Tax Payment Deal Agreed Upon by Atlantic City and Borgata
A tax issue has now been resolved between the Borgata Casino and Atlantic City with $72 million to be paid to the gaming venue by the city.
In every state across the US, casinos and their municipalities have agreements in which an amount is paid in taxes by the gaming venue. This amount is set on a state by state or city by city basis. In one area, the gaming venue might pay a 15 to 20 percent tax while another area might pay even more or possibly less. Either way, the gaming venue has to pay the amount set to the state or city in order to meet regulation guidelines. In Atlantic City, New Jersey, gaming venues have to pay an amount set by the regulators of Atlantic City. For some time now, the city has been fighting with the Borgata Casino based on a property tax dispute. This disagreement has finally come to an end as both groups have come to an agreement.
An Agreement Reached
Atlantic City has been struggling financially for some time. The city has owed the Borgata Casino money for some time due to an overpayment of gaming taxes. Borgata has not been happy that the city has yet to pay the money owed but the city was just unable to do so. The casino has finally reached an agreement with Atlantic City officials, taking $72 million in a final payment to put an end to the property tax dispute between the two.
Jeff Chiesa is the New Jersey Attorney General who announced yesterday that the Borgata had agreed to take less than the original $165 million owed to the gaming venue based on tax appeals filed. Chiesa stated that the settlement came to fruition as both sides were able to work closely together to find common ground. The operator of Borgata, MGM Resorts International, commented on the settlement by stating that they hope Atlantic City will be helped as a whole by the gaming provider accepting less than what they were owed in order to see the case settled.
MGM Resorts International Executive Vice President John McManus commented that with the agreement they are assured the relative certainty of payment and the avoidance of more cost and time in litigation. Both MGM Resorts and the Borgata feel that the deal is right for everyone involved and it is in the best interests of the company shareholders.
The $165 million debt owed to the Borgata stems from a time frame of 2009 to 2015. The problem was that Atlantic City could not pay up due to debt payments they had already incurred and paid along with competition coming in from nearby Pennsylvania, Delaware and Maryland. The Borgata challenged their tax payments to the city and won, being the largest taxpayer to be successful in doing so.
Understanding the Tax Payments
Just like the tax paid on your home, casinos have to pay a yearly tax fee. The amount for casinos in Atlantic City is based on the property assessment. The Borgata claimed that their property was not worth what the city had the gaming venue valued at. The casino challenged the city in court and actually won, which saw a reduction put in place towards their assessment.
The tax refund was not paid by Atlantic City so the Borgata was given the option to not make tax payments while the settlement was ongoing. The court has stated that the city must pay the $62.5 million to the Borgata, which is far less than the overall total due.