Atlantic County Will Receive $15 Million From NJ to Remedy Gaming Tax Dispute

The funds are to cover county property tax losses after state lawmakers amended the casinos’ PILOT.

Atlantic County is closer to being made whole for what county officials said was outstanding tax revenue from iGaming and online sports betting that state lawmakers wrongly stripped from the region that’s home to Atlantic City and its nine casino resorts.

The Reason Behind the Dispute

In 2021, New Jersey lawmakers, at the request of the nine casinos down the shore, passed legislation that removed iGaming and online sports betting revenue from the state’s annual calculation that determines how much the resorts collectively pay through their payment-in-lieu-of-taxes (PILOT) program.

The PILOT was afforded to the casinos in 2016 after five casinos closed and the remaining properties contested their real estate assessments. The legal challenges stalled the timely delivery of property taxes to the state and county.

The Impact on Atlantic County

PILOT bases the casinos’ property tax obligations on the amount of gross gaming revenue (GGR) they generated in the prior year.

The casinos successfully lobbied lawmakers to remove GGR from iGaming and online sports betting, claiming that much of that money goes to the physical casinos’ internet partners, such as DraftKings and FanDuel. Since those third-party entities have little or no brick-and-mortar presence in Atlantic City, the resorts argued they shouldn’t have to pay property tax on that income.

A Settlement for Atlantic County

County Appeal

In a separate 2016 lawsuit resolved through a consent order, Atlantic County’s mandated share of the PILOT money was increased to 13.5%. The county claimed in its 2021 lawsuit that the change to the PILOT calculation violated the consent order.

State courts agreed with Atlantic County, which led to a settlement. This week, the state Local Finance Board, a unit of the New Jersey Department of Community Affairs, signed off on paying Atlantic County $15 million to make the county whole.

The Benefits

The money will come through the state issuing a bond.

Speaking with Zamazonke.co.za on Friday morning, Atlantic County Executive Dennis Levinson said the $15.7 million, which brings the county close to $59 million in additional property tax revenue than it would have received had the county not sued the state in 2016 and 2021, simply pays the county back.

The Future of Gaming Revenue

Through four months of 2025, GGR from Atlantic City casino slot machines and table games is down 2% to $855.4 million. Oddsmakers have also seen declines, as sports betting win is 18% lower at $357.6 million.

Online betting accounted for 96% of the bets from January through April.

Gaming Revenue Trends

In contrast with sports betting and brick-and-mortar, online gaming continues to surge. iGaming revenue during the four months totaled more than $908.4 million, a 21% year-over-year gain.

Conclusion

The settlement brings relief to Atlantic County, which has been waiting for years to receive its fair share of gaming tax revenue. As the gaming industry continues to evolve, it’s essential for lawmakers and local officials to ensure that all stakeholders are treated fairly and equally.