The pandemic-led economic situation that has badly affected Atlantic City’s casinos since March will directly impact New Jersey’s 2021 budget.
It is also because the casino’s overall revenue is the basis of their yearly payment to the city based on the 2016 PILOT bill.
According to this bill, casinos make yearly payments to the city based on revenue instead of paying property taxes based on property value. In 2019, the total revenue generated from Atlantic City’s casinos was $3.2 billion, and their total payments to the city were around $150 million.
However, this year is different as it was defined by the pandemic that caused the casinos to shut down in March. The four months of complete inactivity in compliance with the government orders aimed at observing social distancing, the casinos in Monopoly City are unlikely to repeat the last year’s performance.
Atlantic City’s nine casinos have reportedly generated overall revenue of $1.2 billion from January to July this year. That reflects a visible difference compared to the same duration last year when they reported a revenue of $1.84 billion.
In addition, the city casinos reported a continuous revenue increase with an 11.48 percent average each month starting from August 2019 to the end of that year.
However, it is naïve to expect the last year’s performance in the post-pandemic restriction. The casinos are hardly expected to perform better than they did the last month. So, they are inevitably going to fall significantly short from their last year’s totals.
Furthermore, casino win has dipped by more than 58 percent through July, and is not likely to pick up with the pandemic-led restriction in place.
Atlantic City has a history of casinos going bankrupt. Now, with casino revenues at some of the worst levels in history, the state needs to find a solution fast.
The PILOT bill was approved in order to put an end to the casinos’ property tax appeals filed before the city. It was meant to support Atlantic City’s tax base.
The bill was aimed at bring a stable $120 in annual payments from the city’s casinos. It had been working as planned before the pandemic struck the state.
Sen. Chris Brown (R- Atlantic) was among those who voted for the PILOT bill in 2016. He realizes the need to modify the piece of legislation.
Assemblyman Vince Mazzeo (D-Atlantic), who was a prime sponsor of the bill, also recognizes the need to do something about it. However, Mazzeo adds that the city has to be cautious on “how to navigate” through the looming shortfall.
Meanwhile, the lack of any concrete solution has made residents fearful of a possible increase in property taxes. Some are also worried about an imminent decrease in municipal services.