Bill from New Jersey would explain how state gaming income is presented
According to New Jersey Division of Gaming Enforcement (DGE) , Atlantic City casino market is doing well. However, when analyzing the results provided by the department, a discrepancy arises. While the numbers reflect gross revenue from games (GGR) last year at over 2.88 billion for nine casinos and two gambling races, that's not entirely accurate. Much of this came from online operations and not from land-based gambling. A new law introduced last week aims to provide a more complete picture when DGE releases its revenue figures.
The dilemma of the act on stabilizing the property tax in the casino
When Atlantic City casinos started to waste, they were introduced Property Tax Stabilization Act (CPTSA) to try to get the city back on track. Introduced in 2014, it was a way to guarantee the state a certain amount of income based on gaming performance as it helped the city recover. The legislation increased the property tax liability due to casinos by introducing a sliding scale based on the GGR that determined the amount due. GGR below $ 2.6 billion would result in due property taxes of $ 88 million, and if they reach $ 3.4 billion, the amount rises to $ 165 million.
When DGE reports GGR, it includes online games; However, in many cases, these operations are run by casinos in partnership with third party retailers and game providers. As a result, the casino's revenue is not the same as for land-based operations. This results in a miscalculation of the property tax liability, which significantly reduces the income of the casinos. As a clear example of 2020, Atlantic City's mainland revenue was 43.7% less than 2019, and iGaming revenue grew by more than 100%. The online share casinos had a smaller percentage because of the operating contracts, but according to DGE, they got a lot more revenue.
Bill on Assembly 5587 for Rescue
The Assembly by John Armato introduced Assembly Act 5587 last week to correct the misleading presentation of DGE's revenue data. This would ensure that only land income generated by casinos is included in the figures that DGE uses when calculating the real estate taxes payable. While the bill provides some filling, requiring an additional $ 5 million of annual CPTSA payment through 2026, this is advantageous compared to the tax liability as the overall GGR continues to grow in New Jersey.
Casino operators are vulnerable to the changes made to the Armato Act and hope that the CPTSA changes will take effect. The president of Hard Rock Atlantic City Joe Lupo shared his thoughts in last January when he stated: "There is so much help we really need with these properties - we need to revitalize the city, and it won't be when the media reports on growth when they add online revenues that go to external companies that have no involvement in the game… I don't know why there is no greater transparency in reporting. This measure, on which we report all licensee revenues in casinos, does not give the correct validity. "