New Jersey Judge Grants 90-Day Stay of Casino Tax Break

  • A stay suspends any legal decisions, in this case for 90 days, pending review
  • If the judge’s previous ruling is upheld, casinos would face massive tax hikes
  • The ruling judge said the state has a case but did not argue it fully
  • Money incurred since the first decision will go into a reserve until the case is settled
Atlantic City aerial view
A New Jersey judge issued a 90-day stay of a decision overturning new tax break legislation for casinos. [Image: Shutterstock.com]

Millions hanging in balance

A judge has granted New Jersey a stay of his own decision to nix a property tax break for local casinos.

saving them an estimated $55 million annually

The case involves a rule called payment in lieu of taxes (PILOT), which determines how much money casinos pay to the government. The court will decide if it was right in overturning a change that removed revenue from online casinos and mobile sports betting from casinos’ total calculations, thereby saving them an estimated $55 million annually. 

Atlantic County Superior Court Judge Michael Blee limited the stay to 90 days and said that it was contingent upon the Appellate Division or the New Jersey Supreme Court hearing the case during that window. Blee also said that he would consider an extension if the case was not heard in time.

New Jersey tax breaks split opinion 

The PILOT arguments have been a source of contention for a long time. Blee originally ruled in August that 2021 amendments to the 2016 laws were passed unfaithfully in an attempt to benefit the casino industry with no discernable public benefit.

Nonprofit group Liberty and Prosperity, which raised the case that prompted the 2021 decision, and founder Seth Grossman support the limited stay issued by judge Blee.

“It’s going to motivate everyone to file early and get a quick resolution,” Grossman said. “I would have been disappointed with an indefinite stay.”

Meanwhile, attorneys for New Jersey argued that “irreparable harm” would occur if the stay was not granted and the case subjected to further court review.  

in 2021, the nine local casinos reported $2.67bn in revenue, with another $1.67bn coming from online

According to a review from The Press of Atlantic City and ProPublica, Atlantic City Casinos reported $761m in gross profit in 2021 and would have to pay $110m under the PILOT laws. Also in 2021, the nine local casinos reported $2.67bn in revenue, with another $1.67bn coming from online casino games and online sports betting.

Attorney John Lloyd, speaking for New Jersey, said that the three worst-performing casinos would face imminent peril without a stay. He also said that “significant chaos would flow” if the stay is not extended in absence of a decision as different levels of government would not have a clear budget. 

“This is not just a question of a passing inconvenience,” Lloyd said.

New Jersey has already appealed the case, according to a spokesperson. It is also trying to fast-track the case past the Appellate Court to the Supreme Court to save time and money.

Flaws during arguments

After issuing the stay, Blee said that there is a strong case for it to be extended as it deals with a Constitutional issue.

Blee also warned the state that its case is significantly weaker than others as it did not present any analysis of how the state would suffer without a stay. New Jersey’s legal team argued it would incur immediate and long-term damage without the stay.

“The crux of Defendants irreparable harm claim is that this Court’s Order nullifying the 2021 Amendment as unconstitutional and reverting to the 2016 Amendment destabilizes the greater Atlantic City area as well as the casino industry, and subsequently infringes on the State’s sovereignty interests,” said Blee in his decision.

However, according to the judge, the state’s analysis proved otherwise.

Meanwhile, Grossman harped on the flaws in the state’s case by comparing casinos to other local businesses.

“There is no evidence, other than pure speculation, that the casino industry suffered more from the pandemic and other associated risks than any other business or industry in Atlantic City or Atlantic County,” he said.

Blee’s stay concluded his decision with a note that revenue incurred since his previous ruling would be set aside pending the result of the case.