Judge upsets Atlantic City’s tax break

A state law that provided millions of dollars in tax breaks to casinos in New Jersey has been struck down by a Superior Court judge.

He has ruled that it was passed on “dubious grounds” and violated the state constitution. It is a blow to Governor Phil Murphy and his supporters who fast-tracked the law last year and is a blow to the Atlantic City casinos in their bid to recover from the pandemic.

The central issue is a tax programme called PILOT (payment in lieu of property taxes). Instead of paying property taxes, each casino has, since 2016, paid a share of an industry-wide assessment that was distributed to Atlantic City.

The amount was calculated on the basis of the previous year’s total gaming revenue. Last year, the casinos were successful in their call for a change to that formula to exclude online gambling. That reduced the companies’ total PILOT liability this year by $55m.

The regulation was challenged in court by a local conservative group on the grounds of preferential treatment. They were supported by the judge.