A newly formed commission is set to examine the effectiveness of Atlantic City’s casino payment-in-lieu-of-taxes (PILOT) program, a system that allows casinos to pay a fixed industry-wide assessment instead of traditional property taxes. With the program nearing its expiration, state officials and local leaders are debating its future impact on the city’s economy and financial stability.
Commission to Finally Take Shape After Years of Delay
The commission was originally mandated in the 2016 PILOT legislation but was removed in the 2021 revisions. Now, state officials are moving forward with its formation to review whether the program should continue beyond next year.
Under the original law, the commission was supposed to start work on January 1, 2025, and issue a final report by July 1. However, questions remain about whether the timeline will hold. Atlantic County Executive Dennis Levinson and State Sen. Vince Polistina, R-2nd, recently said they have yet to hear from the governor’s office about its formation or any progress.
Financial Impact of PILOT Payments in Atlantic City
Since its introduction in 2016, the PILOT program has provided Atlantic City with a level of financial stability by preventing costly and repeated casino property tax appeals. The program has contributed significantly to local revenues:
- In 2023, the city received $51.6 million in PILOT payments.
- In 2024, the total PILOT revenue dropped slightly to $48.5 million.
Despite this financial support, critics argue that recent changes to the program have shifted the tax burden away from casinos and onto other taxpayers.
2021 Revisions Reduced Casino Tax Burden
A key factor in the upcoming review is the 2021 changes to the PILOT program. These revisions removed online gaming and sports betting revenue from the calculation of gross gaming revenue, which significantly reduced casino tax obligations.
The impact of these changes is significant:
| Year | Estimated Tax Reduction for Casinos |
|---|---|
| 2022 | $55 million |
| 2023 | $55 million |
| 2024 | $55 million |
State officials justified these revisions by citing increased competition from neighboring states and financial setbacks caused by the COVID-19 pandemic. The adjustments were aimed at keeping Atlantic City’s casino industry competitive and avoiding potential closures.
Legal Battle Over the PILOT Program
Not everyone agrees with the state’s rationale. Atlantic County has taken legal action, arguing that the 2021 amendments violate a 2018 consent agreement between the state and the county. County officials say that by reducing casinos’ financial obligations, the revised PILOT program unfairly cuts into local government funding.
The lawsuit underscores broader concerns about the program’s fairness and sustainability. If the commission finds that the PILOT structure disproportionately benefits casinos at the expense of local services, lawmakers may face pressure to either revise or scrap the program altogether.
Long-Term Consequences for Atlantic City
Mike Chait, president of the Greater Atlantic City Chamber, stressed the importance of a thorough, data-driven review. He emphasized that the commission’s work will have lasting consequences for the city’s economic future.
“The decisions made here will shape Atlantic City’s economic foundation for years to come,” Chait said.
Local businesses, casino operators, and residents will all have a stake in the commission’s findings. The final report will likely influence future financial policies, particularly concerning Atlantic City’s reliance on PILOT payments versus traditional tax structures.
With major financial and legal questions still unresolved, the commission’s work could set the stage for a contentious debate over Atlantic City’s long-term economic strategy
Leave a Reply