Judge orders Atlantic City to review casino tax break PILOT bill

May 4, 2022

A Superior Court judge ruled on Monday that the new PILOT arrangement violated a five-year-old pact involving the Atlantic City casinos and the county.

Judge Michael J. Blee said that the PILOT law, which stands for payments-in-lieu-of-taxes, conflicts with a 2018 court settlement. Blee decided to side with the Atlantic County officials who also signed a petition against the state’s amendment of the program into effect last December.

Judge Marczyk’s earlier concerns

Blee was not the first judge to raise the issue. Earlier in February, Judge Joseph Marczyk first brought up the case. He said the new PILOT law violated the previously agreed order made in June of 2018.

At the hearing, Marczyk addressed his concerns to lawyer John Lloyd. Lloyd had previously said that the Legislature had the right to define the gross gaming revenue in any way it saw fit, despite the previous agreements, including the one made in 2018.

County Executive Dennis Levinson gave his comment afterward, claiming that the state’s arguments were "bizarre".

"What are we going to tax (casinos) on, valet parking? It’s a gaming casino," Levinson said.

However, the state challenged the case and filed a motion for reconsideration the following month on March 17. During the hearing on April 25, Ron Israel, the state’s attorney, argued that Marczyk’s take should have been limited to whether the bill should be hindered from being passed.

In addition, Israel also said that the state had no preparation for any defense since the state had not been notified of any issues regarding the possibility of contract breach.

Judge Blee’s concerns

Blee issued his opinion on Monday. According to him, the state "ignores the fact that Judge Marczyk gave the parties notice at least one month prior to the hearing that the issue of breach would be discussed".

Blee was assigned to take over the case from Marczyk as the latter was temporarily mandated to the Appellate Court. He was of the opinion that the recent bill that resulted in Atlantic City receiving between $15 million and $26 million less through 2026 must be reviewed.

"Now you have two judges, Marczyk and Blee, who are in agreement that the state was wrong and that the taxpayers of this county were being treated extremely shabbily," said Levinson.

Levinson is also actively managing the plans to seek compensatory damages for the county. He previously said that this bill would be a red flag as it would be illogical that "such a complex bill would have a verbal analysis instead of a written document".

PILOT bill amendment

To avoid the closure of four of the nine casinos in the city, the state passed the PILOT bill last December.

The bill is predominantly sponsored by Senate President Stephen Sweeney. He said that the goal was to protect and maintain the stability of the city’s casino industry.

Atlantic City feared repeating history after five of its casinos had to shut down within the short span of two years in 2016.

"We made mistakes (in the original PILOT bill), and if we don’t fix them we run the risk of closing four casinos," said Sweeney.

The bill would remove sports betting and online gaming revenues from the calculations. As for the amount, it would decrease the PILOT payment from about $165 million pre-pandemic to $110 million for all nine casinos this year. Last year, the amount plunged to $130 million.

"At first blush it brings (PILOT) revenues down to $110 million," said Mayor Marty Small Sr. in 2021.

Blee is still waiting for reconsideration or meditation, which were both denied by the state.

Gus Anderson
Gus Anderson is a gambling wizard. As a kid he dreamt about becoming a Tennis, Hockey and Golf professional but ended up as a gambling professional with focus on both sports & casino.