A New Jersey Superior Court Judge is set to rule in July on the constitutionality of the PILOT program that exempts Atlantic City’s seven operational casinos from property taxes in exchange for collective annual payments of $120 million.
The so-called PILOT law was introduced so that much-needed revenue is generated for the city from its casinos. On the other hand, the tax break program was designed in a manner that would prevent Atlantic City’s ailing casino industry from being inflicted further losses.
Liberty and Prosperity, an advocacy group named after New Jersey’s motto, has contested the PILOT law, arguing that it has violated the state’s Constitution. The group has pointed out that under New Jersey’ s Constitution, tax exemption can only be introduced via laws that apply statewide. Opponents of the Atlantic City exemption program have also noted that it allowed the seven casino businesses tax breaks in a way that harmed other county-located businesses and taxpayers.
Talking to local media, Seth Grossman, Executive Director of Liberty and Prosperity and an attorney, said that the New Jersey Constitution allows certain tax exemptions to stimulate investment and development. However, Mr. Grossman that the PILOT program expands such encouragements to an absurd extent.
According to the attorney, the powerful corporations behind Atlantic City’s seven operational casinos and the lavish properties themselves should not be granted such major-scale tax privileges. The Liberty and Prosperity group will try to convince the court that gambling venues will remain intact in case of future tax increases due to the PILOT program, while Atlantic City homeowners and smaller businesses will have to carry heavier burden.
The tax break law was the product of the growing concerns about the future of Atlantic City and its casino industry after four casinos closed doors in 2014. The Great Recession and growing casino competition from neighboring states hit the once popular gambling hub’s profitability greatly.
The city has been showing certain signs of recovery over the past year or so. However, it will be hard for it to regain its former glory, particularly given the fact that surrounding states are expanding their own gambling industries rapidly and at great scale.
On a more positive note, despite the closure of four casinos in 2014 and of Trump Taj Mahal in October 2016, it seems that Atlantic City has not lost its appeal to investors completely. Hard Rock International recently bought that same Trump Taj Mahal casino and unveiled a $500-million redevelopment plan that is expected to be completed with the opening of Hard Rock Hotel & Casino Atlantic City in the summer of 2018.
