A tax plan that was said to stabilize the tax rate in Atlantic City is really just corporate welfare at its worst, charges Golden Nugget owner Tilman Fertitta. The Houston-based Fertitta is threatening to sue of the tax plan—now approved by the budget committee—is passed and becomes law. The plan would set tax payments for all Atlantic City casinos cumulatively at 0 million for two years. Each casinos share would be set by the size of the property.
The idea is to stabilize the city’s tax revenue, which has been hit by numerous casino tax appeals in recent years as well as the closing of four casinos in 2014.
“For now, let’s stabilize Atlantic City,” said state Senate President Stephen Sweeney, the primary sponsor of the legislative package. “There are 8,000 people unemployed, with the potential for another 5,000.”
The casinos collectively would pay $150 million for the first two years and $120 million annually for 13 years if gambling revenue stays at expected targets,
The bill was amended by the committee to aid any casino that would be billed more under the payment in lieu of taxes program than it paid this year. The amount of the overage will be credited toward the casino’s reinvestment tax obligation.
Fertitta says the calculations done by his team would mean that the taxes paid by the Golden Nugget would almost double, from $4.7 million to $8.1 million. He says the assessment on two Caesars-owned casinos—Caesars Atlantic City and Harrah’s Resort—would fall. Taxes would increase at Resorts and Bally’s (also owned by Caesars).
“You can’t play Robin Hood. Especially, you can’t play Robin Hood when you’re robbing from the poor casinos and giving to the rich casinos,” said Fertitta attorney Stephen Scheinthal. “This is cronyism to the hilt, and it needs to stop.”
Also saving on taxes would be Trump Taj Mahal, which could be the difference between staying open and closing.
Atlantic City Mayor Don Guardian testified in favor of a package of proposed bills to the state Senate Budget Committee saying that the tax plan mirrors what billionaire Carl Icahn—who has proposed taking over the casino—has been asking for from the state.
“I do believe this legislation is going to save the Taj from closing,” Guardian said. “It’s exactly what the proposed new owner has been asking for.”
Trump Entertainment Resorts—the casino’s current owner—and Icahn did not comment on the tax plan.
Another bill would redirect that investment tax—paid to the state Casino Reinvestment Development Authority—to pay off $25 million to $30 million of Atlantic City’s debt each year.
Other measures would increase school aid to Atlantic City, mandate a minimum level of benefits for casino workers and eliminate the Atlantic City Alliance, the marketing arm of the casinos.
In another bill, the state’s legislature will also consider changes to a previous law designed to attract smaller casino development to the resort.
Plans call for a loosening of requirements of a 2011 law designed to encourage “boutique casinos” in the resort with as few as 200 hotel rooms.
The new bill would remove requirements that any proposed project would eventually have to expand to 500 rooms and also would let casinos be established in existing buildings.
The 2011 law generated some interest—notably from Hard Rock International—to build small casinos in the resort, but as the city’s gambling revenue continued to decline most of those proposals were scrapped.
“This bill addresses a small-scale casino license, but it can help, so we should get it done,” said Sweeney, the bill’s sponsor. “Allowing renovated buildings to be used for a smaller, boutique casino just makes good sense economically.”
The owner of the 330-room Chelsea Hotel said his property would take advantage of that loophole. Hotel owner and former CRDA Director Curtis Bashaw expressed interest.
“We have always been interested in the idea of adding a gaming amenity to the Chelsea,” Bashaw told the AP. “It’s a boutique hotel; we don’t have room for a big casino. But the bill that passed prevented us from taking advantage.”
Bashaw envisions a small casino of 25 or 30 table games on the hotel’s 5th floor.
“It would be a very intimate experience,” he said. “The casino would be a desirable place to go and learn to play and hang out with your friends.”
Because of fire codes only a few hundred guests at a time could be accommodated, but Bashaw believes that would add to the experience.
“I think there is too much capacity of the one-size-fits-all gaming floor that dominates Atlantic City,” he said. “We don’t want to compete with the mega-gaming halls. We want to give the customer an opportunity to broaden the experience; people are always looking for different experiences.”
