Atlantic City Casino Land-Based Gaming Tax Reduction Bill Sent to New Jersey Governor

Posted on: June 4, 2021, 09:37h. 

Last updated on: July 5, 2021, 01:08h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

COVID-19 caused Atlantic City casinos to see their brick-and-mortar gross gaming revenue (GGR) plunge 44 percent in 2020. New Jersey lawmakers want to help the nine resorts recover by reducing some of their tax obligations.

Atlantic City casino tax New Jersey
The Atlantic City beach is seeing a return of sunbathers this 2021 summer. Lawmakers in Trenton are hoping to give the casinos in town a tax break in the wake of the pandemic. (Image: AP)

The New Jersey Legislature has sent a bill to Gov. Phil Murphy’s (D) desk that would possibly trim some of the eight percent tax on land-based gaming revenue. Senate Bill 2400 would reduce the eight percent tax if casino revenue in the months ahead is below that same month’s revenue generated in March 2019 through February 2020.

For example, if Borgata reports GGR of $60 million in June of 2021, the MGM Resorts casino’s eight percent tax liability would be cut by 25 percent. Borgata reported GGR of $64.8 million in June of 2019.

The larger the GGR decline, the larger the tax reduction. GGR of at least 75 percent to 99 percent of 2019 revenue for the same calendar month is reduced by 25 percent. For revenue of 50 percent to 74 percent of 2019 GGR, the eight percent is shaved by 50 percent.

For GGR of 25-49 percent, the tax is reduced by 75 percent. For casino revenue less than 25 percent, the eight percent tax is fully waived. 

Murphy hasn’t publicly commented on whether he supports handing casinos a potential tax benefit, nor whether he will sign SB2400. 

Atlantic City Recovery

SB2400 was introduced by New Jersey Senate President Stephen Sweeney (D), and cosponsored by Sen. Chris Brown (R-Atlantic City). The legislation garnered widespread support in both chambers of the legislature.

The Legislature and the Governor have continued to seek ways to restart the State’s economy and recover from the financial problems resulting from the COVID-19 pandemic,” SB2400 reads. “It is necessary for the state to take action to ensure the continued viability of the Atlantic City region’s financial condition, and to assist the region’s population in dealing with the financial and economic problems resulting from the COVID-19 pandemic.”

Along with the eight percent tax, New Jersey law requires that Atlantic City casinos pay a 1.25 percent tax on GGR that is earmarked for investment and economic development projects primarily in Atlantic City.

Real money casino revenue is taxed higher at an effective rate of 17.5 percent. Fifteen percent goes to the state, and 2.5 percent to a community investment fund.

Additional Lifeline

SB2400 doesn’t only potentially reduce the eight percent tax for Atlantic City casinos. The legislation that is being sent to the governor additionally allows each casino to issue $90 million in tax-free promotional credits to gamblers over the next two years.

“A casino licensee shall be allowed a deduction from gross revenues … for the total value of promotional gaming credits, match play coupons, and table game wager coupons redeemed by its patrons,” the statute reads. 

Promotional credits are frequently used as marketing tools for casinos to lure guests. One of Borgata’s current promotions is issuing $2,000 in slot credits every 20 minutes on Sundays this month between noon and 7 pm.