New Jersey Senate President Stephen Sweeney (D) has been a loyal ally of Atlantic City casinos during his nearly 20-year run as a state Senator in Trenton. Now a lame duck, Sweeney’s swan song could be a major concession to the current nine gaming resorts by way of reducing their property payments.
First elected to the New Jersey Senate in 2002, Sweeney was shockingly defeated during this month’s election by a little-known Republican truck driver.
One of the state’s most powerful Democrats over the past two decades, Sweeney isn’t sitting idle until his successor is sworn in. Instead, legislation that he introduced in June that could save casinos tens of millions of dollars in reduced payments under the state’s payment-in-lieu-of-taxes (PILOT) program is being resurrected.
S4007 is Sweeney’s Senate version of a similar bill proposed in May by Assemblyman John Armato (D-Atlantic). The pieces of legislation seek the same goal: strip online gaming and mobile sports betting revenue from the total gross gaming revenue (GGR) figure that is used to calculate the nine casinos’ collective PILOT assessment each year.
Sweeney’s PILOT bill today advanced out of the Senate Community and Urban Affairs Committee.
Amending Payment Structure
The 2016 PILOT bill, which Sweeney authored, withdrew property taxes on Atlantic City casinos. In exchange, they agreed to pay the state and Atlantic County at least $120 million annually. The law came after several casinos successfully challenged their property tax valuations in the wake of five casinos closing between 2014 and 2016.
PILOT was seen as a way to guarantee that tax revenue would continue to flow into the state and county in a timely, expected manner. The total payment is dependent on GGR.
The 2016 arrangement, which is to run for 10 years, came before New Jersey legalized internet casino gambling and online sports betting. The land-based casinos argue that since they share much of their iGaming revenue with third-party operators, most of which aren’t located in Atlantic City, that income shouldn’t be tied to the PILOT program.
GGR from internet casinos and online sports betting flourished throughout much of the pandemic, while Atlantic City’s retail gambling tumbled. But Atlantic County officials say Sweeney and Armato’s bills favor the casinos instead of residents.
We will obviously end up back in court,” Atlantic County Executive Dennis Levinson told the Press of Atlantic City. “I’m going to fight for the taxpayer.”
Atlantic County receives 13.5 percent of the PILOT payments.
State lawmakers could have options in considering amending the PILOT structure.
Amato’s bill simply sets the 2022 PILOT payment at $125 million. Sweeney’s bill sets the 2022 number at $110 million, but could increase if brick-and-mortar GGR greatly rebounds next year. By comparison, the casinos paid $150 million under PILOT last year.
In related developments, Sweeney’s forthcoming exit as the state’s second-most powerful Democrat behind Gov. Phil Murphy could be good news for anti-casino smoking advocates. Sweeney has largely shared the thinking of the Casino Association of New Jersey, in that now is not the time to end the clean air indoor loophole afforded to casinos.
Advocates such as the “Americans for Nonsmokers’ Rights” recently told Casino.org that they hope Sweeney, during his lame duck session, finally fights for workers’ rights to a workplace free of tobacco smoke and pushes legislation to end casino smoking.
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