To give Atlantic City casinos 10 year tax break, new state P.I.L.O.T. law declares them “blighted areas in need of redevelopment”.

Article VIII of NJ State Constitution requires that all real estate be assessed ?according to same standard of value? and taxed equally “at the general rate?.? It has some exceptions.? It allows tax breaks for veterans, farmers, senior and disabled citizens, charities, ?structures in areas in need of rehabilitation?? and ?blighted areas in need of redevelopment?.?? To give casinos a ten year tax break, Governor Christie and the Legislature support a new law that would declare every casino in Atlantic City ?blighted? and ?in need of rehabilitation?.??? If they get away with this, any politicians in New Jersey can give tax breaks like this to any of their big campaign donors at any time–and the rest of us would make up the difference.? 2016-borgata-water-club

We are suing to stop this.?? Please support us by sharing this information, and making a tax deductible contribution through the PayPal button on our home page.?? Here is a summary of the case.?? For copies of the complete lawsuit with backup documents, please call (609) 927-7333 or email


Before the first Atlantic City casinos opened in 1978, ?the state put these three “poison pills” in the enabling laws adopted after the referendum:

1.? Every casino needed a 500 room hotel.??? Because of this, only a handful of super-big corporations pwn every casino in Atlantic City.? They also own or control almost every major hotel,? restaurant, shop, and entertainment in town.? The law was written this way because in 1978, there was only one hotel in town that already had 500 rooms.?? It was the old Haddon Hall and Chalfonte owned by Resorts International.??? That corporation by was represented by powerful attorney/lobbyist Pat McGahn whose brother was Democratic State Senator Joe McGahn.?? The law was designed so Resorts International would have a 2 year monopoly on casino gambling on the East Coast.)? chalfonte hotel

#2.? Casino owners and employees could not run for public office, contribute to political campaigns, or have any voice in New Jersey politics.? They had no political voice. ? This people who owned Atlantic City?s casinos and major hotels, restaurants, shops, and entertainment paid 80% of local taxes, but had no voice in how that money was spent.?? To overcome this, the NJ Casino Association recently hired a new lobbying firm called Optimus Partners.? One partner is Philip Norcross, brother of Democrat powerbroker George Norcross.?? The other is Jeffery Michaels, boyhood friend of Republican Governor Chris Christie (and brother of “Bridgegate” Port Authority Police Lt. Thomas “Chip” Michaels).? Democratic Assemblyman Vince Mazzeo of Atlantic County admitted on a talk radio program that the legislation he sponsored giving casinos a ten year tax break was given to him by lobbyists for the Casino Association.

#3.? Casinos pay 1.25% of gross “win” Casino Reinvestment Development Authority? (CRDA) slush fund run by NJ politicians.? For first 15 years, this money stuffed Atlantic City with low income housing projects that paid little or no real estate taxes.??? This made Atlantic City a town of ?taxation without representation? and ?representation without taxation?.

When its first casino opened in 1978, Atlantic City?s local budget for ?40,000 residents was $37 million per year.? In 2015, it was $262 million.? Local government spending increased some 16% each and every year for 37 years? roughly four times the rate of inflation.??? Casino owners were OK with this for the first 30 years when they had a near monopoly on East Coast gambling.1978-atlantic-city-budget-lrg


The party ended with the economic collapse of 2006 and competition from Pennsylvania and Delaware casinos after 2010.

In 2006, Atlantic City?s 13 casinos had a ?win? of $5.2 billion.?? By 2015, the 8 remaining casinos had a total ?win? of only $2.4 billion?less than half.

In 2008, Atlantic City had taxable real estate worth $20.5 billion.?? By 2015, it was down to $7.3 billion?just over a third of its previous value.

In February, 2011, the state appointed a monitor to supervise Atlantic City?s finances during this crises.??? But Atlantic City?s local government and public school spending increased at the same rate as before.LibertyandProsperity_banner

Atlantic City?s local government spending was $193 million for 2007.?? It was $262 million? for 2015.?? Atlantic City?s public schools spent $16,482 per pupil in the 2007-2008 school year.?? It was $27,411 per pupil for 2014-2015.

Besides raising taxes substantially, Atlantic City government borrowed enormous sums of money between 2011 and 2015 by issuing bonds, and by passing budgets that were roughly $100 million short of being balanced as required by the Local Budget Law.

Local government increased its bonded debt from $169 million in 2007 to $271 million in 2014. ?The Board of Education increased its bonded debt from $50.3 million to $85.9 million.

Atlantic City?s 2015 budget anticipated $33.5 million from state ?P.I.L.O.T.? legislation that was never adopted.?? It ??deferred? its obligation to pay $20.3 million of employee health benefits, and $18.6 million of employee pension contributions.?? And it did budget tax refunds for hundreds of taxpayers who appealed assessments based on pre-2006 values.

By 2015, casinos were only paying about 60% of Atlantic City?s property taxes.


New Jersey?s ?Local Finance Board? has supervised Atlantic City?s finances since Republican Governor Chris Christie first took office in 2010.?? In February, 2011, a state monitor was appointed to report Atlantic City?s finances directly to the State?s Director of Local Government Services.

On June 11, 2015, the New Jersey State Assembly, and on June 25, 2015, the New Jersey Senate approved a law that would let Atlantic City casinos pay reduced fixed payments instead of regular property taxes for the next 15 years.??? However, the Governor refused to approve the proposed legislation, and it did not become law.

Even though this legislation was never adopted, Atlantic City?s governing body approved its 2015 budget on September 22, 2015 which falsely assumed it would receive $33.5 million from this legislation during 2015.

On February 3, Atlantic City?s governing body approved ?temporary appropriations? which grossly exceeded the amount permitted by N.J.S.A. 40A:4-19, and the amount of available funds. ?This was partly because it falsely assumed it was likely to received $33.5 million from this legislation in 2016.

Atlantic City government was unable to pay its employees on April 8, in part because it never received funding from this legislation that was never adopted.

NJSA 2C:30-4 states:? that a:

?person or member. . . body charged with or having the control of a State office, division, department. . . or member of a . . . municipal governing body. . . commits a crime of the fourth degree if he purposesly and knowingly. . . incurs obligations in excess of the appropriation and limit of expenditure provided by law for that office, division, department, institution, board, or body. . . ?

For this reason, our lawsuit demanded that Atlantic City Mayor Donald Guardian to forthwith issue proper Reduction In Force (RIF) or other notices necessary to reduce the obligation of Defendant ATLANTIC CITY to pay salaries, wages, pensions and/or benefits to any employee for which not lawful appropriation of funds has been made.


Article VIII, Section 1(a) of the New Jersey State Constitution provides that all real estate ?shall be assessed according to the same standard of value? and? ? taxed at the general tax rate? for all other property in the ?taxing district in which the property is situated.?

On February 22, 2016, Assemblyman Vincent Mazzeo introduced Assembly Bill 3209, and on February 29, 2016 State Senator Stephen M. Sweeney introduced the identical Bill as Senate Bill 1715.?? Those bills propose letting Atlantic City casinos make reduced payments instead of taxes for the next ten years.? To avoid the requirement of the State Constitution that all real estate be assessed and taxed equally, the legislation declared that every casino in Atlantic City was in a ?blighted area? because Atlantic City ?contains a tourism district as established pursuant to Section 5 of P.L. 2011, c.18 (C.5:12-219)?2016-harrahs-AC-pool

Atlantic City is the only municipality in the State of New Jersey which contains such a ?tourism district?.

Most of the areas of Atlantic City where casinos are located contain modern, luxury, upscale casinos, restaurants, shops, nightclubs, and hotels, and cannot be presumed to be ?blighted areas? without finding of facts established through due process.

There are currently eight ?casino gaming properties? in Atlantic City.? Together they pay more than half of the total property taxes for the municipal, public school, and library budgets of ATLANTIC CITY, and roughly one fourth of the total property taxes of Atlantic County.2016-tropicana-quarter

If the CASINO TAXATION BILLS? become law, the eight casino gaming properties would have no obligation to pay any portion of the massive property taxes needed to fund the massive increases in debt and deferred payments incurred by ATLANTIC CITY since the State Defendants took control the finances of ATLANTIC CITY in 2011.

If the CASINO TAXATION BILLS become law, that massive tax burden would be shifted to the remaining half of taxable real estate in Atlantic City, and would cause a catastrophic decrease in its value.

If the CASINO TAXATION BILLS become law, the eight casino gaming properties would have no obligation to pay for any increases in county property taxes for the next ten years, thereby shifting the full burden of any such increases to owners of the remaining three fourths of taxable real estate in Atlantic County.

If the CASINO TAXATION BILLS become law, the catastrophic decrease in the values of non-casino properties in Atlantic City would cause significant decreases in the amount of county property taxes paid by property owners in Atlantic City and increases in the tax to fund county government by owners of all taxable property in the other 22 municipalities of Atlantic County.


A business entity is ?insolvent? when it is ?unable to pay its debts?.??? Although Atlantic City?s government has not yet declared bankruptcy, it is obviously insolvent if it can?t pay its employees.? It therefore has fiduciary duties to pay creditors having priority by statute or common law.

It is well settled that obligations to pay moneys held in trust, tax obligations, and payment of employee salaries for work performed and services rendered are debts entitled to priority that? must be paid before any other debts by insolvent debtors.

On or about April 1, 2016, Atlantic City Mayor Guardian paid? $585,000 in principal and $79,688.08 in interest to holders of unsecured Series 2012 taxable bonds one week before the City did not have the $3.5 million it needed to pay employees and payroll taxes the following week.

Mayor Guardian now plans to pay bondholders another $1,797,310.98 to holders of unsecured Series 2012 Taxable and Tax-Exempt bonds on May 1.

If Mayor Guardian continues to pay unsecured bondholders and increase the debt owed to its employees for work performed, it is less likely that such debt to employees will be discharge in bankruptcy, and more likely that there will be big tax hikes to pay them.

?Most property values in Atlantic City decreased by roughly one third during the past three years.?? Another round of tax hikes will make them fall further.??? When Atlantic City properties lose value, they pay less in county property tax, and every other business and homeowner in the county pays the difference.??? This is why almost every piece of real estate in Atlantic County has also lost value during the past three years.


  • 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.

    View all posts

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top