The ongoing litigation between New Jersey and Atlantic County over the PILOT program (payment in lieu of taxes) has stalled in court for a year, it seems. But the hearing before the state appellate court finally resumes March 20, according to the Press of Atlantic City.
The law, dating back to 2016, links the amount of property taxes owed by casinos to their annual gross gaming revenue. But the casinos in 2021 sought modifications, key among them elimination of revenue from online casinos and sports betting from the calculations. The casinos reasoned that the majority of those revenue streams ended up in operators’ pockets, thus should not be charged to the casinos in figuring out the property taxes.
Lawmakers agreed. Former Senate President Steve Sweeney cautioned that without the changes, the tax bill could shutter a handful of casinos.
The county sued.
Atlantic County argued that the amendments could cost local taxpayers as much as $26 million over the five-year period, probably more given the growing success of online casino and sports gambling in New Jersey.
New Jersey’s Superior Court sided with the county, claiming an agreement between the state and county in 2018 takes precedence.
“Despite the initial rulings in our favor and a willingness on our end to discuss the matter,” County Executive Dennis Levinson told PlayNJ, “the state remains steadfast in its determination to stall and appeal, which only serves to deny Atlantic County taxpayers what is rightfully theirs and to also pass along the cost of this prolonged litigation to taxpayers throughout the entire state.”
The county expects around $18.3 million this year from the PILOT, a slight increase from 2023. Under the previous formula, the casinos owe the county $14.1 million more if the court rules in favor of the casinos, Levinson said.
He said the state may believe the county taxpayers don’t need the money because the county lowered its property tax rates. The tax rate for 2024 could drop up to five cents per $100, Levinson said. In actuality, the decrease has more to do with an increase in property values in the county.
