Atlantic City’s largest casino, the Borgata, is officially fed up with the seaside town in which it operates. Atlantic City owes the Borgata more than $170 million in unpaid tax refunds from the years 2011-2015. The debt was settled in the courts, and AC agreed to begin a payment plan with the Borgata. After the city failed to pay the casino its first installment of $62.5 million for the tax years 2009-2010, the Borgata decided to take legal action.
The Borgata asked for a hearing in the Superior Court and requested that the judge allow the casino to stop paying taxes to Atlantic City and seize city properties to repay the debt. Judge Julio Mendez addressed the Borgata’s concerns and is allowing the casino to stop paying its scheduled taxes to Atlantic City. However, the Borgata is not permitted to seize any Atlantic City Property.
Joe Corbo, counsel to the Borgata, spoke to the Associated Press about the latest actions taken by the Atlantic City casino:
“We did not come to this decision lightly. We have been tremendously patient, giving city officials every opportunity to pay the amounts we are owed, or to engage us in good-faith negotiations. But after years of delays and unsuccessful appeals by the city, we can wait no longer.
We have a fiduciary duty to the shareholders of our parent companies to pursue collection of the amount we are owed, which currently stands at over $170 million with interest.”
Atlantic City on the verge of bankruptcy
On January 27, Governor Chris Christie held a press conference announcing that the state of New Jersey would assume responsibility for Atlantic City’s finances. The mandate was required to help Atlantic City stave off its inevitable bankruptcy.
Atlantic City’s debt goes well beyond the $170 million owed to Borgata; the city’s estimated outstanding debts total over $240 million. When Chris Christie announced the takeover, he stated that Atlantic City would no longer be able to pay its bills as early as this spring.
This outstanding debt was attributed to Atlantic City’s poor government structure that has been built around unnecessary spending and a major decrease in casino tax revenues. The city has essentially been bleeding money since the early 2000’s.
Northern New Jersey casino expansion
Another huge issue Atlantic City is facing is the expansion of casinos to northern New Jersey. On February 8, the northern NJ casino expansion bill passed the Assembly Judiciary Committee by a vote of 5-2. In general, the expansion is viewed very optimistically by most New Jersey residents. Its supporters see the expansion as a way to save New Jersey’s depleting gambling economy.
Many are concerned about the casino expansion because the two new casinos the expansion will bring are likely to take away significant business and money from Atlantic City, which is also the epicenter of the New Jersey online gambling industry. Even taking into account kickbacks to AC, it will be incredibly difficult for the city to recover. Between the state takeover of Atlantic City and the city’s massive debts to seemingly every major business within it, the Borgata might not be paying its taxes for a very long time – and other businesses may soon find themselves in the same situation.