Wagering on sports has been big for the Atlantic City casinos, as well as their partners, and it has also been a big benefit for the state of New Jersey with the taxes on gambling. In just over one year, New Jersey sportsbooks have collected in excess of $3 billion in bets, generated $284.6 million in revenue and delivered over $36 million in taxes to the state.
However, while casino operators in Trenton and the host cities of the state’s two racetracks have enjoyed obvious financial benefits from betting taxes, that has not been the case for Atlantic City. Local officials think that should change.
“In 14 months, New Jersey has overtaken Las Vegas as the no.1 sports betting destination, and a lot of it has to with the success of Atlantic City and online,” said Marty Small Jr., mayor of Atlantic City.
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“But we don’t get one penny… That’s unacceptable.”
He wants an additional tariff on sports betting for Atlantic City in order for the money to be used for tax relief.
“My first and foremost goal, as it was as council president and will continue to be as mayor, is more rateables for the city and more revenue streams to offset our taxes.”
Different deal for NJ racetracks
Unlike East Rutherford in Bergen County or Oceanport in Monmouth County, which is where the Meadowlands and Monmouth Park racetracks are located respectively, Atlantic City does not get any money in taxes from sports betting. After New Jersey’s sports wagering regulations and tax laws were passed last year, the state’s lawmakers proposed another piece of legislation, A4230, that would levy an additional tax on revenue derived from sports betting. Both chambers of government approved A4230, while Governor Phil Murphy vetoed the first bill and signed the new legislation into law in October 2018.
According to the bill, there is an additional tax of 1.25% derived from a casino or sports betting locale in Atlantic City that goes to the Casino Reinvestment Development Authority (CRDA) for Atlantic City “marketing and promotion”. At the same time, East Rutherford and Oceanport collect a 0.75% tax and their counties get 0.5%. The bill states the money is for “economic development purposes, which shall include, but not be limited to, improvements to: transportation and infrastructure, tourism, public safety, and properties located on or near the racetrack”.
Since sports betting in New Jersey became legal in 2018, the CRDA has received $1.14 million in tax revenue and racetrack beneficiaries have pocketed $1.4 million. This data came from the New Jersey Division of Gaming Enforcement (DGE). Mayor Small made the point that Atlantic City officials are “ecstatic” about the “excitement and energy” which has come from legal sports wagering and want the gaming industry in Atlantic City to be a profitable one. However, he and other AC officials believe Atlantic City should get more financial benefits.
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Atlantic City assemblymen John Armato and Vince Mazzeo voted for the tax legislation for sports wagering, and Armato stated, “Money generated in Atlantic City needs to stay in Atlantic City.”
Legislative action would have to be taken in order to change how the taxes generated from sports betting would be distributed. Armato and Mazzeo have said that although they have not addressed the issue as of yet with city officials, they have both expressed interest in looking into options in how the revenue derived from the taxes should be used.
“In theory, it’s good to have advertising dollars for Atlantic City because it increases visitation, which, in turn, gets more people to spend money in Atlantic City,” said Mazzeo.
“But, we need to be looking at long-term sustainability, and we’re certainly open to ideas for long-term property tax relief.”
Lack of trust in AC casino industry
The New Jersey tax distribution from sports wagering is unique, especially when compared to nearby states. For example, in Pennsylvania some of the tax rate of 36% is given to counties as well as host municipalities. The rate is 10% in New York with counties and host municipalities getting a part of that directly.
Industry experts have weighed in how Atlantic City differs from other cities that get a slice of the sports betting pie. Michael Pollock, who is the Spectrum Gaming Group managing director, believes the reluctance of New Jersey to give AC some of the revenue coming from gaming is a “function of the history between the state and city”.
He added, “There has never been a great deal of confidence in the municipal government of Atlantic City to effectively manage its finances.”
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According to Dustin Gouker, one of the leading PlayNJ.com sports betting analysts, as “an outside observer” it looks as if New Jersey does not have trust in Atlantic City.
“I’m not aware of another state that handles a jurisdiction with kid gloves. I would be frustrated if I was someone who lived or worked in Atlantic City,” he said.
NJ assemblyman John Burzichelli, one of the primary sponsors of the sports wagering tax bill, has stated that the legislation does not show how New Jersey sees the ability of Atlantic City to manage its money. He said other cities that get a percentage of the taxes from sports betting don’t have the authority for redevelopment that Atlantic City has with the CRDA.
Burzichelli said, “Atlantic City is different. The tax is getting to Atlantic City, it’s just going through the Casino Reinvestment Development Authority.”