Boyd Gaming, the owner of Atlantic City's best performing casino, expects a decision by the end of the year on a massive tax appeal settlement being challenged by the city, company officials said Wednesday.
In October, a tax court ruled that Borgata Hotel Casino & Spa was owed $48 million in overpaid taxes after the property was assessed at more than double its value in 2009 and 2010. The city has since appealed that ruling.
In a conference call discussing 2013 fourth-quarter earnings Wednesday, Paul Chakmak, the company's executive vice president and chief operating officer, said Borgata continues to pay taxes at the higher rate until the process is complete.
The casino's earnings before interest, taxes, depreciation and amortization would have been $2.1 million higher in the fourth quarter and $8.4 million higher across 2013 were it not for Atlantic City property taxes, said Chakmak, who described Borgata's fourth-quarter earning as well below original expectations.
Borgata's net revenues in the fourth quarter totaled $157 million, including the $2.2 million seen from online gambling. That's a 6.5 percent increase from the nearly $148 million in net revenues during the fourth quarter of 2012.
But Boyd expected the casino to do better than that given that the fourth quarter of 2012 included the impacts of Hurricane Sandy, which left the property shut down for days.
This year, the casino's fourth quarter took a hit particularly in December when Borgata saw an unusually low hold percentage on table games. Hold refers to the money a casino keeps after gamblers cash in their remaining chips.
Borgata's hold percentage in December 2013 was 11 percent on nearly $103 million, compared to a 15 percent hold percentage in December 2012 on $113 million. Boyd officials said the disparity equated to a $3.6 million loss in earnings before interest, taxes, depreciation and amortization.
Boyd officials also speculated that harsh winter weather cost the casino another $1 million in December.
Meanwhile, Boyd officials were encouraged by the launch of Internet gambling. Borgata and its online partner bwin.party currently have more than 40 percent of the market share.
Chakmak said online business is primarily coming from new customers, despite suggestions that Internet gambling will cannibalize Atlantic City's brick-and-mortar casinos. Eighty-five percent of those engaging in online gaming through Borgata have not had rated play at Borgata in the last two years, officials said.
"New Jersey is an important first step, but it won't be the last," Boyd President and CEO Keith Smith said, adding that the company intends to pursue Internet gambling ventures in other states if the practice is approved.
Contact Jennifer Bogdan:
Follow Jennifer Bogdan on Twitter @ACPressJennifer