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Atlantic Casinos Breathe A Sigh Of Relief With The Passing Of Tax Relief Legislature

Article by : Helen Oct 7, 2020

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Atlantic City casinos have been reeling from the effects of the novel coronavirus. In fact, the first three months of 2020 have been some of the hardest in the city’s history. As a result, the casinos’ economic gains are under threat, which could undo the progress made over the years. Casinos are not the only sector under pressure; the entire regional economy faces similar threats as people are forced to stay home.

On 16th Mar, New Jersey Governor Phil Murphy ordered all casinos to shut down. The decision was later revised, and they were allowed to reopen at 25% capacity on 2nd July 2020.

The closure led to significant losses in revenue. For instance, in the second quarter, Atlantic City casinos experienced gross operating losses amounting to $112 million. Compared to the first six months of 2019, the gross gaming revenue dropped by $767 million in June 2020.

How Negatively Have Casinos Been Affected?

As indicated above, 2020 has been challenging for businesses and households alike. The tourism sector, including hotels, resorts, and casinos, has been significantly hit due to the pandemic.

All nine Atlantic City casinos reported a staggering 170.4% decrease in gross operating profits for April, May, and June. The loss coincided with the closure directive by the governor to mitigate the spread of Covid-19.

Making The Best Of Misfortune

To remedy the dire situation, Atlantic City’s mayor Marty Small took matters into his hands. He issued a six months executive order, permitting visitors to consume alcohol publicly in select outdoor areas.

Additionally, legislators introduced bills: A4032/S2400, which reduces casino fees and taxes, and A4002/S2257, which provides a tax credit on any sports betting revenue.

On 17th Sept 2020, the New Jersey Assembly Appropriations Committee (NJAAC) unanimously passed a bill (A4032/S2400), allowing racetracks and casinos to deduct promotional gaming credits the gross sports betting revenue within a set threshold from being taxed.

Lawmakers cited an unprecedented economic catastrophe facing Atlantic City resulting from the 107-day shutdown of casinos. Losses were amounting to more than $112 million and nearly 50% job losses. A second bill, A4002/S2257, allows casinos to deduct any gross revenue (online/mobile) above $12 million, and $8 million generated from either promotional or free wagers by customers.

Too Little Too Late?

According to the Gaming Enforcement (DGE) Division, the total revenue for August 2020 was $326 million. Compared to last year’s $352 million the previous year, representing a drop of 7.5%.

Despite these losses, the situation isn’t beyond repair, thanks in part to revenue derived from online gambling sites. Online casinos brought in $87.6 million in August 2020, compared to $ 41 million in the previous year, representing an increase of 113%. August’s total gaming industry revenue was at least $1.618 billion compared to $2.278 billion during a similar period last year, representing a 29% loss. These figures are still on a downward spiral as casinos face back-to-back quarterly losses.

New Jersey casinos are not the only ones suffering as a result of closures. Almost every state across the country has its casinos hurting, resulting in incredible losses.

As luck would have it, most states are currently allowing these industries to resume operations, with most casinos in Las Vegas reopening to the public on 4th Jun 2020. More casinos are expected to reopen over the next couple of weeks.

Leading analysts predict that Atlantic City will experience a surge of visitors flooding their venues once they reopen. These bills will also help alleviate the pressure felt by casinos and hopefully provide much-needed employment.