New Jersey’s Fight Against PILOT Program for AC Casinos Harming Residents Financially

During a recent budget presentation, Atlantic County Executive Dennis Levinson stated that New Jersey officials' decision to appeal a court ruling regarding Atlantic City Casino's PILOT program is negatively affecting residents in the area. NJ refuses to change the property tax structure created by casinos, and the recent appeal of a court ruling is stopping the county from using funds that would help alleviate the obligations of taxpayers within the 2024 annual budget. 

During the presentation, Levinson stated that the county's lawsuit against the state is stalled and not showing any movement toward a resolution. This year, PILOT will provide over $18 million to the county. If the court rejects the state's appeal, an additional $14 million may also be due.

However, the court process is taking quite some time, and the funds cannot be allocated for the 2024 budget. Levinson stated that despite the initial ruling in favor of the county and officials' willingness to discuss the matter, the state still wants to stall and appeal the issue.

Levinson says that the state's action is denying taxpayers in Atlantic County what is rightfully theirs and passing the cost of litigation to residents throughout the state. 

The PILOT Bill is a 10-year plan that was originally called the Casino Property Tax Stabilization Act. It was signed in 2016. The legislation connects the amount of property taxes owed by casinos to the annual gross gaming earnings.

The law was amended in 2021 to eliminate the revenue from online casinos and sports betting in New Jersey from the gross totals. This, of course, reduced the New Jersey gaming venues' tax obligations. Online gambling has grown considerably over the past few years, with revenues up over 19% in 2023. Over $1.9 billion was earned last year. Online sports betting brought even more, with over $962 million.

So far, Atlantic County has filed a legal challenge, and Liberty & Prosperity, a political organization, has filed another challenge. The lawsuits were filed against the state and ruled in favor of the county and L&P.

New Jersey is now appealing the decisions. In 2021, Atlantic County sued NJ to stop the amendments because the changes would have affected a court-ordered settlement connected to the original law. The 2018 settlement ensures that the county receives a certain amount of money as long as PILOT is in place.

Atlantic County feels that the amendments will cost local taxpayers up to $26 million over a five-year period.

L&P argues that the PILOT bill is unconstitutional because it violates the requirement that all real estate be assessed and taxed at an equal rate. L&P settled its original lawsuit but remained opposed to the 2021 amendments.

As the county and state go at it over casino earnings and tax payments, the iGaming industry continues to bring in major revenue totals. In 2023, the state counted for 8.7% of the total gambling revenue for US commercial entities. With land-based and online gaming combined with sports betting, the state brought in over $5.7 billion. This is the highest single-year total ever for the state.

Online casinos brought in $1.92 billion, and sports betting generated $962.4 million. Sports bettors placed almost $12 billion in bets, and land-based revenues from sportsbooks came in at $44.1 million. Land-based casinos brought in $2.84 billion.

The Borgata Hotel Casino & Spa, Hard Rock Hotel & Casino Atlantic City, and the Ocean Casino Resort are among the top 15 casinos in the country as the highest-grossing properties. As the revenues continue to increase, there is no doubt that the state and county will continue to argue about what should be done with tax payments and revenue earnings.