The Rule on Atlantic PILOT Bill to Come Within Weeks

State lawmakers passed a bill late last year, and Governor Phil Murphy signed it. The bill focused on changing how casinos pay property taxes. Atlantic County, which is home to Atlantic City and several casinos, had numerous issues with the bill. Therefore, they went to court.

The revised PILOT (or payment-in-lieu-of-tax) law signed a few days before Christmas last year drastically reduces casino PILOT payments. In the bill, internet and sports gaming are not included when calculating gross gaming revenue.

The changes in the law violate a consent order passed in 2018. The consent order was between the state and Atlantic County. 

Basis of the Atlantic County Case

The Atlantic County officials oppose this bill because of the initial 2016 agreement and 2018 consent form. The state of New Jersey allowed Atlantic City casinos to make a lump sum annual payment. This was in exchange for standard property taxes levied on the resorts. 

The PILOT tax is calculated using the total GGR (Gross Gaming Revenue) from the previous year. The 2021 PILOT amendment that caused all this lessens the property tax sum for 2022 from $165 million to $110 million. 

John Lloyd, the state lawyer attested that the New Jersey legislature had the freedom to define gross gaming revenue in any way they saw fit. He went on to say that the 2018 consent agreement between the state and the county was insignificant.

The lawyer further stated that there was no definition for gross gaming revenue in the initial consent order. The only thing that was clearly defined was that the Division of Gaming Enforcement had the role of defining GGR (Gross Gaming Revenue).   

These arguments are the fueling elements for Atlantic County’s legal complaint.

The Effects of the PILOT Bill

Lawyers on Atlantic County’s side argue that this bill disadvantages players. The alteration only favors the casinos. 

Since the property tax reduces by a significant amount, the cost will have to be catered for by taxpayers. Superior Court Judge Joseph Marczyk plans to issue a decision in written form on the PILOT lawsuit in a few weeks.

The PILOT arrangement should run through to 2026. That is a long time to subject taxpayers to additional tax costs. Atlantic County attorney Ron Riccio argued that the consent order stipulated that all gaming revenues, including land-based, internet, and sports gaming were in the PILOT calculations.

Official Verdict

Superior Court Judge Joseph Marczyk allowed Atlantic County and the New Jersey state leadership to settle their differences using a mediator. Unfortunately, the New Jersey state officials declined the offer and moved the complaint back to the Superior Court.

The Atlantic County Executive Dennis Levinson considers the state’s rejection of mediation as arrogant and incomprehensible. The disputing parties should reach a fair conclusion instead of causing taxpayers financial stress.

The initial agreement was fair and just for the people, the casinos, the state, and the county. Superior Court Judge Joseph Marczyk listened to oral arguments from all concerned parties. He also received a preliminary injunction from the Atlantic County officials.

Both the county and the state are awaiting his verdict.