Atlantic City Mayor Don Guardian warned that the city may go bankrupt if it is forced to pay the debt it owes the Borgata Casino, the most profitable of all eight remaining gambling venues.
At present, Atlantic City is on a payment plan, which has been ordered by court and under which, it is to pay the amount of $150 million in tax refunds to the casino. However, on December 8, it missed a $62.5-million payment in tax refund for the 2009-2010 calendar years.
The Borgata brought the matter to court, asking for Atlantic City to be ordered to pay the aforementioned installment with interest and within a month. The gambling venue also asked for the city to be required to pay all legal fees that it has spent during the course.
Borgata Senior Vice President Joe Lupo told media that being a taxpayer, the casino has the right to be paid a refund of overpayments and in a timely manner. The executive also pointed out that Atlantic City has paid its debts to every other gambling property, except for his own.
Commenting on the matter, Mayor Guardian said that the city cannot pay its debt at present and being forced to do so may result in it going bankrupt. What is more, it seems that the once-popular gambling destination cannot apply for a bond or be granted government relief without proving fiscal responsibility.
Yet, the city may receive a financial assistance package of $60 million in government aid. However, the said package first needs to be approved by Gov. Chris Christie. It has recently passed the New Jersey Legislature.
Over the past several weeks, city and state officials voiced concerns that the Borgata may eventually try to seize Atlantic City assets, if the latter does not pay the due refund installments. Responding to those comments, Mr. Lupo said that his casino should not be blamed for the resort’s inability to pay its debt. According to the executive, Atlantic City’s current situation is due to years of “fiscal mismanagement and wasteful spending.”
The city will now have to wait for a court decision on whether it would be ordered to pay the due tax refund within a month. If the judge rules in favor of the gambling venue, Atlantic City will be really close to declaring insolvency, city officials revealed.
Currently, the Borgata is the city’s most profitable casino. Last year, it generated revenue of almost $680 million.
