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May 15, 2017

New Jersey’s Casino Revenue Much Lower Than Neighboring States According To AGA Report

May 15, 2017
New Jersey revenue casinos gambling

A report released by the American Gaming Association indicates that New Jersey casinos are living the good life.

The report, titled “State of the States,” reviewed the 2016 revenue and tax numbers for all states with legal gambling.

One of the most telling stats for Atlantic City came on page 10 of the report. A table of commercial casino tax revenues indicated that New Jersey’s casinos are paying far less in taxes than New York, Pennsylvania, and Ohio.

Jeff Gural, the vocal owner of the Meadowlands racino, spoke to the Press of Atlantic City, saying the low tax revenue is an indication that casino owners are using New Jersey as a tax haven to fund competing casinos in other states.

“You guys have been ripped off by the casino industry for 30 years,” Gural was quoted as saying. “I wrote the casino laws in New York. The tax rate here is a fiasco. Basically what has happened in Atlantic City is that operators have taken profits from here and built competition for Atlantic City.”

The numbers behind the news: PA leads the way in gambling tax

We’ve known for a long time that Pennsylvania’s casinos pay the highest tax rate in the nation. But studies from the AGA and others like it really put in context the disparity between states.

Here is a quick breakdown of what New Jersey, Ohio, New York and Pennsylvania casinos paid in taxes in 2015:

  • New Jersey: $237 million
  • Ohio: $545 million
  • New York: $888 million
  • Pennsylvania: $1.379 billion

Ohio’s tax revenue is nearly double that of New Jersey’s, New York’s is triple, and Pennsylvania’s is an incredible 421 percent higher than its neighbor to the east.

What’s even more fascinating is that the AGA ranks Atlantic City as the second biggest commercial casino and racetrack market in the entire country, with a 2015 revenue total of $2.426 billion.

Ohio’s Cincinnati and Pennsylvania’s Pittsburgh/Meadowlands ranked 19th and 20th. Each notched nearly $600 million in revenue, or only a third of what Atlantic City pulled in.

Why is New Jersey’s casino tax revenue so low?

The answer to this question is pretty straightforward. New Jersey doesn’t tax its casinos like other states do. Here’s a listing of what each state’s casinos pay in base taxes, according to the AGA:

  • New Jersey: 8% on gross gaming revenue
  • New York: 31-41%, depending on the casino
  • Ohio: 33% for land-based casinos, racinos/VLT operators get 66.5% of revenue
  • Pennsylvania: 55% on slots, 16% on table games

As you can see, the tax burden carried by Atlantic City casinos is significantly lighter than its neighbors.

Do low revenue numbers in Atlantic City create a haven for groups like Hard Rock, Caesars, and MGM to save money they can use to fund casinos in other states?

That’s a hard sell for some. The city is, in a numbers sense, still reeling from its 2014 contraction when four casinos closed in one calendar year.

Hard Rock is the only group to put forth legitimate plans to open a casino, and if the tax-haven theory were true, we’d expect to see a lot more development than we have.

Keep up with what’s happening in the New Jersey casino industry, both online and off, by checking into this online casino forum in NJ.

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NJ Casino Control Commission Approves Caesars Plan For Bankruptcy Restructuring

May 15, 2017
Caesars Casino bankruptcy

Lost amid the last few months of big news in Atlantic City is the continued Chapter 11 bankruptcy reorganization of Caesars Entertainment Operating Co., the group who runs Bally’s and Caesars Atlantic City.

This past week, according to the Press of Atlantic City, the Casino Control Commission approved the casino group’s plans to lease out operation of their properties to a third-party company.

“As part of the reorganization, Caesars split the company into a real estate trust and an operating company,” the paper wrote. “Under the plan, the real estate company would then lease operations to a newly created company.”

Caesars bankruptcy required $5 billion settlement

Caesars will emerge from its Chapter 11 bankruptcy this year, wrapping up a two year process that resulted in a $5 billion settlement and complicated restructuring, planning, and big shifts in debt holding.

The company’s casino arm, Caesars Entertainment, was bleeding badly before bankruptcy, the New York Times reported. However, through the process the company was able to buoy its finances when its biggest stakeholders sold off their stakes to appease creditors.

When the bankruptcy completed, the Times reported, creditors owned 70 percent of Caesars Entertainment Corporation. The parent corporation, Caesars Entertainment Operating Company, remained relatively intact throughout the bankruptcy proceedings.

Massive bankruptcy an “achievement”

A Reuters report indicated that the breadth of the Caesars bankruptcy case meant that finding a solution that pleased all parties would be a gargantuan task.

US bankruptcy judge Benjamin Goldgar, who oversaw the Chapter 11 proceedings, was quoted as saying, “It is a monumental achievement.”

John DeCree, an analyst at Gaming Union, told Reuters that Caesars was a pioneer because of how it managed the bankruptcy. He noted that all that was left was for Caesars to get “the new structure under control.”

Caesars took a huge step in that direction when New Jersey’s Casino Control Commission approved the company’s restructuring plan.

Keep up with what’s going on in the world of NJ gambling with our NJ casino forum.

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Image by Jason MrachinaCC BY-NC-ND 2.0

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