Ruling on PILOT bill for Atlantic City Coming Within Weeks

A bill seeking to change how casinos pay property taxes was approved by state lawmakers and signed by Governor Phil Murphy late last year. It didn’t sit well with Atlantic County, home to Atlantic City and its casinos, and a court fight ensued. It’s now up to a New Jersey judge to determine the fate of the program while a larger battle brews.

Atlantic City Double-Crossed by State

Superior Court Judge Joseph Marczyk will issue a written decision within weeks on whether he will stop the new casino payment-in-lieu-of-taxes law from taking effect while Atlantic County’s legal challenge to it is heard, he said Tuesday. According to the Press of Atlantic City, Marczyk made the statement following hearing oral arguments from the state and the county on the request for a preliminary order.

The amended PILOT law was signed just days before Christmas, drastically reducing casinos’ PILOT payments. It did this by excluding Internet and sports gaming from gross gaming revenue calculations.

Atlantic County asserts that the changes to the law are in violation of a 2018 settlement agreement for the county’s lawsuit against the original 2016 PILOT. These amendments will also provide $15 million to $26 million less for the county through 2026 than the consent order under the old law.

John Lloyd, the attorney for the state, claimed that the Legislature could define “gross gambling revenue” however it pleased, regardless of the 2018 agreement between the state and the county.

Lloyd stated that gross gaming revenue could be determined to include penny slots only or all slot machines. Marczyk was not impressed and asked if the state could define it to zero, or exclude a slot machine that is performing at an unprecedented rate, similar to online and sports gaming.

Lloyd responded, “I think it could’ve, Your Honor.”

He added that the state would not do anything that would harm other stakeholders, such as the school and city systems. The PILOT legislation was created to assist all stakeholders following the tax court’s finding that the city’s property taxes assessments were excessively high.

Subjective Interpretation of the Law

Dennis Levinson, county executive, said after the state’s input, “What are we going tax (casinos) on, valet parking?” he referred to the state’s case as “bizarre,” according to the Press of Atlantic City.

Lloyd also argued, “gross gambling revenue” is not defined in any PILOT law or consent orders. It is only determined by the state Division of Gaming Enforcement.

Ron Riccio, the county’s attorney, presented the county’s case. He argued that the consent order was based upon the understanding that all gaming revenues, Including online and brick-and-mortar, would be included in PILOT calculations. This had already been the case for several years.

Riccio also noted that former Senate President Steve Sweeney, the law’s sponsor in the Senate, said to the Senate Budget and Appropriations Committee when it was examining the PILOT bill, that the county had gotten too much from the original PILOT legislation.

Lloyd, however, denied that the new law was intended to reduce payments to the county.

It’s now in the judge’s hands. A decision will be made in the coming weeks; however, regardless of how it goes, it’s likely the fight isn’t yet over.