The announced closing of the Trump Taj Mahal will not lessen the total amount of PILOT funds to be paid to the city by casinos under a state rescue plan for the resort.
According to an analysis by the Press of Atlantic City, the city will still receive its allotted $120 million in payments in lieu of taxes from the city’s casinos. However, if the Taj Mahal closes as scheduled, the city’s seven remaining casinos will see their share of the figure increase.
The PILOT bill passed by the state set payment in lieu of taxes for the casino industry in an effort to stabilize the city’s tax base and halt costly tax appeals by casinos. Lost tax revenue and re-payments of taxes to casinos that have won tax appeals are a major reason the city’s finances are on the critical list and a main component of about $500 million in debt the city can’t pay back.
The bill calls for the city’s casinos to annually pay about $120 million cumulatively to the city as long as current casino revenues are stable. The Taj Mahal, however, has been engulfed in a long labor strike and announced it would close October 10.
Still, officials don’t feel the casino’s closing will sharply hurt the city’s overall casino revenue and that the $120 million figure will remain intact as the city’s other casinos will probably pick up Taj Mahal gamblers.
“We’ve seen casinos close, and that business gets spread out among the other casinos,” said State Senator James Whelan, a sponsor of the PILOT bill. “Whatever business Taj had is now spread out among the other properties.”
That view has been backed up by a report from Moody’s Investors Service that said the Taj’s revenue would be “up for grabs” for the other casinos.
Moody’s, however, still cautioned that Taj’s closing could have an impact on the PILOT bill.
“Although we expect other casinos in Atlantic City will capture a portion of the Trump Taj Mahal’s revenue, citywide gambling revenue is likely to decline,” wrote analyst Douglas Goldmacher. “This, in turn, could have a knock-on effect on the city as the casinos’ payments in lieu of taxes can fluctuate depending on total casino revenues.”
According to the Press, however, even if the city lost all of the Taj’s annual gross gaming revenue—$180 million in 2015—the city’s total gaming revenue would still be over $2.2 billion, the threshold for the casinos to pay a collective payment to be $120 million. Brick-and-mortar casino winnings totaled $2.4 billion in 2015.
“The Taj wasn’t even making $200 million,” Atlantic City Mayor Donald Guardian told the paper. “So the likelihood of the PILOT payment being reduced is not there, which means the other seven properties have to make the $120 million.”
An amendment to the bill also sets the PILOT floor at $120 million. If overall gaming revenue fell below $2.2 billion, all other casino revenue streams would be counted to offset the loss, according to the Press.
Casinos Court Taj Workers
The Taj Mahal announced it was closing October 10 earlier this month. The property has been embroiled in a casino worker’s strike that began July 1.
Since then, competing city casinos have conducted job fairs that have drawn many Taj Mahal workers. Borgata Hotel Casino & Spa was first, holding a job fair for its new MGM National Harbor Casino in Maryland which drew more than 500 applicants. Last week, Caesars Entertainment held a job fair to fill about 200 positions at its three Atlantic City properties as well as about 300 more between Harrah’s Philadelphia and Horseshoe Casino Baltimore.
Caesars officials told the Press that the job fair was designed to attract Taj Mahal employees, as well as other trained and experienced personnel that have lost jobs in Atlantic City.
Tioga Downs Casino in Nichols, New York has also scheduled a job fair in Atlantic City for August 29 and 30.
Britta Erickson, vice president of marketing for the casino—which hopes to be awarded a full casino license soon—said the company is looking for experienced personnel.
“As we continue to expand the property into a full-scale resort, our need for well-trained, experienced personnel will continue to grow,” Erickson told the Press. “Atlantic City has been in the gaming business for decades, and with the reduction in the number of casinos, we felt that we could provide career opportunities for some very qualified people who would be interested in relocating a few hours north.”
And also confirming the exodus of workers from the resort, a recent Stockton University study found that the Atlantic City area has seen about 13,000 workers move out of the area since early 2013 as local jobs disappeared. In 2014, Atlantic City saw four casinos close and about 8,000 casino workers lose their jobs.
In another report, the Press said that businesses near the Taj Mahal have seen a sharp decline in business as picketers regularly hold demonstrations at the property. That includes the Steel Pier—the city’s only amusement pier—which said it has seen an about 20 percent decline in business since picketers appeared on the Boardwalk.
