ATLANTIC CITY — Casino taxes and fees were up for the third consecutive reporting period, due in large part to the rise in internet gaming, according to industry experts.
A recent report from the state Division of Gaming Enforcement shows the Atlantic City casino industry paid nearly $219 million in taxes and fees during the 2018 fiscal year, which ran from July 1, 2017, to June 30, 2018. In a separate report released by the same agency, the casino industry paid more than $280 million in taxes and fees in the 2017 calendar year, plus an additional $35 million in city taxes and fees.
The figures represent taxes paid on total gaming and progressive slots as well as fees paid on hotel rooms and parking spaces. Since its inception in 2013, internet gaming taxes have accounted for a larger portion of total gaming taxes each year. According to the calendar-year report, internet gaming taxes accounted for $22.4 million in 2015, while last year online gambling taxes totaled $36.9 million.
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Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University, said that while gross revenue tax has remained relatively consistent over the last three calendar years — $174.7 million in 2015, $175.7 million in 2016 and $174.7 million in 2017 — the growth witnessed in the total gaming revenue tax has “therefore, come primarily from increases in the internet gross revenue tax.”
“In 2015, taxes on internet gaming revenue represented 11 percent of total gaming revenue taxes and have increased incrementally year-over-year,” Pandit said. “For the six months ended June 30, 2018, internet gaming revenue taxes represented 20 percent of total gaming revenue taxes.”
In New Jersey, casino slot and table game revenue is taxed at 8 percent, while internet gaming revenue is taxed at 15 percent. Sports betting, which commenced at the state’s racetracks and Atlantic City casinos in the spring, is taxed at 8.5 percent. The taxes are deposited into the Casino Revenue Fund, which finances programs for seniors and people with disabilities.
Anthony Marino, a local gaming analyst, said the evidence indicates the increases in revenue tax can be directly attributed to online gaming.
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“Online gaming creates more tax revenue,” Marino said. “(The state) was smart to tax internet gaming at a higher rate” than slot and table games while keeping it below what other gaming markets have set.
As for the overall health of the industry, Marino pointed to the luxury tax, which he described as a primary indicator of “overall economic activity in Atlantic City.”
Between 2014 and the first half of this year, Marino said, “the decline of most of these taxes, particularly the luxury tax, suggest that there was actually no growth in non-gaming activity, and in fact a decline, on a citywide basis despite claims by some that non-gaming revenues were increasing.”
“That is now the past,” he concluded. “In the second half of this year, the two new casinos’ continued growth in internet casino-type gambling, and the addition of sports betting revenues, both brick-and-mortar sports books as well as from internet and mobile devices, will, in the short-term, significantly boost total revenues.”