Borgata Casino Snubs Tax Payment to Struggling Atlantic City
February 22, 2016
Borgata Casino Snubs Tax Payment to Struggling Atlantic City, Demands Hundreds of Millions in Unpaid Tax Refunds
The Borgata Hotel Casino and Spa will not be paying its taxes to Atlantic City over a dispute involving tax refunds. On Wednesday, February 17, Borgata was scheduled to pay Atlantic City $7.2 million, but reneged, as the casino continues to complain about a tax dispute that has embattled the two for three years.
“We are simply asserting our rights as a taxpayer to receive a refund of overpayments,” said Borgata’s senior vice president Joe Lupo. “We are also disappointed that the city is focusing solely on us its attempt to resolve the situation. Atlantic City has paid refunds to every other property--except Borgata.”
In 2010, the state of New Jersey valued Borgata at $2.26 billion and taxed it according to that number. But, in 2013, the Tax Court of New Jersey cut that estimate down to only $880 million. As such, the court determined Atlantic City had charged Borgata approximately $150 more than it legally owed. The debt includes an overcharge of $62.5 million for 2009 and 2010, and another $88.5 million for 2011 through 2014.
Atlantic City was ordered to issue part of the refund by December 31 of 2014, but failed to do so. Negotiations have continued and interest has accrued on the debt, which now amounts to $170 million.
Borgata’s withheld tax payment could severely harm Atlantic City, whose coffers are almost empty at the moment. Without the money, it is thought that the city could run out of money before the end of February, forcing bankruptcy. Atlantic City has experienced substantial economic hardship over the past several years, as four major casinos closed down in 2014: The Atlantic Club, Showboat, Revel, and Trump Plaza. That year, the surviving casinos experienced profit growth of over 40 percent.
Added stress to the casino industry will hit Atlantic City over the next three years, as eight new casinos will open up in Pennsylvania, New York, Maryland, and Massachusetts. Moody’s Investors Service released a report last November that claimed the market is already running at capacity and that this could cause further closures. Possible casualties in Atlantic City could include Trump’s Taj Mahal, Bally’s and Caesars.
Joe Corbo, a lawyer for Borgata, wrote in an email that he believed the casino has been patient and fair minded in making the decision to starve Atlantic City of $7.2 million. “We did not come to this decision lightly. We have been tremendously patient, giving city officials every opportunity to pay the amounts we are owed, or to engage us in good-faith negotiations… But after years of delays and unsuccessful appeals by the city, we can wait no longer.”