New Jersey PILOT Amendments Upheld; State Seeks Stay

Will the PILOT battle ever end? The state of New Jersey is seeking a stay of the decision favoring Liberty & Prosperity, the organization led by Atlantic City activist Seth Grossman (l.), to eliminate the legislative amendments. The appeal appears to be headed for the state Supreme Court.

In the latest episode of How the PILOT Flies, the state of New Jersey filed a motion to stay a judge’s decision on August 29 that knocked out amendments to the casino payment in lieu-of-taxes legislation. The request is predicated on a pending appeal, one that has yet to be filed.

Atlantic County Superior Court Judge Michael Blee will hear oral arguments October 7 regarding the stay. Blee ruled that the amendments violated the state Constitution because they favored an industry over a public purpose, according to the Press of Atlantic City.

The amendments reduced the tax liability for casinos by eliminating online sports betting and internet casinos from the calculations as originally interpreted.

Acting state Attorney General Matt Platkin said Atlantic City and state finances will be thrown out of kilter if the order is not stayed until the appeal is decided. The state has also argued it would suffer irreparable harm, but also insisted the amendments did not violate the Constitution. The public purpose is the stabilization of the casino industry.

Seth Grossman, president of Liberty and Prosperity, the organization bringing the suit against the state, argued he has yet to see a “credible fact or expert opinion evidence that laws reducing taxes for a specific industry, such as casino properties, and raising taxes on other properties … increases the overall economic health of Atlantic City and Atlantic County.”

Nor was there proof that the casino industry suffered more than any other industry from Covid-19, Grossman said.

Chief of Investigations for the Division of Gaming Enforcement Christopher Glaum argued for a different viewpoint. “If this Court’s invalidation of the amendment goes into effect, then the former statute will be in effect, and reinvestment into the casino hotel properties may decline as it did during the 2009–2017 period,” he said. “This would have substantial economic and societal impacts not just to Atlantic City, but to the state as a whole.”

Resorts, Golden Nugget and Bally’s would face much higher payments under the original PILOT, possibly threatening their survival, Glaum said.

“However, the Uniformity Clause was added to our state Constitution in 1875 and kept in our constitution in 1948 to specifically prevent the legislature from giving preferences to particular property owners for any reason,” Grossman wrote.

With the combatants in their corner waiting for the next round, an opinion piece in the Press has pitched for a faster date to the inevitable: arguments before the state Supreme Court.

The novel and big-money PILOT scheme has seemed destined for the N.J. Supreme Court, the editorial spelled out.

Atlantic County also urged the matter be taken up right away from the top court, to save time and money spent in legal fees. And it would provide “clarity to proceed.”

Property tax law may not prohibit “the kind of end run taken by the PILOT arrangement.”

Then again, the state side may be stronger than it seems. Treating revenues from online gaming and sports betting may be different enough to rule in favor of the casinos.

“If there were legal betting on court outcomes, we’d be tempted to put our money on Atlantic County getting what its settlement agreement promised (or at least a good result from a renegotiation of part of that settlement), and state government being allowed to change its laws to account for these new forms of legal gambling.”