Atlantic City Loses Over Casino Tax Assessment Appeals
City Must Reimburse Casinos After Overvaluing Property Worth
Good news for Atlantic City’s casinos is bad news for the city itself. All 12 casinos, including the two-week old Revel Resort, have appealed their tax assessments from the past three years, claiming their properties aren’t worth nearly as much as the city believes.
The assessments began in 2008, two years after the economic downturn, but an increase in competition from casinos in neighboring states such as Pennsylvania, Maryland, New York and Delaware has seen an even sharper decline in gross gaming revenue. After a peak of $5.217 billion in 2006, revenue has dropped by 36 percent to $3.317 billion last year, a number not seen since 1993.
The city has already settled with Pinnacle Entertainment and Caesars Entertainment to give back a combined $46 million for over-collecting from six casino properties.
Court documents show that Trump Casinos is currently in the process of negotiating with the city over its 2010 assessment that valued the Trump Taj Mahal at $1.66 billion. Trump Casinos believes the property is worth only $240 million, showing just how far apart the two sides are.
A casino’s tax assessment is ultimately determined by its ability to generate revenue, but recent sales of comparable properties are also considered. In 2009, the Tropicana Casino and Resort was sold under bankruptcy to a group of creditors for just $200 million. In 2010, the Resorts Casino Hotel was purchased by DGMB Casinos for only $35 million from lenders after former owner Colony Capital defaulted.
Here is a look at Atlantic City gross gaming revenue over the last ten years.
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