Atlantic City Casino PILOT Program Renewal Discussion Put On Hold
Talks concerning the renewal of Atlantic City's casino payment-in-lieu-of-taxes (PILOT) initiative have been paused due to financial uncertainty at both the state and federal levels. Senator Vince Polistina attributed the delay to ongoing debates about gaming-related taxation and broader economic challenges.
LISTEN TO THIS ARTICLE:According to Sen. Polistina, no progress has been made in forming the commission responsible for reviewing the PILOT program. However, with Governor Phil Murphy recently unveiling his proposed 2026 budget, discussions may soon begin. The governor's $58.05 billion budget proposal includes an estimated $400 million in new state taxes on online gambling and sports betting.
Related: Atlantic City's Controversial PILOT Program up for RenewalUnder the 2016 law, the PILOT review commission was initially designed to be active starting January 1 and was expected to deliver a report before July 1. However, the commission was inadvertently left out of the 2021 amendments to the PILOT law. Despite this omission, Gov. Murphy's office has confirmed that the commission will still move forward.
Another major factor contributing to the delay is an unresolved lawsuit filed by Atlantic County against the state regarding modifications to the original PILOT law. The pending legal case creates additional uncertainty about the future of the program.
Sen. Polistina also raised concerns about the timing of potential tax hikes on gaming operations, particularly as Atlantic City's land-based casino revenues have been on the decline. Six out of the city's nine casinos have reported sustained drops in in-person gambling income, a trend that predates the COVID-19 pandemic. Additionally, the expansion of gaming facilities in New York has introduced new competition, prompting further discussions about whether additional financial burdens on the industry are justified.
Established in 2016, the PILOT system requires casinos to make payments based on gross gaming revenue rather than traditional property taxes. These funds are distributed among Atlantic City, its school district, and Atlantic County to help support local government operations and education.
The program was originally introduced as a means to stabilize Atlantic City's finances after a wave of successful property tax appeals by casinos left the city struggling with debt. However, with the current PILOT arrangement set to expire in 2026, questions remain about what system will take its place.
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The delay in discussions has also raised concerns about the PILOT review commission, which Gov. Murphy previously announced. The commission was intended to analyze the program's effectiveness and consider potential changes moving forward.
Former Senate President Steve Sweeney, a key figure in crafting the 2021 amendments, recently stated that the omission of the commission was likely an accidental oversight. The commission's responsibilities include reviewing the financial stability of the casino sector, assessing Atlantic City's long-term fiscal health, and determining how the PILOT program has impacted casino operators and local taxpayers.
County Executive Dennis Levinson has been vocal in his opposition to continuing the PILOT program, instead advocating for a return to the standard property tax system for casinos. Levinson argues that the PILOT arrangement has disproportionately benefited Atlantic City and casino businesses at the expense of county taxpayers. He is expected to serve on the review commission and insists that Atlantic City is capable of fairly assessing casino properties under traditional taxation.
Additionally, the county has pursued legal action against the state, claiming that the 2021 PILOT amendments resulted in approximately $14 million in lost revenue for Atlantic County. Levinson has emphasized that, as the second poorest county in New Jersey, Atlantic County cannot afford this financial setback. He has also pointed out that while the casino industry generates substantial economic benefits for the state, it is unfair for Atlantic County taxpayers to shoulder the financial shortfall caused by the PILOT structure.
After meeting with Department of Community Affairs Commissioner Jacquelyn Suárez, Levinson expressed cautious optimism about resolving the county's lawsuit over the 2021 PILOT modifications. He indicated that discussions are ongoing and suggested that a potential resolution could be within reach.
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