Tax Relief Could Be On The Way For Struggling Atlantic City Casinos

Written By Derek Helling on September 24, 2020 - Last Updated on October 28, 2022
atlantic city casino tax relief

A bill that would grant significant Atlantic City casino tax relief is headed to Gov. Phil Murphy after the New Jersey General Assembly overwhelmingly approved it Thursday morning. The aim of the bill is to help AC casinos rehire more of their pre-pandemic workforce.

While it’s uncertain whether Murphy will sign the bill in its current form, what’s clear is the need for the deferment. It’s also uncertain how many employees casinos can actually put back to work given the ongoing restrictions.

Details of the Atlantic City casino tax relief bill

A4032, which the Assembly approved 71-5, is essentially a deferment of tax payment for AC casinos. The NJ Senate passed the bill in June.

The bill’s chief tenets include:

  • Deferment of most fees normally imposed on casinos for the time frame that AC casinos were completely closed to the public
  • A further deferment of those fees for a period of six months after they reopened
  • Calls for casinos to repay those amounts in 12 equal monthly installments after the deferment periods end
  • Excludes fees and taxes incurred from online gambling from the deferment
  • Excludes taxes levied on hotel rooms and parking from the deferment

So, essentially, all the taxes that AC casinos would normally pay for revenue on physical slots and table games, bingo, poker, etc., they won’t have to start actually writing checks for until the deferment period ends. For the annual licenses on slot machines, for example, that deferment period ends Oct. 30.

Perhaps most notably, the casinos will not have to pay the deferred amounts with interest. One of the bill’s sponsors, NJ Sen. Chris Brown, spoke about the bill’s aim.

“Remember, our goal is to get employment back up to pre-pandemic levels, when over 27,000 local families held casino jobs,” Brown said. “We have to take these initial steps and develop a plan, not a bailout, to help our local economy recover as quickly as possible.”

While the bill does mandate casinos make “a good faith effort” to restore their workforces to pre-pandemic levels, it does not include any clear enforcement measures for that requirement. It does specify a time frame in which casinos must make such an effort.

That may not matter in terms of Murphy’s approval. For the foreseeable future, it may be difficult to force casinos to hire new staff in droves anyway.

Safety protocols may limit casinos’ workforces for the time being

Atlantic City casinos still face a litany of restrictions aimed at preventing the spread of COVID-19. Poker rooms are still closed, indoor dining is limited and gaming positions are reduced.

Indoor capacity limits for casinos include all staff, not just casino guests. That means each person on shift at a casino counts toward that 25% capacity limit.

While the increased need for sanitation creates some work, a lack of gaming activity balances that out. In the end, hiring more people isn’t just about the bottom line. It’s also about whether or not there is room for more staff.

Regardless, these tax breaks should allow casinos the fiscal flexibility to hire staff as the opportunity demands. Heading into October, that situation looks more promising than it did since the pandemic began.

The raw numbers of the cost of COVID-19 for casinos

The bill headed to Murphy cites a $112 million loss and a 50% reduction in the workforce for AC casinos because of COVID-19. While NJ online casino and sports betting revenue have been robust lately, AC casinos still depend on physical gambling for much of their operating income.

Some casinos have turned to aggressive and exclusive brick-and-mortar promotions to encourage foot traffic on their gaming floors. Their ability to pay the back taxes when the deferment period ends may rely on the success of those promos.

It will be hard for Atlantic City casinos to argue that the state government was indifferent to their plight, regardless of how successful they are in recovering from the pandemic. Hopefully, the circumstances of the pandemic will allow them to quickly boost their staffing levels.

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Derek Helling

Derek Helling is a lead writer for PlayUSA and the manager of BetHer. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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