what damages could be collected.
Back then, no representative of Governor Phil Murphy’s office responded to a request for comment. The state’s Casino Association refused to comment on the situation, too.
The state was taken to court by the county as a move aimed at stopping the amended PILOT law, which was given the green light in December 2021 and was signed by Governor Murphy only days before Christmas.
Under the provisions of the new piece of legislation, casinos’ payments were lowered from what they were supposed to be had the original PILOT law continued. According to the then-Senate President Steve Sweeney, who was the sponsor of the law, up to four casinos could cease operation without the new law.
Online gambling and sports betting services were removed from the estimations of gross gaming revenue as part of the law. As a result, the casino revenues in the fiscal year 2022 (from July 1st, 2021 to June 30th, 2022) have considerably increased in the budget of Governor Murphy from the initial projections. The Governor’s budget reported that the collections so far are still exceeding the projections for the current fiscal year, rising above the levels they hit during the coronavirus pandemic.
According to reports, online gambling and sports betting activity marked a substantial increase and have kept strong performance even after in-person gambling premises of local casinos fully reopened.
Legislature Had the Right to Define What GGR Is, State Attorney Says
The actual amount gathered is $41.1 million above the expected level for the fiscal year 2022, while revenues are expected to grow to a total of $425.1 million for the following fiscal year.
As mentioned above, Atlantic County argued that the changes brought by the law breached a 2018 consent order settlement of the lawsuit filed by the county against the original 2016 PILOT, and Judge Mrczyk agreed. As part of the consent order, Atlantic County was set to receive approximately 13% of PILOT money calculated under the provisions of the old PILOT. That piece of legislation was interpreted as including online gambling and sports betting under gross gaming revenues.
The amendments of the law are set to bring the county between $15 million and $26 million less through 2026 than the amount expected to be brought under the consent order under the original PILOT from 2016.
In a hearing that took place earlier in March, the state’s legal representative John Lloyd argued that the Legislature had the right to define the term “gross gaming revenue” any way it found suitable, at any time, in spite of the 2018 consent agreement inked between the state and Atlantic County. Mr. Lloyd further argues that there is no definition for gross gaming revenue either in the original PILOT law or the 2018 consent order, apart from the information that it is determined by the state’s Division of Gaming Enforcement.
According to Ron Riccio, attorney of Atlantic County, the consent order was based on the understanding that all gaming revenues, including the ones generated from land-based and online gambling, and, at a later stage, sports betting, would be included in the PILOT calculations.