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.
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.[i15-table tableid=4306]