Atlantic City Settles Pilot Tax Disagreement with the State
Expertise: Global Gaming, Asia Gaming, US Gaming, Sports Gambling
LISTEN TO THIS ARTICLE:
According to Atlantic County Executive Dennis Levinson, per The Press of Atlantic City, the settlement ensures the county will receive approximately $59 million more than it would have if it had not pursued legal action challenging the original 2016 PILOT law and its subsequent 2021 revisions. The agreement, finalized on April 2, follows extensive negotiations between county and state officials.
Levinson credited the outcome to the persistence of the county’s legal team and the support of county and municipal officials throughout the legal battle. He emphasized that the support of these officials was critical in maintaining momentum and determination in seeking what the county considered a fair share of casino-related revenue. He also highlighted the instrumental role of County Commissioner Ernest Coursey, who facilitated dialogue between the county and state representatives, helping to initiate the negotiations that eventually led to a resolution.
The settlement follows a four-hour meeting in February between Levinson and Department of Community Affairs Commissioner Jacquelyn Suárez. The meeting aimed to explore the possibility of a mutually agreeable resolution and, according to Levinson, set the stage for productive discussions that led to the finalized agreement.
Sen. Vince Polistina of Atlantic County described the resolution as a positive development. He added that it signals a constructive step forward in resolving one of the most contentious fiscal issues affecting the county and its relationship with the state regarding casino revenue allocation.
A Battle 9 Years in the Making
The original PILOT law was enacted in 2016 as a mechanism to stabilize casino tax payments and reduce volatility in property tax revenues resulting from fluctuating casino property assessments. Under this arrangement, casinos agreed to make fixed annual payments to Atlantic City and Atlantic County instead of traditional property taxes. Atlantic County filed suit shortly after the law’s passage, arguing that the payment distribution unfairly shortchanged the county.
The 2016 lawsuit resulted in a settlement that guaranteed the county a larger percentage of annual payments, calculated based on gross gaming revenues from all casino revenue sources. However, the state Legislature amended the PILOT law in 2021 to exclude online gambling and internet sports betting revenues from the gross gaming revenue formula. This change significantly reduced the total payments casinos were required to make, thereby decreasing the amount allocated to the county.
Levinson previously estimated that the county lost approximately $14 million due to the changes introduced in the 2021 amendments. In contrast, the restructuring benefited Atlantic City by increasing the share of funds it retained without requiring it to allocate additional revenue to the county. The county argued that this reallocation undermined the fairness of the original settlement and prompted renewed legal action to restore the intended balance.
RELATED TOPICS: Regulation
