New Jersey state to appeal casino tax break ruling in legal fight with Atlantic County

The legal battle over the casino PILOT law -which 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- seems to not be over. The State of New Jersey is expected to ask the court to reconsider a judge’s Feb. 25 decision that the tax proposal is in violation of a 2018 consent order.

According to Superior Court Judge Joseph Marczyk’s ruling last month, New Jersey violated the terms of a consent order between the state and Atlantic County. In 2018, the lawsuit over the 2016 PILOT bill was settled for specific percentages based on the original law details, to run through 2026.

Under the consent order, Atlantic County was set to earn about 13% of PILOT funds calculated under the original law, which the county interpreted as including online sports betting and internet gaming under GGR. By leaving out these two profitable verticals, Atlantic County claims the state dishonored their agreement, which prompted the county to sue.

State representatives have now told the county in a conference call that New Jersey would file a motion for reconsideration, Atlantic County Executive Dennis Levinson said on Monday, according to The Press of Atlantic City. “It’s just a tactic to delay the process. These things are typically not granted,” Levinson said.

The filing, which must be received by the court by Thursday, would be with Atlantic County Assignment Judge Michael J. Blee. The county then would have until March 25 to respond, and the state has until March 29 to reply in further support of its motion. Superior Court Judge Marczyk, who was handling the case until now, moved Tuesday to the Appellate Division. 

In his order from last month, Marczyk did not enjoin the state from implementing the law “except to the extent they are subject to sanctions and/or damages,” to be determined in a March hearing before judge Blee. At the time, Levinson said this implied “they are going to decide now what damages” the county can collect, and how the county is harmed by this.

The controversial new PILOT law was signed by Gov. Murphy in December, lowering payments from what they would have been under the original legislation. The amendments would provide Atlantic County with $15 million to $26 million less through 2026 than under the original law, according to officials.

The Superior Court Judge had previously urged the parties to go into mediation, but the state of New Jersey ultimately declined to do so in January. In a hearing this month, lawyer for the state John Lloyd argued the Legislature had the right to define “gross gaming revenue” any way it saw fit in spite of the consent agreement, while county attorney Ron Riccio argued the consent order was based on the understanding all gaming revenues would be included in calculations.