Lawmakers in New Jersey have introduced legislation that would provide significant tax breaks to help Atlantic City casinos recover the COVID-19 shutdown.

The bill would temporarily modify taxes and fees relating to casinos’ land-based operations, and also amends the current law on the use of promotional gaming credits.

The bill would waive the annual license fee of $500 on each slot machine from July 1, 2020 through June 30, 2021, and directs the Division of Gaming Enforcement (DGE) to distribute any surplus funds and overpayments held in the Casino Control Fund to each casino in proportion to the licensee’s share of the surplus or overpayment.

Taxes levied on a licensee’s gross revenue would be reduced on a sliding scale, with no revenue tax or investment alternative tax applicable on gross monthly revenue that is 25 per cent lower than the same calendar month immediately prior to March 1, 2020.

Monthly revenue of between 25 per cent and 49 per cent of pre-crisis levels would be subject to revenue and investment alternative taxes calculated at 25 per cent of the amount normally due, rising to 50 per cent on revenue that is 50-74 per cent lower. Revenue of 75-99 per cent of pre-crisis levels would be taxed at 75 per cent of the normal amount due.

To qualify for the revenue and investment alternative tax reductions, licensees must prove to the DGE that the entire amount gained from the reduction has been applied to promptly re-hire former employees and new applicants; to attract tourists, gaming, and hospitality patrons to visit and stay at the casino hotel property; to market and promote events that would draw visitors to the property or Atlantic City; or for other activity deemed by the State Treasurer or the DGE to be beneficial to the return of pre-crisis economic, gaming, and tourism levels to Atlantic City.

Promotional gaming credits would not have to be declared until they are used by patrons at a slot machine, gaming table, or sports pool in the licensee’s casino or internet gaming system, with licensees eligible for a deduction on gross revenue tax in an amount equal to the promotional credits.

The bill would also waive parking and room taxes for the remainder of the year, and allows certain licensing and other fees to be deferred during the period that the licensee’s casino hotel facility remains closed due to the emergency, and during the six-month period after reopening.

The bill (A4032 / S2400) does not impact tax liabilities on gross revenue from casino simulcasting, internet gaming, or sports wagering.

Gaming Intelligence

A second bill also introduced by Assemblyman Louis Greenwald (A4031 / S2398) directs the State Treasurer to make short-term loans available to casino licensees from the Property Tax Relief Fund. This would allow them to make payments due on May 1 and August 1, 2020 to Atlantic City in lieu of property taxes, with the loans available solely for this purpose.

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