Should Atlantic City Get A Direct Cut Of NJ Sports Betting Tax Revenue?
Sports betting first became legal in New Jersey in June, 2018. Since then, there is no denying that it has become a big cash cow not only for Atlantic City casinos and their NJ online gambling partners but also for the State of New Jersey. Sports betting in AC is moving quickly and everyone wants a piece of the pie.
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Sports Betting in AC
According to a November 12 article on www.pressofatlanticcity.com, over the course of not quite a year and a half, NJ sportsbooks have taken in over $3 billion in legal wagers, generating $284.6 million in gaming revenue and over $36 million in taxes.
Some government officials feel that it is not right that Atlantic City itself does not directly reap the financial benefits and that needs to change.
How is Atlantic City benefiting from the substantial tax revenue from NJ sports betting? Or is it?
At a recent meeting of the Atlantic City Taxpayer’s Association, Atlantic City Mayor Marty Small made the following comment:
“In 14 months, New Jersey has overtaken Las Vegas as the No. 1 sports betting destination, and a lot of it has to with the success of Atlantic City and online. But we don’t get one penny. … That’s unacceptable.”
Small said that Atlantic City could use the additional money for property tax relief.
The mayor does not consider it fair that a municipality that is home to nine casinos receives no direct tax revenue at all generated by sports betting. Meanwhile, municipalities where there is a racetrack but no casinos do.
East Rutherford in Bergen County is home to the Meadowlands, and Oceanport in Monmouth County is home to Monmouth Park. Both facilities offer online sports betting in addition to horse racing. Atlantic City has a racetrack, too, but it closed in January, 2015.
The existing state law relating to taxes on gross sports betting revenue
In October, 2018, Gov. Murphy signed a bill into law whereby revenue generated from sports betting or a “joint sports wagering operation” would incur an additional 1.25 percent tax. The Casino Reinvestment Development Authority (CRDA) would receive this money for the purpose of Atlantic City “marketing and promotion.”
However, according to the state Division of Gaming Enforcement, that has not been happening in practice. Instead, the CRDA has been giving large amounts of this money to the Meadowlands and Monmouth Park municipalities and counties rather than letting it stay in Atlantic City. Sports betting in AC was just the beginning.
Mayor Small said that he and other Atlantic City officials are “ecstatic” about the “excitement and energy” that sports betting has brought to the city. However, they would like Atlantic City to reap more of the financial rewards.
Assemblyman John Armato said that “money generated in Atlantic City needs to stay in Atlantic City.” Armato and fellow Assemblyman Vince Mazzeo both indicated a willingness to explore other options on how the tax revenue from sports betting should be allocated.
Difference between New Jersey and other states how sports betting tax revenue is distributed
The manner in which sports betting tax revenue gets distributed in New Jersey is notability different than in other nearby states. Rather than an agency such as the CRDA controlling the distribution, in Pennsylvania, a portion of the 35 percent tax rate goes directly to host municipalities and their respective counties. In New York, a portion of the 10 percent tax rate likewise goes directly to host municipalities and their respective counties.
Could a lack of trust by New Jersey in Atlantic City be a factor?
Michael Pollock, managing director of Spectrum Gaming Group, voiced his opinion on the matter. Pollack suggested that New Jersey’s apparent reluctance to give any of the tax revenue from sports betting to Atlantic City directly makes sense based on “the history between the state and the city.” Pollock further stated that “there has never been a great deal of confidence in the municipal government of Atlantic City to effectively manage its finances.”
Dustin Gouker, lead sports betting analyst for PlayNJ.com, who doesn’t live in New Jersey, presumably feels that the state doesn’t trust Atlantic City. He had this to say:
“I am not aware of another state that handles a jurisdiction with kid gloves. I would be frustrated if I was someone who lived or worked in Atlantic City.”
On the other hand, one of the NJ sports betting tax bill’s primary sponsors, Assemblyman John Burzichelli, denied that the legislation reflected how capable the state thinks Atlantic City is of managing its finances. Unlike the sports betting municipalities in the other nearby states, Atlantic City has a redevelopment authority. Therefore, “the tax is getting to Atlantic City. It’s just going through the Casino Reinvestment Development Authority.”
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