On Thursday December 17th, the New Jersey State Assembly voted for the acceptance of Governor Chris Christie’s conditions on a series of bills that would relieve financial strain on the seaside town of Atlantic City.
A major part of the bills is PILOT (payment in lieu of taxes) – a program that would allow Casinos to pay a set payment instead of taxes. PILOT would also redirect much needed aid to the city, who this year alone lost around 8,000 jobs due to casino closures.
Originally, Governor Christie vetoed the Atlantic City tax bailout. Christie thought that PILOT needed more government control over the given aid. Now that it has been renegotiated and passes the State Assembly, PILOT is scheduled to be voted on by the Senate in June 2016.
Alhough everyone can agree Atlantic City is in dire straits, many are questioning how the loss of state tax revenue can be made up. Atlantic City has literally been on the edge of economic collapse since 2014, when four casinos closed their doors.
Not only did the city lose more than half of its tax base, it also carries an additional tax burden of around $397 million in outstanding debt.
“We need the money to balance the budget,” Atlantic City Finance Director Michael Stinson said in a statement to Philly.com earlier this week.
Much of the $397 million debt is owed to casinos. Borgata, Atlantic City and other casinos are owed millions of dollars in tax refunds that the city simply cannot pay. Borgata alone is owed $60 million and the debt is supposed be paid by the end of January.
While Atlantic City struggles, online gaming sees record revenues
Amidst discussions of how the government can intervene to help save Atlantic City, previous legislation to allow casinos to offer gaming online has been working out in flying colors.
This November was a record breaking month for iGaming in New Jersey. Online gambling operators saw a combined $13.22 million total revenue for this November. That is a 51.3 percent increase from November, 2014.
This was the best month ever for New Jersey iGaming revenue, beating out the previous record of $13.16 million for March 2015.
There are several factors that contributed to the record breaking month. For the first time since iGaming legalization, online poker saw positive numbers. Newer online casino Resorts saw $1 million in revenue – the first time Resorts has hit the $1 million mark.
The remainder of the current season will tell a lot about iGaming’s future in New Jersey. The next few months need to be great for online poker especially. Poker has been on a major downswing since the summer. If online poker doesn’t see an upswing in revenues over the colder months, the already shaky base may not support all of the online poker rooms in New Jersey.
Though the poker numbers are less stable, increased casino revenues could be the new standard. Online casino revenues have held firm, with modest increases since legalization.
Is PILOT enough to save Atlantic City
It’s obvious that if some sort of bailout is not passed in New Jersey, Atlantic City is doomed to continue shrinking. With that said, will PILOT and the new series of bills be enough to save it?
Many people including City Council President, Frank Gilliam believe that there are many long-term problems with the tax liens in PILOT. Gilliam is concerned that PILOT is a short term solution with many long term problems. The City Council President expressed his concerns in a statement this week.
Gilliam told Philly.com:
“When you talk about locking an industry in at a particular number. I hope it is not one of these bills that destroy the city in the future.”
One thing is certain – casinos struggling to pay their employees certainly won’t be able to make the investments in renovations that their properties need to compete with surrounding states. If Atlantic City is going to see a revival, making it possible for casinos to enhance themselves could be the only solution.