Atlantic City casinos received some good news yesterday, even if it isn’t enough to warrant breaking out the champagne. The New Jersey Senate has approved a couple of measures that will help casino operators financially as they try to recover from COVID-19. Tax cuts and expanded sports gambling were already approved by the New Jersey Assembly, and now it’s Governor Phil Murphy’s turn to sign off on them so they can be implemented.
Atlantic City Casinos Get a Break
Atlantic City casinos, pending Governor Murphy’s signature, have been approved for a temporary tax break to help reduce the damage from the COVID-19 pandemic. Casinos in the city are only now starting to come back fully to life, and the Senate has approved a bill that will save operators from having to cover all of their 8% gambling tax. The stipulation is that the 2021 in-person gambling revenue has to be below the monthly revenue for the same month during the March 2019 – February 2020 period to qualify for the reduction.
In addition, operators are going to be exempt from paying taxes on the first $90 million of promotional credits paid out. The exemption covers free play coupons and is valid for a two-year period. Several other tax breaks that had been proposed didn’t make the final cut as the bill made its rounds through the legislative maze, but operators should be pleased that some type of relief is coming. Atlantic City lost 80% of its gross operating profit last year because of COVID-19, and any benefits are welcome to help casinos recover. The first quarter of 2021 has provided better results, but there is still a long way to go before Atlantic City can say that it’s back to normal.
New Sports Gambling Options in New Jersey Possible
New Jersey is one of several states that, upon establishing legal sports gambling markets, prohibited wagers on in-state college sports. The concern was that this would lead to more instances of match-fixing and athletes accepting money for favors, but the state is now reconsidering that position. Lawmakers are hoping they can update the New Jersey Constitution to allow sports wagers on in-state colleges and games played in the state by teams from other states.
The Senate approved that measure yesterday; however, it is going to need more work. The Assembly still has to take action on the bill before, if approved, it is sent to Governor Murphy. In addition, the Assembly is going to consider an effort to create more flexibility with raffles and bingo in the state. Veteran and senior citizen groups are the only ones currently allowed to use the net proceeds of the activity to support themselves, but a measure is in the works that would expand the capability to charitable, religious, and other groups. This will require even more finesse, as a bill needs to be approved to authorize the activity and a separate one to authorize a change to the New Jersey Constitution to define how the proceeds can be used. It isn’t clear when the Assembly will take action on the sports gambling or the raffle and bingo bills.