With Atlantic City casinos‘ payment in lieu of tax (PILOT) program set to expire next year, the state of New Jersey is prepared to sit down with Atlantic County to settle a 2021 lawsuit stemming from amendments to the program.
Although the suit has been at a standstill since March 2024, there are now discussions taking place about settlement options. Atlantic County Executive Dennis Levinson believes the state plans to renew the program and wants the lawsuit out of the way first. He told the Press of Atlantic City:
“After all this time. … After we spent $1.3 million fighting them, they want to sit down and have a discussion. And why? Because they want a new PILOT.”
As of last week, Levinson has not heard from state lawmakers regarding a new PILOT as of yet, which likely to change soon. In the near future, Levinson is going to be discussing a new PILOT and a settlement agreement.
Atlantic County sued NJ in 2o21
Levinson appears to be convinced that since the PILOT expires at the end of next year, that’s the only reason the state wants to settle the lawsuit. Discussions for a new PILOT have already begun.
The settle talks date back from a 2021 lawsuit, when Atlantic County sued the state over amendments that would have altered a previous court-ordered settlement resulting from the original law.
The amendments affected the aggregate base pay, investment alternative tax (IAT) and gross gaming revenue (GGR) tax in some way. However, the biggest change removed online casino and sports betting revenues from the GGR calculation.
Atlantic County received a 13.5% of the payment through 2024, followed by a drop to 12% in 2026 and 2026, the final two years. And because of the online casino and sports betting amendments, Levinson estimates that the county lost about $14 million.
The county actually won a Superior Court case regarding the amended PILOT agreement. However, a three-judge appellate panel placed the case back into the Superior Court on a technically, where it hasn’t moved since.
Discussions for new PILOT have started
State Sen. Vince Polistina, R-Atlantic, confirmed last week that a new PILOT program has been discussed, since the current plan ends at the end of 2026.
The PILOT was designed to help Atlantic City casinos from having to pay heft property taxes. Five casinos closed prior to the PILOT in 2016. Polistina doesn’t see a world where properties go backwards:
“I don’t see ever going back to traditional real estate taxes for casinos. You need the PILOT to give certainty. That has to continue in perpetuity.”
The state has until the end of 2026 to come up with a new PILOT plan.
