Lawmakers in New Jersey are currently considering the future plans for the PILOT (Payment In Lieu Of Taxes) program for Atlantic City casinos. The program, which started in 2016 and was scheduled to end in 2026, had the assignment to stabilize AC finances through fixed annual payments for casinos. This method, instead of a variable property tax, was designed to provide revenue that was easily predictable in place of fluctuating property tax.

PILOT was amended in 2021 due to the changes that arrived with the COVID-19 pandemic. The danger of closing due to lockdowns on public spaces put a lot of gambling venues at risk. However, a decision has been made to put online gambling and sports betting revenue outside of the GGR (gross gaming revenue). 

Many of the casinos used the opportunity to survive with a stronger online presence. Mobile apps became the prime way to enjoy slots, table games, and even live dealer tables. The advancement in Web3 and blockchain led to the development of casino bots that can be used to play on Telegram, utilizing its strong encryption and privacy options, as well as cryptocurrency implementations.

There was a certain legal pushback against this amendment. The Superior Court ruled out that it was unconstitutional in August 2022. The statement was that the tax breaks provided through this regulation change were undue and that they violated the constitutional legislation. Legal proceedings on this ruling are currently ongoing as the state has appealed this decision. 

At the moment, the PILOT program is calculating fees using three values: aggregate base payment, investment alternative tax, and variable payment (tied to GGR). The removal of online activities from the GGR calculation has greatly helped smaller venues keep their head above the water by strengthening their web services. In this way, many small and medium properties have successfully maintained their position in the touristic offer of Atlantic City by being allowed to switch their focus to the digital world.

State senator Vince Polistina said that he doesn’t see casinos “ever going back to traditional real estate taxes” as the PILOT gives a certain certainty to the revenue stream. He is one of the strong proponents for the continuation of the program, claiming that going back to property taxes would be a huge step backward. Talks about the eventual continuation in some shape have been ongoing for a few months now. The City Council and county commissioners are trying to come to a consensus in the time before the program expires at the end of 2026. 

Dennis Levinson, Atlantic County Executive, on the other hand, is not in favor of PILOT continuation. Levinson says that the county is being underpaid as payments are dropping from 13.5% in 2024 to a planned 12% in 2025/2026. His main argument so far has been that there are still outstanding payments that have not been addressed, which, in his words, makes the talks about the program extension concerning. 

With the $14 million that the county is owed at the moment, Levinson’s thought is that the current debts should be paid before a new PILOT program is put in motion. “Casino gaming benefits the whole state” he concluded, but said that the taxpayers of Atlantic County should not be the only ones responsible for the financial burden created by the adjustments made to the program. Even among the conflicted opinions, hope remains that the city and the county will come to a solution benefiting all parties.