Governor Murphy Asks for “Stay” And Delay. We Want Judge To Force Immediate Collection of Taxes Due For Internet & Sports Bets

Below Is Full Text Of Liberty and Prosperity Plaintiffs’ Argument Submitted To Court On September 26.  Judge Michael Blee Will Hold Zoom Hearing at 10am on Wednesday, October 12.


Click Here For Link to Post 9/28/2022 Article by Gambling News: 
Click Here For Article of 9/28/2022:  State seeks stay of judge’s decision striking down PILOT amendments (
Click Here For Press of Atlantic City Editorial of 9/26/2022:  Faster PILOT ruling preferred whatever Supreme Court decides (


On December 21, 2021, Defendant State of New Jersey adopted several amendments to the original “Casino Property Tax Stabilization Act (NJSA 52:27BBBB-18-26, et. seq. of 2016), hereinafter referred to as the “Original CPTSA”. Those new amendments are hereinafter referred to as the “Amended CPTSA”.

On January 24, 2022, Plaintiffs filed this action seeking to invalidate the Amended Pilot Law. On January 25, 2022, Plaintiffs served Defendants with a copy of the summons and complaint in this action.

On or about March 17, 2022, the attorneys for Plaintiffs and Defendants agreed in a telephone conversation to extend the time for Defendants to respond to Plaintiffs complaint, but disagreed on how long that extension should be.

April 7, 2022, Plaintiffs filed a motion requesting the entry of default and default judgment against Defendants. On April 28, 2022, Plaintiffs, at the request Of Defendants’ attorney agreed to dismiss their motion seeking default and default judgment, and agreed to a consent order giving Defendants until June 3, 2022 to respond to Plaintiffs’ complaint.

On June 3, 2022, Defendants filed their motion to dismiss Plaintiff’s complaint.

On June 4, 2022, the Court issued a notice that Plaintiff’s complaint would be dismissed for failure of prosecution if Plaintiffs did not move forward on or before August 2, 2022.

On June 20, 2022, Plaintiffs filed their Motion for Summary Judgment against Defendants, returnable on July 22, 2022. The Court heard oral argument on both motions on August 5, 2022. It decided said motions on August 29, 2022.

During this period of delay, the State’s Division of Gaming Enforcement failed to include any “Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue” in its calculations and determinations of “Gross Gaming Revenue” to compute the “Casino PILOT” payments due from each casino in its invoices for the “2022-3 rd QUARTER” PILOT” dated July 6, 2022 or for the Second Quarter of 2022 dated on or about April 6, 2022.

On September 12, 2022, Defendants filed a motion to stay this court’s Order of August 29, 2022 pending their appeal. As of this date, Defendants have not filed any appeal.

The Atlantic City casino properties are due to make their next quarterly PILOT payments for the Fourth Quarter of 2022 on or about October 17, 2022.


The Original Casino Control Act of 1977, NJSA 5:12-144 required each licensed casino to pay an 8% state tax on “gross revenues” from “gaming operations”, less only the total of all sums paid out as winnings.  It also required each casino “to make investments” of an additional 2% of those gross revenues “in equity investments in land and real property on which improvements are made and in real property improvements”. This was done as a compromise between those Legislators who wanted an 8% state tax on gross gaming revenue and those who wanted a 10% state tax. (Certification to be submitted)

However, the original Casino Control Act also required all such “investments” to be approved by the New Jersey Casino Control Commission and “consider the public interest, including the social and economic benefits to be derived from such investments for the people of this State”.

During the next six years, the casinos and the Casino Control Commission were unable to agree on which “investments” proposed by the casinos sufficiently considered “the public interest”. (Certification to be submitted.)

As a result, the Casino Control Act was amended in 1984 to add a new section 5:12-144.1. That section created a new “Investment Alternative Tax” (IAT) of 2.5% of gross revenues which gave casinos an alternative to making “investments” pursuant to NJSA 5:12-144. A newly created State agency, the Casino Reinvestment Development Authority (CRDA) would have complete control over how this money would be spent or “invested”. NJSA 5:12-144.1 required that most of this tax at first be “invested” in a “comprehensive housing program” in Atlantic City.

At some point, casinos were allowed to reduce their IAT to 1.25% of their “land based” gaming revenue (i.e. not including “Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue”) by “investing” that money in bonds issued by the CRDA. (Paragraph 16 of Christopher Glaum certification of 9/12/2022)

The Original CPTSA of 2016, made the IAT even less like “investment” and more like any other government tax. It provided that most of the “Investment Alternative Tax” be paid to the State through its Division of Gaming Enforcement, and applied to the repayment of previously incurred state government debts and debts incurred by Atlantic City local government while under State supervision. The rest was refunded to the casinos to give them a de facto seven year freeze in their real estate taxes.

Under the Original CPTSA of 2016, all money paid by the Casinos to the Division of Gaming Enforcement for the IAT are to be allocated and disbursed according to the following priorities: (Paragraph 17 of Christopher Gaum Certification of 9/12/2022)

  1. Payment of previously issued long-term CRDA debt
  2. Credited back to Casinos to guarantee that their Gross PILOT payments made during any calendar year did not exceed their real estate taxes for 2015. (For Years 2017, 2018, 2019, 2020, and 2021 only).
  3. Debt service payments on debt incurred by Atlantic City government (mostly incurred for operating expenses while under State Supervision).

Under the Amended CPTSA of 2021, the IAT could now also be applied to the following purposes, in the following order: (Paragraph 20 of Christopher Gaum Certification of 9/12/2022)

  1. The general fund of the budget of Atlantic City
  2. A newly created “Clean and Safe Fund” for Atlantic City
  3. A newly created “Infrastructure Fund” for Atlantic City
  4. CRDA for its purposes
  5. Remaining funds, if any, shall be credited to the casino properties.

Plaintiffs do not in any way challenge or object to this portion of the Amended CPTSA.

The State’s Brief in favor of a Stay begins with the statement, not supported by any evidence, that “The economic health of Atlantic City and the casino industry rise and fall together”. (Defendant’s Brief, “Procedural History And Statement of Facts”, Part A, Page 3)

It is true that in 1977, the Legislature found and declared in NJSA 5:12-1 that:

“b.(2) (T)he city of Atlantic City and its resort, tourist, and convention industry represent a critically important and valuable asset in the continued viability and economic strength of the tourist, convention and resort industry of the State of New Jersey. . .

“b.(4) (T)he introduction of a limited number of casino rooms in major in major hotel convention complexes, permitted as an additional element in the hospitality industry of Atlantic City will facilitate the development of existing blighted areas. . . , and the refurbishing and expansion of existing hotel, convention, tourist, and entertainment facilities. . .

However, there is no evidence that those statements, even if true then, are still true forty-five years later when there are now competing casinos in nearby Pennsylvania and soon to also be in nearby New York. (Paragraph 17 of Christopher Gaum Certification of 9/12/2022)

While the State’s papers discussed at length the hardships and difficulties Atlantic City’s nine casinos would face if their payments in lieu of real estate taxes increased, they did not present any facts pertaining to the those of non-casino business and homeowners in Atlantic City and elsewhere in Atlantic County also facing big increases in their real estate taxes.

The Municipal Stabilization and Recovery Act (MSRA) 52:-27BBBB-1 to 17, enacted in 2016, did bring local government spending down to sustainable levels during its first four years. Atlantic City’s local government budgets showed spending as follows from 2016 through 2020:

  1. 2016: $242,995,495
  2. 2017: $222,142,711
  3. 2018: $225,334,875
  4. 2019: $207,711,277
  5. 2020: $210,734,743

(Plaintiffs Appendix of 6/15/2022, Attachments A, B, C, D)

However, Atlantic City’s yearly spending increased to $221,447,262 in 2021 (5% increase), and $235,055,612 (6% increase), This was before the current inflationary trends began. The Uniformity Clause of the New Jersey Constitution requires all real estate in a taxing district to be assessed by the same method and taxed at the same rate to so that every parcel of real estate pays its proportional share of such increases. (Certification to be supplied.)

In 2016, the last year before the Original CPTSA took effect, seven Atlantic City casino properties had an aggregate assessed taxable value of $2,964,521, 100 or roughly 46.3% of Atlantic City’s total tax base of roughly $6.4 billion (Paragraphs 3 and 4 of Novelette Robinson certification of 9/12/2022). After six years of the Original CPTSA, Atlantic City’s 2022 share of the “Aggregate PILOT Payment”, “Separate State Payment”, and the IAT from nine casino properties combined “represented 40% of the total revenues received by Atlantic City”. (Paragraph 14 of Adetoro Aboderin certification dated 9/12/2022)

Plaintiffs do agree with two important facts raised by the State Defendants. First, Plaintiffs agree that the Atlantic City casinos do not receive or benefit from all “Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue”. State Defendants correctly point out that Atlantic City Casinos pay most or much of that money to “Joint Venture” partners or “Third Party Operators” like DraftKings and FanDuel. (See Paragraphs 68 through 70 and Paragraphs 76 and 79 of said Certification of Christopher Glaum date 9/12/2022).

However, the State Division of Gaming Enforcement has studied that issue for many years, and has the expertise and resources to identify and exclude moneys paid to such “Joint Venture” partners and “Third Party Operators”. (Paragraphs 68 through 73 of said Certification of Cristopher Glaum.)

Second, Plaintiffs agree with the State Defendants that “two deficiencies with the statutory language” of N.J.S.A. “permitted casinos to technically comply with the standard (for capital and maintenance expenditures) without meaningful reinvestment into their properties”. Plaintiffs do NOT challenge that part of the Amended CPTSA.


A. Defendants State of New Jersey have produced no credible fact or expert opinion evidence that laws reducing taxes for a specific industry, such as casino properties, and raising taxes on other properties in Atlantic City and Atlantic County increases the overall economic health of Atlantic City and Atlantic County.

The unanimous NJ Supreme Court case of New Jersey State League of Municipalities vs. Kimmelman 105 NJ 422 (1987) Kimmelman also cited with approval Roe v. Kervick 42 NJ 191, 199 A2d 834 (1964). Roe supra recognized at 199 A2d 842 that constitutional prohibitions like the uniformity clause were adopted when “many abuses followed in the wake of” financial aid to encourage the development of one industry, railroads, ‘ to the serious detriment of the taxpayer. . . “Roe, supra at 199 A2d 842 Roe, supra, further repeated the timeless wisdom of an 1870 Michigan Supreme Court case which pointed out,

“When the State once enters upon the business of subsidies, we shall not fail to discover that the strong and powerful interests are those most likely to control legislation, and that the weaker will be taxed to enhance the profits of the stronger. . . “ Roe, supra at 199 A2d 842.

B. Plaintiffs do not and did not at any time challenge or object to any provisions of the Municipal Stabilization and Recovery Act (“MRSA”) of 2016. NJSA 52:27BBBB-1 through 17.

C. In assessing and taxing real estate, only the amount of income, not its source, is relevant.

A luxury hotel in a location with a spectacular view of the ocean is often likely to attract more customers willing to pay more, than an identical hotel building without such a view. As a result, the hotel with a spectacular view is likely to have a higher value, and be assessed more for real estate taxes.

A luxury hotel with 500 or more rooms located within Atlantic City, New Jersey can qualify for a New Jersey casino license. With a casino license, the owner of that hotel can earn money from a variety of “land based” casino games, including slot machines, poker, sports betting, and various card and other table games. However, that license holder also qualifies for permits to earn money from “Internet Gaming” and Internet “Sports Wagering”. It does not matter whether or not customers of those online games are physically present in the casino premises, or even present in New Jersey. What matters is that only the owner of a physical, qualifying hotel located within the boundaries of Atlantic City can qualify for a casino license and earn that income.

For the past nine years, New Jersey couns have recognized that income derived from casino gaming revenue can be used to assess the casino hotel property in Atlantic City which generates such income for real estate tax purposes. See Marina District

Development co. LLC vs, City ofAt1antic City, 27 NJ Tax 469 (Tax, 2013) affirmed by Appellate Division Docket No. A-1616-13T4.

D. Defendants have not produced any fact or expert opinion as evidence that the casino industry suffered more from “the pandemic and other looming risks” than any other business or industry in Atlantic City or Atlantic County, New Jersey.

E. Article VIll. Section I(a) of the New Jersey State Constitution absolutely bars the Legislature from taxing real estate for one group of properties differently other within the same taxing district.

Article VIll of the New Jersey State Constitution states:

“I(a) Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the State for allotment and payment to taxing districts shall be assessed according to the same standard of value, except as otherwise permitted herein, and such real propelty shall be taxed at the general tax rate of the taxing district in which the property is situated, for the use of the taxing district”.

The unanimous NJ Supreme Court case of New Jersey State League of Municipalities vs. Kimmelman 105 NJ 422 (1987) referred to this section of our State Constitution as “the uniformity clause”.

Kimmelman observed that the predecessor to this uniformity clause was added to our State Constitution in 1875.

“The dominant industry of that time, the railroads, exerted considerable influence over the Legislature’s taxing power and had obtained for itself virtual exemption from taxation. . . . (citation omitted) Growing sentiment mobilized by Governor Parker led to a constitutional convention that produced the first limited restraint against preferential tax treatment for one industty. . . ”

In rushing the Amended CPTSA into law, the Legislature did not in any way state why it expressly excluded revenues from Internet gaming and online sports wagering from the definition of GGR.

Plaintiffs agree that the Atlantic City casinos do not receive or benefit from all “Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue”. State Defendants conectly point out that Atlantic City Casinos pay most or much of that money to “Joint Venture” partners or “Third Party Operators” like DraftKings and FanDuel. (See Paragraphs 68 through 70 and Paragraphs 76 and 79 of said Certification of Cristopher Glaum date 9/12/2022).

However,  the State Division of Gaming Enforcement has studied that issue for many years, and has the expertise and resources to identify and exclude moneys paid to such “Joint Venture” partners and “Third Party Operators”. (Paragraphs 68 through 73 of said Certification of Cristopher Glaum.)

Plaintiffs also do NOT challenge or object to those portions of the Amended CPTSA allowing IAT funds to be used for Atlantic City’s general fund, or for its Clean and Safe Fund or Infrastructure Fund.

Plaintiffs do NOT challenge or object to those portions of the Amended CPTSA which extend the Separate State Payment (SSP) or which amend NJSA 5:12-83(i).

F. Immediately Enforcing the Court’s order of August 29, 2022 and Ordering State Defendants to immediately calculate, determine, and collect additional PILOT payments from the casinos for “Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue” is needed to prevent irreparable harm. Staying the order, and delaying this relief would cause irreparable harm. The State’s application for a stay is NOT based on settled law. Greater harm would occur if a stay were granted. Granting a stay would change the status quo.

“A party seeking a stay must demonstrate that (1) relief is needed to prevent irreparable harm; (2) the applicant’s claim rests on settled law and has a reasonable probability of succeeding on the merits; and (s) balancing the ‘relatively hardships to the parties reveals that greater harm would occur if a stay is not granted than if it were”. Garden State Equality vs. Dow, 216 314, 320 (2013) (citing, inter alia, Crow v. De Gioia, 90 NJ 126, 132-134 (1982)

“The moving party has the burden to prove each of the Crowe factors by clear and convincing evidence. Brown v. City of Paterson, 424 N.J.Super. 176, 183 (App.Div.2012) (citation omitted). “In acting only to preserve the status quo, the court may ‘place less emphasis on a particular Crowe factor if another greatly requires the issuance of the remedy.’ ” Ibid. (citation omitted).

“In acting only to preserve the status quo”, a court “may place less emphasis on a particular Crowe factor”. Garden State Equality, supra, at 320.

  1. Enforcing this Court’s order, by compelling the Division of Gaming Enforcement to calculate, determine, and collect the Third Quarter PILOT Payment, including the proper percentage of Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue” less payments to Joint Venture Partners and Third Party Operators for the Third Quarter of 2022 would prevent irreparable harm. If the State ultimately prevails, it can easily return or reallocate any excess moneys collected. However, if Plaintiffs prevail, and if the DGE fails to collect that money on or before October 17, 2022, it would be difficult to identify and collect that money months, or even a year later. Because some casinos appear to be in financial difficulty, it might be impossible to collect that money without much difficulty and hardship.
  1. The State’s claim for a stay does not rest on settled law. On the contrary, the State’s claim goes directly against the clear and unambiguous language of the New Jersey State Constitution and the direct holding of the unanimous NJ Supreme Court case of New Jersey State League of Municipalities vs. Kimmelman, 105 NJ 422 (1987)
  1. Minimal harm would occur if the DGE collects one quarter of disputed taxes and holds that money until an appellate court resolves the dispute, either finally or pending appeal.
  2. The court must recognize that what is good for state government officials and the casino industry is not necessarily good for the “public interest”. The worst that could happen by enforcing, rather than delaying implementation the Court’s order of August 29, 2022 is that certain disputed funds would be held in escrow for several months.


I. (Sic) The State Will Not Suffer Any Harm Absent a Stay.

A. It is most unusual for government officials to argue that collecting disputed funds until a court resolves the issue constituted “interference with state tax collection. Holding this extra money for a few months will not have any effect on Atlantic City’s fiscal affairs.

B. The State has not offered a scintilla of evidence that collecting one quarter PILOT payments based on net “Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue” received by the casinos will thwart any public purpose.

C. The State cannot claim that it will suffer irreparable harm to its sovereign interests if it is temporarily barred from applying an unconstitutional statute. Garden State Equality vs. Dow, 216 314, 320 (2013)

II. (J). The State is NOT likely to succeed on the merits. That is why this Court entered its Order of August 29, 2022 in the first place!

A. If Atlantic City casinos “serve a public purpose” because they employ people and pay taxes, then every business in New Jersey (including the railroads whose tax breaks provoked adoption of this clause in our State Constitution, “serve the public interest. 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.

B. Article 8, Section l, Paragraph 2 of our New Jersey Constitution specifically refers to laws “exempting real and personal property used exclusively for religious, educational, charitable, or cemetery purposes, as defined by law and owned by any colporation or association organized and conducted exclusively for one or more of such purposes and not operating for profit”.

K. The owners of Atlantic City Casinos should expect and be prepared to pay significantly higher PILOT payments beginning in 2022. That is because the original CPTSA gave them a seven year freeze on their real estate taxes at 2015 levels. It was well known that the cost of local government and public schools in Atlantic City, together with the cost of Atlantic County Government significantly increased during those seven years. Also, all other property owners in Atlantic City and Atlantic County paid for those increases through increases in their taxes.

L. The effect of the Original CPTSA on the Resorts and Golden Nugget casinos cannot be determined until the DGE calculates 2022 PILOT amounts due for each casino including net Internet Gaming Gross Revenue” or “Sports Wagering Gross Revenue” that excludes moneys paid to Joint Venture partners and Third Party Operators.

The State claims that if the Amended CPTSA is invalidated, and the Original CPTSA remains in effect, the PILOT payment for the Resorts casino, including Internet Gaming and Sports Wagering Revenue, will increase from $3.550 million in 2021 to $16.33 million in 2022. It claims the Golden Nugget PILOT payment will increase from $4.755 million to $8.261 million. However, those numbers include large sums not received by the casinos which were paid out to Joint Venture partners and Third Party Operators. The court should not consider increased payment to be paid by the casinos for years 2022 through 2026 until the Division of Gaming Enforcement submits numbers based on net Internet and Gambling funds received by the casinos after payments made to Joint Venture partners and Third Party Operators.

K. The most effective way to secure prompt and final appellate review of these issues is to vigorously compel collection of the disputed tax.

So far, State Defendants have been casual and leisurely in defending this case. They were served with process on January 25, 2022, but did not file motions to dismiss as their first pleading until June 3, more than four months later. They claim this court’s Order of August 29, 2022 is causing “irreparable harm”. Yet they have not yet begun the appeal process. That will quickly change if the court denies the State’s application for a stay, but instead orders the immediate calculation, determination and collection of the disputed taxes from the casinos.

“I know no method to secure the repeal of bad or obnoxious laws so effective as their stringent execution.” President Ulysses S. Grant, Inaugural Address of March 4, 1869.

Dated: September 25, 2022  /s/ SETH GROSSMAN, Attorney for Plaintiffs is a tax-exempt, non-political education organization of roughly 200 citizens who mostly live near Atlantic City, New Jersey.  We formed this group in 2003. We volunteer our time and money to maintain this website. We do our best to post accurate information. However, we admit we make mistakes from time to time.  If you see any mistakes or inaccurate, misleading, outdated, or incomplete information in this or any of our posts, please let us know. We will do our best to correct the problem as soon as possible. Please email us at or telephone (609) 927-7333.

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  • Seth Grossman

    Seth Grossman is executive director of Liberty And Prosperity, which he co-founded in 2003. It promotes American liberty and limited constitutional government through weekly radio and in-person discussions, its website, email newsletters and various events. Seth Grossman is also a general practice lawyer.

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