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New Jersey Fleecing State's Taxpayers

March 13, 2010

Life in New Jersey isn't easily wrapped up in a two-hour movie with a happy ending.

But in many ways, the Atlantic City casino operators are trying to control the script in this state to the detriment of its citizens. New Jersey citizens pay the highest property taxes while New Jersey casino operators pay the lowest tax rate of any casinos east of the Mississippi. And they have used their clout to deprive the state budget of a source of income that could help close the budget gap in the same way that New York, Pennsylvania and Delaware have addressed the issue — with slot machines at existing racetracks.

Rain Man: In that great movie starring Dustin Hoffman, the character he played, Raymond, was an idiot savant with a computer for a mind, a great card counter with an innocent personality. The Atlantic City casinos are even better with numbers. Over the last five years — from 2005 to 2009 — the Atlantic City casinos have banked $23.3 billion in gross gaming wins.

The return to the state has been only $1.9 billion, or a tax rate of only 8 percent. If these same casinos were in New York or Pennsylvania, they would have paid $11.2 billion, or about 48 percent of their winnings.

You don't have to be the Rain Man to do the math. The Atlantic City casinos have been subsidized to the tune of more than $9 billion over the last five years, or an amount equal to New Jersey's entire budget deficit for this year.

Thanks to the generosity of New Jersey taxpayers, the 38,000 people the casinos claim to employ have been subsidized to the tune of $236,000 for each one of those jobs over the last five years. Those dollars certainly could have been better spent on education, road and bridge repair and property tax relief.

Wall Street: Michael Douglas, playing the role of Gordon Gekko, delivered one of the great lines of that movie when he said: "Greed is good." This made an impression with the folks in Atlantic City.

Two years ago, Gov. Jon Corzine "negotiated" a deal for the casino industry to pay the state's racetracks $30 million a year in exchange for which the horse racing industry agreed not to seek slots, table games or any other forms of gaming at the tracks.

At the 11th hour the casinos wanted more. They demanded yet another donation from the taxpayers of New Jersey, amounting to about $20 million per year in tax concessions, not for the three-year life of the purse enhancement agreement, but forever. That's like winning a $280 million lottery.

At the same time the Atlantic City casinos were blocking the expansion of gaming at the racetracks in New Jersey, protecting their monopoly, they were building casinos across New Jersey's borders in Pennsylvania and New York. The Harrah's Chester racino was built south of Philadelphia, only 70 miles from Atlantic City. MGM, one of the two owners of the Borgata, is trying to win the bid to build a casino at Aqueduct Racetrack in Queens, New York — about the same distance from Atlantic City as the Meadowlands Racetrack. The Donald has filed suit in Pennsylvania for a multi-game Trump casino.

Apparently the higher tax rates in Pennsylvania and New York have not dissuaded the casino interests at the same time they greedily seek more concessions from Trenton.

Gone with the Wind: The days of New Jersey taxpayers being taken advantage of by Atlantic City's casinos should be just that — Gone with the Wind. It's time to take back the tax revenues that are being siphoned off by our neighbors in Pennsylvania and New York and bring them back to New Jersey by putting in a new casino at the Meadowlands Racetrack. Projections are that New Jersey would make twice as much at the Meadowlands in the first year of such a casino than it makes from all the Atlantic City casinos combined in 2009.

The Atlantic City casinos have received enough subsidies. The people of New Jersey are entitled to a better shake. So far, New Jerseyans are throwing snake eyes while the casinos are raking in the chips.

Forrest Gump: Let's build a world-class casino at the Meadowlands Racetrack, and let's charge the Atlantic City casinos the tax rates they are willing to pay the states that border New Jersey and replenish the state treasury. If we do not, then as Tom Hanks said in playing the title character, Forrest Gump, "Stupid is as stupid does."