The legal battle unfolding for the past half-year or so has pitted Atlantic County against the state of New Jersey in what can be referred to as the PILOT wars.
Catchy isn’t it?
In simple terms, the state Legislature approved an amendment to the law known as PILOT—payment in lieu of taxes—that cut out sports betting and iGaming from calculations, costing the county millions. The county sued. A judge then ruled in the county’s favor. Then the state appealed to try and avoid paying that hefty bill.
Now, another party has stepped into the muck to have its say in a court of law—a non-profit named Liberty and Prosperity. The organization thinks the whole concept goes contrary to the constitution. But they filed suit to overturn the amendment so the original PILOT legislation can run its course through 2026, according to the Press of Atlantic City.
Everybody clear?
The genesis of the PILOT law revolved around the numerous successful appeals of casino tax bills, which left the city without enough income to carry out its budget. Under PILOT, the casinos pay a certain amount of their taxes based on gaming revenue up to a certain point. That way, the casino industry knows what its obligation is, and the city and county know how much money they have to budget properly.
PILOT will expire in 2026, ten years after it launched, and the traditional property tax structure returns after that. In 2018, the county again took issue with the payments, and filed suit to ensure they received their fair share. They won.
In 2020, casino revenue fell as gaming shut down and later operated under restrictions. Since most of the revenue for iGaming and online sports betting goes to third-party operators, the casinos wanted some relief by cutting out those two streams from the calculations. Lawmakers went along with the request, one which could save the casinos millions this year alone.
The county reminded the state of the 2018 memorandum. They sued. They won. The state appealed.
The new lawsuit by Liberty and Prosperity said PILOT violated the state constitution’s uniformity clause and other legal jargon. The state says the city and gaming industry have a unique relationship not present anywhere else.
A hearing was held August 7 before Judge Michael Blee. His decision is forthcoming.
“Indeed, the principal shortcoming of Plaintiff’s argument is that it fails to acknowledge the unique circumstances of the City and the casino industry from a constitutional perspective,” the state’s lawyer, John Lloyd, said in his legal brief.
Lawyer Seth Grossman, who also runs L and P, said the whole act is unconstitutional. “The only logical thing is to throw out the amendment and make casinos live up to the 10-year deal they signed up for back in 2016.”
Otherwise, the money to reimburse the county will come from state taxpayers, Grossman said.
The judge recently ruled in favor of the county in its lawsuit, which is seeking to force the state to pay it the difference between what it would have received under the original PILOT and what it will get from the amended one.
But a state appellate court stayed that order until it takes further action on a state appeal.
“Enough is enough. They ought to meet their obligations,” Atlantic County Executive Dennis Levinson said. “But they want to prolong it as long as they can, whatever their reasons are.”
