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Will Atlantic City Casinos Really Close Without Tax Breaks?

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What to Know

  • The push to enact tax breaks for Atlantic City’s casinos and avoid a threatened closure of as many as four of them got a key supporter as the head of the main casino workers’ union endorsed a bill being considered by state lawmakers.
  • Bob McDevitt, the influential president of Local 54 of the Unite Here union, said Monday the bill is necessary to prevent thousands of casino workers from losing their jobs.
  • Last week, outgoing Democratic state Senate President Steve Sweeney said casinos have told him that four of the nine gambling houses are in danger of going out of business if the tax relief bill does not pass.

The push to enact tax breaks for Atlantic City's casinos — and avoid a threatened closure of as many as four of them — got a key supporter Monday as the head of the main casino workers' union endorsed a bill being considered by state lawmakers.

Bob McDevitt, the influential president of Local 54 of the Unite Here union, said the bill is necessary to prevent thousands of casino workers from losing their jobs.

“Our members and their families have suffered terribly during the pandemic and resulting meltdown in the economy," McDevitt said. "As we exit the pandemic and begin the recovery process, it is essential that Atlantic City’s hotel and gaming properties remain stable.

“The choices in my mind are clear: Do nothing and risk the loss of thousands of jobs, or immediately pass this legislation and provide a foundation for stability and growth in the future,” he said.

Last week, outgoing state Senate President Steve Sweeney said casinos have told him that four of the nine gambling houses are in danger of going out of business if the tax relief bill does not pass.

The bill provides for the casinos to make payments in lieu of property taxes to Atlantic City, Atlantic County and the city's school system.

Among other benefits, it would remove internet gambling and sports betting money — Atlantic City's two fastest-growing revenue streams — from calculations of how much the casinos have to pay. (Normal state taxes on those items would remain in place.)

Sweeney offered little proof of his assertion last week, saying he had been told by several casino properties and their trade association that multiple casinos could close without the relief contained in the bill. He did not identify specific casinos he believes to be at risk.

Atlantic City’s casino profits and revenue are up significantly this year, rebounding strongly from declines caused last year by the pandemic.

And they are doing better than they did over the comparable period of 2019 before the pandemic hit. But employment is down from peak levels as many casinos are running leaner this year; McDevitt said about 20% fewer workers are on the job now compared to 2019.

Last week, the nation's commercial casinos set a record for their highest-winning year ever.

But casino executives have long complained that revenue from sports betting and internet gambling must be shared with technology platforms, sports books and other partners — even though the casinos are paying taxes on the full amount.

That is a big reason why those two items would be exempted from the amount casinos must pay under the payment in lieu of taxes bill, known as the PILOT bill.

So are any casinos really in danger of closing if the bill doesn't pass?

“It is difficult to assess the statement that four casinos would close because there is limited public information available about the impact on individual casino properties,” said Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, which studies the Atlantic City casino industry.

“The proposed amendment to eliminate sports and online betting could help some casinos and hurt others,” she said.

She noted that between December 2020 and July 2021, internet and sports betting accounted for 46% of total casino revenue, adding it would make a big impact on the casinos finances to exclude those totals from calculations on how much they have to pay.

The bill was approved by a Senate committee last week and sent to the full Senate for consideration, possibly as soon as this week. A slightly different version of the bill is due for discussion and a likely vote in an Assembly committee Monday morning.

The competing versions need to be reconciled into one bill, which needs to be passed by the full Senate and Assembly before going to Gov. Phil Murphy.

Copyright AP - Associated Press
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