Atlantic City’s casino industry has deteriorated over the last few years. Revenue for most of the casinos has dropped considerably and some are struggling to remain solvent. Originally reported by the WSJ 13 casinos recently argued that their property taxes should be reduced since the value of their businesses has fallen.
A New Jersey court recently ruled that Atlantic City must issue a $50 million refund to Borgata Hotel Casino & Spa for overpaid property taxes for fiscal years 2009 and 2010. This was encouraging news for the owners of the Borgata, but it was worrisome for the city government. The city only generates about $250 million a year, which means it will need to implement austerity measures or raise other taxes to make up for the lost revenue.
Judge Patrick DeAlmeida, the presiding judge of New Jersey’s tax court, said that the casinos’ property taxes need to reflect the economic conditions they are operating in. DeAlmeida said that the gaming industry has been adversely affected by competition in neighboring states. He said that property values for the casinos have fallen with revenue.
State politicians are also concerned about the state of New Jersey’s gambling industry. Governor Chris Christie pledged to help revive the ailing casinos when he took office three years ago. However, they have taken a turn for the worse and he is struggling to come up with solutions. Senator Jim Whelan also feels that resurrecting the casino industry needs to be a priority but doesn’t know what the right course will be.
Whelan has a better understanding of the challenges because he used to be the mayor of Atlantic City. He said there aren’t any perfect solutions to the crisis.
Several other casinos have successfully appealed their property taxes. This has caused the city’s tax revenues to decline by 30%. The city has been forced to increase taxes on residential properties and businesses, but realizes that won’t be a viable long-term solution. They hope that the casinos will recover so that they can reduce taxes on other groups.