![handle is hein.journals/gmglwr18 and id is 1 raw text is: DOI: 10.1089/glre.2014.1811
Gambits
News in brief about the gaming world
BORGATA WINS $50MM
FROM ATLANTIC CITY
Atlantic City's Borgata Hotel
Casino and Spa recently won a tax
appeal against the city worth at
least $50mm. A state court found
that the city's property tax assess-
ment against the casino was more
than twice what it should have
been, given the sharp fall-off in gam-
bling revenue due to the weak econ-
omy and increasing competition,
especially from Pennsylvania casi-
nos. The judge cut the 2009 and
2010 assessments by more then
three-fifths (61%), which translates
into a $48.8mm refund-and that's
before factoring in interest owed the
Borgata on its tax overpayments, or
the effect of the Freeze Act, which
may let the casino lock in the reduced
assessment for a further two years.
All in all, Atlantic City (AC) may
owe the casino more than $100mm.
Atlantic City is no stranger to ca-
sino tax appeals: since 2007, it has
had to bond for $180mm to fund
tax refunds to over-assessed casinos,
as the tax value of the city's assessed
properties has declined by more
than a third. The declines have
been driven largely by casino tax ap-
peals. What makes the Borgata rul-
ing different-and dangerous to the
city-is not just its size, but the fact
that it was a court ruling. Histori-
cally, most AC casino tax appeals
were settled out-of-court; however,
the Borgata ruling is a potentially
precedent-setting decision that may
encourage more casinos to roll the
dice in court.
Atlantic City is already in dire fi-
nancial straits: its debt service pay-
ments, for example, already take up
almost one-sixth (15%) of the munic-
ipalbudget-double the average mu-
nicipal percentage. While the city
has reaped praise for how it's been
meeting this challenge, the only
way for it to raise revenue is by rais-
ing tax rates, which at some point
may reach insupportable levels for
a city with few valuable ratables
other than the casinos which have
been winning appeals and getting
settlements against it.
The city has stated it will appeal,
but the odds of success in an appeal
of this nature are short.
MORE GOOD NEW FOR
ATLANTIC CITY'S BORGATA
Fresh from winning a $50mm tax
appeal (see above) comes more
good news for the Borgata.
First, it actually grew its revenue
in the third quarter of 2013, increas-
ing it by almost seven percent. Sec-
ond, its EBITDA (earnings before
interest, taxes, depreciation, and am-
ortization) rose even faster than rev-
enue, climbing almost 40 percent
due to gains at table gains. Third,
based on its revenue growth, the
Borgata increased its share of the
Atlantic City market: one of twelve
casinos, the Borgata nonetheless
commands 21 percent of the market.
All that, plus it had received
New Jersey's first Internet gambling
permit.
Not bad for the third quarter.
POKERSTARS NJ ONLINE
GAMBLING LICENSE
APPLICATION SUSPENDED
PokerStars has not been having a
good time of it in New Jersey. Last
April, its bid to buy Atlantic City's
Atlantic Club casino fell through.
Eight months later, in December
2013, state gambling regulators sus-
pended its application for an online
gambling license. (Its proposed part-
ner, the Resorts casino, received a
license; what's unknown at the time
of writing is whether Resorts will
seek another experienced online
gambling partner or look to offer
in-state online gambling by itself.)
Regulators suspended PokerStar's
application based primarily on the
unresolved federal indictment against
[founder] Isai Scheinberg for the al-
leged violation of federal gambling
statutes...and the involvement of
certain PokerStars executives with
Internet gaming operations in the
United States following enactment
of the [Unlawful Internet Gaming
Enforcement Act], said Lisa Spen-
gler, a Division of Gaming Enforce-
ment spokesperson.
NEW JERSEY INTERNET
GAMBLING GROWS
Since November 25, 2013 and as of
January 6, 2014-so, in a bit more
than a month-almost 150,000 online
gambling accounts have been cre-
ated in New Jersey. (That's not
150,000 unique players, though-as
the Gaming Enforcement Division
noted, some people create separate
accounts on more than one site.)
At time of writing, seven casinos
are offering online gambling: Golden
Nugget Atlantic City; Borgata Hotel
Casino and Spa; Tropicana Casino
and Resort; Trump Plaza Hotel and
Casino; Trump Taj Mahal Casino
Resort; Caesars Atlantic City; and
Bally's Atlantic City. (As discussed
above, Resorts Casino Hotel has re-
ceived approval to offer online gam-
bling, but had its online partner,
PokerStars, suspended due to an in-
dictment against its founder.
The big question is whether online
gambling in New Jersey will meet
Wall Street analysts' prediction of
$200 million to $300 million in new
revenue its first year-or whether it
will cannibalize revenue from Atlan-
tic City's brick-and-mortar casinos.
GOODBYE
TO ATLANTIC CLUB
Atlantic City's Atlantic Club
Casino Hotel (formerly the Atlantic
City Hilton) filed for Chapter 11
bankruptcy protection November 6,
2013. (With its filing, half of the
city's dozen casinos have filed for
bankruptcy protection since 2007-
further evidence of the challenges
facing Atlantic City.) It is scheduled
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