New Jersey judge to rule on Atlantic County's lawsuit against new casino tax break in weeks

New Jersey Superior Court Judge Joseph Marczyk is set to issue a written ruling within weeks on whether he will stop the new casino PILOT law from taking effect, he announced on Tuesday. The controversial law gives tax relief to Atlantic City’s casinos by removing sports and online gaming revenues from the calculation of their payments in lieu of taxes.

Judge Marczyk made the statement after hearing oral arguments from both Atlantic County and the state on the county’s request for a preliminary injunction, reports The Press of Atlantic City. The Superior Court Judge had previously said he wanted the parties to go into mediation, but the state of New Jersey ultimately declined to do so.

The PILOT tax break, which was signed by Gov. Murphy in December, lowers casino payments to an estimated $110 million from $165 million under the previous law. Atlantic County would receive the same amount in 2022 it received in 2021 -about $17.5 million-, although 2021 payments were based on depressed casino revenues from 2020, amid pandemic-related shutdowns.

According to Atlantic County Executive Dennis Levinson, the state violated a signed consent order settled in an Atlantic County lawsuit against the original PILOT bill, which was signed into law in 2016. In 2018, the case was settled for specific percentages based on the original PILOT details, to run through 2026. Levinson has said more than $30 million is at stake for county taxpayers over the next five years.

Dennis Levinson, Atlantic County Executive

But John Lloyd, a lawyer for the state, argues the Legislature had the right to define gross gaming revenue in any way it saw fit at any time, in spite of the 2018 consent agreement between both parties.

“Here’s my concern regarding gross gaming revenue. Under your argument you could have determined gross gaming revenue should be calculated to include only penny slots or not include slot machines,” Marczyk told Lloyd according to the cited source, asking whether the state could even define it down to zero if it so chose.

However, Lloyd argued the state would not do something that would harm other stakeholders since the PILOT legislation was enacted to help all of them after the city’s property tax assessments were found to be bloated in tax court.

County attorney Ron Riccio, who made the county’s presentation, argued the consent order was based on the understanding that all gaming revenues would be included in PILOT calculations, which was the case for the first several years. Lloyd, however, denied the new law was targeted at reducing payments to the county.

According to estimates by the state Office of Legislative Services, the county would lose about $4 million a year under the new PILOT law, while Atlantic County claims the annual loss would range between $5 million to $7 million. 

The new PILOT law was the source of much controversy throughout the last weeks of 2021. The legislation was sponsored by former state Senate President Steve Sweeney, who said four casinos would close if it did not pass.