Chalk up another win for The Borgata. Is it another financial screw-up for the flat broke and rudderless City of Atlantic City? Borgata, the town’s largest employer and biggest taxpayer, is not only the most profitable, but it could be the most under-assessed property for tax purposes. That means less money for AC’s bone dry, municipal coffers.
Background: MGM co-owned Borgata 50/50 with Boyd Gaming. MGM recently announced a buy out of Boyd’s 50% share of Borgata for $900 million. That makes the fair-market value of the Borgata worth $1.8 billion dollars. Ouch. A recent assessment handed down by a court judge pegged Borgata’s value at just $850 mil.
Is the PILOT bill a sweetheart deal for Atlantic City casinos? Some elected officials like County Exec Levinson thinks so.
Some say (and we agree) that Casinos should be taxed on all revenue streams — not just gross gaming revenues. That means taxes should be levied on food, drinks and entertainment, which are the fastest growing portions of most Atlantic City casinos. But wait, it gets better. Casino’s can petition the CRDA to allow their IATA taxes be allocated to internal upgrades and other investments within their own Casino properties. This highlights why Atlantic City’s non-tourism district and non-gaming infrastructure still suffers.
Borgata has held back its last two quarterly tax payments. This is due to the $170 million in tax refunds Atlantic City still owes the marina-based casino.
Perfect timing for Borgata, horrible timing for Atlantic City’s financial leadership. Borgata gets an incredible sweet deal under the recently signed PILOT BILL. Borgata and the other 7 casinos will contribute to the annual $120 mil payment in lieu of taxes based on gaming revenue, hotel rooms and property size. Foolishly, fast growing food, drink, and entertainment revenues will not be a part of that equation.