State Asks For More Delay. Our Papers Ask Court To Have Casinos Pay Taxes On Internet Gambling & Sports Bets Now.



1.     On June 18, 2018, the Law Division of Superior Court issued a “Consent Order for Settlement” in the matter of Liberty and Prosperity 1776, Inc. et als. vs. City of Atlantic City, et als., Docket No. ATL-L-777-16. (Plaintiffs/Respondents Appendix Page 1)

2.     On December 21, 2021, Defendant/Appellant 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 purported to allow Atlantic City’s licensed casinos exclude revenue from internet gambling and sports betting from their “Gross Gaming Revenue” (GGR) used to determine their Payments In Lieu of Local Real Estate Taxes.  Those amendments significantly reduced the payments made by Atlantic City’s licensed casinos “in lieu of” real estate taxes.  They also violated the terms of the June 18, 2018 “Consent Order for Settlement” made between these parties and the County of Atlantic in Liberty & Prosperity 1776, et als. vs. City of Atlantic City, et als., Docket No. ATL-L-777-16.

3.     On January 24, 2022, Plaintiffs/Respondents filed this action seeking to invalidate those portions of the Amended Pilot Law.

4.     On January 25, 2022, Plaintiffs /Respondents served Defendant/Appellants with a copy of the summons and complaint in this action.

5.     On March 2, 2022, Defendants/Appellants were required to file an answer or otherwise respond to the summons and complaint of Plaintiff/Respondents in this action.  They failed to do so.

6.     On or about March 17, 2022, the attorneys for Plaintiffs/Respondents and Defendants/Appellants orally agreed to extend the time for Defendants/Appellants to respond to the summons and complaint.  However, there was a misunderstanding as to whether the extension would be to March 29 or April 29, 2022.

7.     On April 7, 2022, Plaintiffs/Respondents filed a motion requesting the entry of default and default judgment against Defendants.

8.     On April 28, 2022, the parties agreed to a consent order giving Defendants/ Respondents until June 3, 2022 to respond to the complaint of Plaintiffs/Respondents.

9.     On June 3, 2022, Defendants/Respondents filed their motion to dismiss Plaintiff’s complaint, returnable on July 8, 2022.

10.  On June 4, 2022, the Trial Court notified Plaintiffs/Respondents’ that it would dismiss their complaint on August 2, 2022 for failure of prosecution.

11.  On June 20, 2022, Plaintiffs/Respondents filed a motion for Summary Judgment returnable on July 22, 2022.

12.  The Trial Court heard oral argument on both motions on August 5, 2022.

13.  On August 29, 2022, the Trial Court issued its Final Judgment which in part declared that “The December 21, 2021 Amendment to the (original 2016) Casino Property Tax Stabilization Act is hereby declared null, void, and of no effect”. (Ra1-Ra2).

14.   The Trial Court also issued a 41 page detailed, fact-based “Memorandum of Decision On Motion” explaining the reasons for this decisions.

15.  On September 12, 2022, Defendants/Appellants filed a motion before the Trial Court seeking to stay the Trial Court’s August 29, 2022 Final Judgment pending their anticipated appeal.

16.  On September 25, 2022, Plaintiffs/Respondents filed opposition to that motion, together with a cross-motion to enforce litigant’s rights.  Plaintiffs/Respondents asked the Trial Court to compel Defendants/Appellants to include revenue from internet gambling and sports betting in calculating casino “Gross Gaming Revenue” (GGR) when determining and collecting the  Payments In Lieu of Local Real Estate Taxes for Atlantic City casinos.

17.  Defendants/Appellants filed their Notice of Appeal on October 13, 2022, the last possible day.

18.  On October 14, 2022, the Trial Court issued an order granting the motion by Defendants/Appellants for a stay, but limited the length of that stay to 90 days. (Ra146)

19.   The Trial Court also issued a 12 page Memorandum of Decision explaining the reasons for its decision.

20.  On November 3, 2022, this Appellate Division issued its Scheduling Order for this case.  Said order provided, inter alia, that the Brief and Appendix for Defendants/Appellants was due on December 19, 2022.

21.  Defendants/Appellants at no time made any effort to seek an “accelerated” or “emergent” resolution of this case appeal, as specifically requested by the Trial Court.

22.  On December 15, 2022, Defendants/Appellants filed this motion to delay the filing of their Brief and Appendix until January 18, 2023, and to further extend the stay of the Trial Court’s August 29, 2022 Final Judgment.

23.  On December 19, 2022, Defendants/Appellants failed to file their appellate brief and appendix when due.

24.  The Division of Gaming Enforcement (DGE) of Defendants/Appellants invoices and collects Payments In Lieu of Real Estate Taxes (PILOT) from Atlantic City casinos on a quarterly basis.  Those PILOT tax payments  are billed during the first week of January, April, July, and October of each year, and due during the second week of February, May, August, November. (See 9/12/2022 Certification of Adetoro Aboderin, Ra114 to Ra130)

25.  Because of the 90 day stay ordered by the Trial Judge on November 14, 2022, the DGE did not bill or collect PILOT for sports betting or online gambling that would have been due that week.

26.  If this court grants a further stay and delay requested by Defendants/Appellants, then the DGE will not bill the Atlantic City casinos for said additional moneys in January, 2023 or collect them in February, 2023.


The State Defendants/Appellants are causing ireparable harm to themselves, the public, and the casino industry with their unconscionable delay in defending this case and pursuing this appeal.

Plaintiffs’ summons and complaint in this matter were served on the State Defendants/Appellants on January 25, 2022.  It was unconscionable for them to wait

The Trial Court made its ruling on August 29, 2022.  It was unconscionable for theState Defendants/Appellants to wait until October 13, 2022, the last possible day, to file their appeal.

The Trial Court granted State Defendants a stay of its judgment on October 14, 2022.  This allowed the State to exclude online gaming and internet sports betting revenue from GGR in their Third Quarter PILOT invoices to the Atlantic City Casinos on or about October 15.

However, the Trial Court limited that stay to 90 days. It expected this matter to be before the Appellate Division or New Jersey Supreme Court on an “accelerated or emergent basis” before the Fourth Quarter PILOT invoices were sent to the Atlantic City casinos in January of 2023.

It was unconscionable for State Defendants/Respondents to fail to file their Brief and Appendix on December 19, 2022 as required by the Scheduling Order of November 2.

Absolutely no harm, irreparable or otherwise, would occur to the State, the public or the Casino Industry if Atlantic City casinos are required to pay PILOT in lieu of real estate taxes for the quarter invoiced in January of 2023 and paid in February of 2023.

It is worth mentioning that the Trial Court rejected the State’s claim that the so-called Casino Property Tax Stabilization Act (CPTSA) of 2016 had the purpose or effect of stabilizing Atlantic City revenues.  The Court agreed with Plaintiffs/Respondents that Atlantic City’s financial problems began with “the legalization of casino gambling in neighboring states in the mid-2000s coupled with the “Great Recession of 2008”. (Ra6)

The Trial Court also found that Atlantic City’s financial crisis began after State Defendants/Respondents took “supervision” over Atlantic City’s finances in 2010  pursuant to the Local Government Supervision Act. N.J.S.A. 52:27BB-68 and 40A:40-10. (Ra6).

More specifically, the Trial Court found:

“By 2016, four of the City’s twelve casinos had closed.  Despite being under the State’s supervision since 2010, the City continued to operate without a balanced budget and incurred new debt in order to pay for municipal operating expenses. . .  (Ra7)

The Trial Court found that the State Defendants/Respondents finally took action to cut Atlantic City’s municipal spending and stop incurring deficits to fund operating expenses with the  Municipal Stabilization and Recovery Act (“MSRA”) adopted on May 27, 2016. (Ra7) and (Plaintiff /Respondents Appendix Pages 16 through 17)

Plaintiffs/Respondents have consistently asserted that these spending cuts, not the CPTSA, fixed Atlantic City’s financial crisis.

The problem with including internet casino gaming and internet sports wagering in computing Gross Gaming Revenue (GGR) and the PILOT paid by Atlantic City casinos in lieu of real estate taxes was also created by State Defendants/Respondents.

Since the first application of  the CPTSA in 2017, the Division of Gaming Enforcement (DGE) of State Defendants/Respondents included all casino revenue from internet gaming and online sports wagering receipts in GGR, even when internet Joint Ventures and Third Party Providers retained as much as half of that money.  At first online casino revenue involving internet Joint Ventures and Third Party Providers was very small.

New Jersey first permitted sports betting until 2018.  After this, Atlantic City internet casino revenue involving Joint Ventures and Third Party Providers became very significant.

Because of this, the DGE practice of  including in GGR, internet online casino and sports betting revenue retained by Joint Ventures and Third Party Providers  now has a significant negative impact on many Atlantic City casino operators.   However, that negative impact can be immediately corrected by the DGE without legislation or court intervention.  (Ra69-Ra70)

There is nothing inconsistent in the arguments of Plaintiffs/Respondents concerning the constitutionality of the Original CPTSA Act of 2016.  They have always claimed it was unconstitutional.  They simply agreed to dismiss their previous lawsuit to upon the agreement by Defendants/Appellants to include all online gaming and sports betting revenues in calculating the PILOT payments in lieu of online and real estate taxes for Atlantic City casinos during the ten year period of the “one time only” and  “emergency” CPTSA..

Plaintiffs/Respondents do not challenge any part of the 2021 Amendment that did not change the calculation of the casino PILOT payments in lieu of real estate taxes.  That is because those other parts of the 2021 Amendment do not in any way relate to the taxing of real estate or the Uniformity Clause of the New Jersey State Constitution.

The Trial Court, after reviewing the proofs and arguments submitted by the parties concluded that Defendants/Appellants “do not have a reasonable probability of success on the merits”. (Ra154)

The State’s only purpose of issuing a stay at this point in the proceedings is to create an artificial financial crisis.  It seeks to create unnecessary issues for courts that will decide this case in the future to influence those courts.  One unnecessary issue that would be caused by a stay is how a casino struggling in the future could repay retroactive past due PILOT payments.  A second issue would be further unnecessary delay by the DGE to change its methods so it can exclude from GGR, moneys retained by internet Joint Ventures and Third Party Providers.




In Section V. of its 12 page Memorandum of Decision, the Trial Court held:

“However, the stay is granted for a ninety (90) day period, contingent upon either the Appellate Division or the New Jersey Supreme Court considering this issue of significant public importance on an accelerated or emergent basis pursuant to R. 2:4-1, R. 2:9-2 or R. 2:9-8.  This time limit is justified due to (1) the significant public interest in the resolution of this matter; and (2) the County services either in limbo or outright denied to the public as a result of this stay.”  (Ra157)

The Trial Court did provide for an indefinite stay.  However, this would be only if the State Defendants/Respondents pursued their appeal on an “accelerated” or “emergent” basis.

“If during this ninety-day period, either the Appellate Division or New Jersey Supreme Court accepts this matter on an accelerated or emergent basis, this stay will remain in place until a final adjudication on the merits and all appeals are exhausted”. (Ra157)

Of course, the State Defendants/Respondents did just the opposite.  Instead of seeking a prompt disposition on the merits, they are doing everything they can to slow the process.


Article VIII of the New Jersey State Constitution states:

“1(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 property 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 industry. . . “

Kimmelmen 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.

Kimmelman then recited the history of the 1947 New Jersey Constitutional Convention which drafted the uniformity clause in our current state constitution.  Kimmelman concluded that the uniformity clause specifically denies the State the “right to classify real estate in different categories” for the purpose of taxation.

Kimmelman made it clear that Article 8, Section 2, which gives the legislature the power to grant real estate tax exemptions, only applies to religious, educational, charitable, and cemetery uses which had historically been granted such exemptions.

Exemptions for veterans, farmers, senior citizens, and owners of “blighted areas in need of redevelopment” clearly did not qualify for any legislative exemptions.  That is why they required special exceptions in the constitution.

Atlantic City casino properties clearly do not fall within any of those exceptions.

2nd Roc-Jersey Associates vs. Town of Morristown, 158 NJ 581 (1999) clearly does not apply to this case.  That dealt with a situation where a Special Improvement District (SID) provided certain services mostly to benefit commercial property owners, and there was a rational basis for not charging residential customers fees for services that offered them little benefit.

Town of Secaucus vs. Hudson County Board of Taxation, 133 NJ 482 (1993) also does not apply to this case.  There the New Jersey Supreme Court struck down the disparate tax treatment as unconstitutional special legislation.  It did not apply the uniformity clause of Article VIII because it found that the term “taxing district” only applied to municipalities. It observed that the Hudson County Board of Taxing was not a “taxing district” as contemplated by the uniformity clause because it was a county agency, and not a municipality.

Town of Morristown v. Woman’s Club of Morristown, 124 NJ 605 (1991) dealt with real estate that was a recognized historic site.  That property clearly fell into the “educational” purposes recognized by Article VIII, Section 2 of the New Jersey Constitution. That case obviously does not apply to Atlantic City casino properties.

The State argues that the CPTSA articulates many worthy “public purposes”.  However, that argument misses the obvious holding of Kimmelman.  The uniformity clause clearly denies the Legislature the power to create different tax classifications of real estate without amending the State Constitution.

The State argues that casino properties will pay less if they are taxed at their true assessed values like all other real estate in Atlantic City.  First, there is no evidence that the casino properties were inspected, appraised, and assessed for tax purposes since they were taken off the tax rolls in 2016.  Second, even if they were, the uniformity clause does not allow disparate tax treatment of any kind for any reason.  Whether the casinos pay more or less is relevant only to Plaintiffs in deciding whether or not it is in their self-interests to pursue this action.

It is also absurd for the State to argue that Plaintiffs’ challenge of the amended CPTSA threatens the stability of the tax base and budget process for Atlantic City, Atlantic County, and the casino industry.  Plaintiff’s consented to the original ten year CPTSA formula and settlement.  It is the casinos and New Jersey State Legislature who have chosen to scrap the ten year deal they made after only five years.

The argument that hotels, restaurants, retail stores, and parking areas owned by casino operators serve more of a public purpose than those owned by others is inconsistent with the plain language and intent of the uniformity clause.  Moreover, if the argument is made that casinos serve more of a public purpose than any other business, it is difficult to conceive of a single industry which could not make the same argument.  That would make a total mockery of the uniformity clause.

There is also an important practical political purpose for the uniformity clause.  The owners, employees, and suppliers of Atlantic City’s casinos are by far the biggest, richest, and most influential interest group in Atlantic County. If casino property owners are permitted to pay fixed, payments “in lieu of” their regular property taxes, these interests have little or no self interest in using their influence to oppose or limit waste, fraud or abuse in local government or to be concerned about local spending and taxes.   That would make it easier for special interests to seek more spending and higher taxes by local government.

It is worth mentioning that it appears that state government did little or nothing to control out of control local government spending and tax increases for ten years from 2006 and 2016.  It appears that the full power of state government was not mobilized to address the problem until the powerful casino industry, including its owners, employees, and suppliers were threatened by unsustainable real estate taxes.

Finally, the state seems to make an argument that casino properties may qualify for special tax treatment  pursuant to Article VIII, Section 3 of our State Constitution.  That section states:

“Article VIII, Section III, Paragraph 1:  The clearance, replanning, development, or redevelopment of blighted areas shall be a public purpose and public use for which private property may be taken or acquired. . . (P)rivate corporations may be authorized by law to undertake such clearance, replanning, development or redevelopment; and improvements made for these purposes and uses, or for any of them, may be exempted from taxation, in whole or in part, for a limited period of time. . . “

It is hard to image how any licensed casino property in New Jersey can determined to be “blighted” or part of a “blighted” area.

NJSA 5:12-84 adopted in 1977 required and does require each licensed Atlantic City casino property to at all times be “a superior, first-class facility of exceptional quality”.

The New Jersey Legislature on May 27, 2016 did not have any factual basis to declare each licensed casino property in Atlantic City to be a “blighted area”  when it enacted the Original CPTSA.

The Amended CPTSA does not even purport to claim that the casino properties of Atlantic City are blighted areas.

Gallenthin Realty Development Inc. III vs. Borough of Paulsboro, 191 NJ 344 (2007) held that courts, and not the Legislature, are to determine whether an area is “blighted” as contemplated by the State Constitution, and that the objective,  commonly used and understood definition of that word must be used to make that determination.

A.    Atlantic City Casinos Do Not Serve More Of A Public Purpose Than Railroads.

If an appellate court rules that by Atlantic City casinos serve a “Public Purpose”, and are therefore entitled to special assessment methods or rates to determine their real estate taxes, it is difficult to imagine any industry that would be subject to the Uniformity Clause.

Nothing in the Original 2016 CPTSA Act requires the State to include as GGR online and sports betting revenues retained by third party vendors or joint venture partners.  The decision to include such revenues in GGR was an arbitrary decision made by the State’s Division of Gaming Enforcement without any legislative authority, and can be easily reversed. (See Christopher Glaum Certification of 9/12/2022 at Paragraphs 37 and 38)

Plaintiffs do not in any way challenge or object to the authority of the Legislature to continue the IAT crediting mechanism in 2022 or future years.

Finally, Hon. Michael J. Blee specifically held below that,

“For reasons previously explained in this Court’s August 29, 2022 Order, Defendants (Appellants) are unlikely to succeed on the merits”.

It is ridiculous to compare Atlantic City casinos to schools, churches, cemeteries, or other properties that received tax exemptions “in the historical mold of the public purpose”.

Kimmelman made it clear that Uniformity clause was adopted in 1875 to prevent special real estate tax treatment for the railroad industry. For the State to prevail, it must establish that Atlantic City casinos serve more of a public purpose than railroads!

B.    The Right To Engage In the Business of Online Gambling and Sports Betting Is An Appurtenance to Qualified Atlantic City Casino Real Estate.

Only owners of qualified Atlantic City casino hotel properties can obtain licenses to lawfully engage in the business of online gambling and sports betting. Those properties must be located in Atlantic City, contain at least 500 first class hotel rooms, and otherwise meeting the standards of qualified casino hotel properties under the New Jersey Casino Control Act.  Therefore, that right to lawfully engage in the business of online gambling and sports betting is an appurtenance to that parcel of real estate which increases its value.  Therefore that added value to the real estate can be taxed as real estate.  That added value can be determined by analyzing the income it produces.


Terminating the Stay Before Calendar Year 2023 Will Promote Fiscal Certainty and Stability.
The next quarterly PILOT payment for Atlantic City casinos is to be invoiced during the second week of January of 2023 and paid during February.  If the State is concerned with stability, it can set up a mechanism for any excess funds to be held in escrow until this case is resolved.

The Trial Court’s Ruling Does Not Affect The Ability of the Legislature To Distribute Investment Alternative Tax (IAT) funds any way it sees fit to promote “the public interest”.
The State Cannot Be “Irreparably Harmed” By Holding Funds In Escrow Until This Case Is Resolved On The Merits.


It is difficult to understand how State Defendants/Respondents can claim that collecting higher taxes from Atlantic City casino properties will cause “irreparable harm” to the public interest while collecting higher taxes from every other taxpayer in Atlantic County would cause “de minimis” harm.

Dated:  December 20, 2022                             SETH GROSSMAN, Attorney

453 Shore Road

SG/pre/2022-0613-pilot-brief                        Somers Point, NJ  08244

(609) 927-7333

Attorney for Plaintiff

  • 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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