New taxes mean AC casinos, gamblers will pay more

John Curran

Wednesday, July 2, 2003 | 9:33 a.m.

ATLANTIC CITY -- Ante up, gamblers.

Parking your car at a casino hotel, staying the night, supplying casinos with slot machines -- it's all about to get more expensive, thanks to a state budget that boosts taxes on casinos, their customers and some vendors.

The $24.1 billion spending plan, adopted after months of partisan wrangling between lawmakers and a bitter fight between Gov. James E. McGreevey and the casinos, deals $90 million in tax increases to New Jersey's gambling industry.

McGreevey originally proposed $135 million worth of tax increases on the casinos, saying the gambling companies had to suffer like everyone else in filling a $5 billion gap.

Under the budget as passed, Atlantic City's 11 casinos would be taxed on the rooms, meals and show tickets they give to high-rolling gamblers to curry favor. The 4.25 percent tax would raise about $26 million.

In addition, casinos' net profits would be taxed for the first time, raising $20 million. The 7.5 percent tax, which would expire after three years, would be levied on a casino's net profits, including management fees.

But the tax also includes an incentive, allowing casinos to reduce their net profits tax liability by adding rooms, parking garages or stores to their complexes.

Casino lobbyists had strenuously opposed the tax, saying it would hit the best casino operators hard and reward those that made less money.

Whether the increased costs are passed down to the millions of gamblers who stream into Atlantic City to visit the 24-hour-a-day casinos remains to be seen.

Conceivably, casinos could "comp" a room but require the customer to pay the tax.

But the budget plan also taxes gamblers directly, boosting parking fees at the casino-hotels' garages to $3 per car, from $2.

That change also hits the casinos, which now keep 50 cents of every $2 paid; under the budget bill, the state will get that 50 cents, and the extra $1.00.

Altogether, the parking fee increase will raise about $18 million for the state, officials said.

Also, a $3 room tax will be imposed on each room night -- whether the customer pays cash or is "comped" -- to raise another $14 million, officials said. That's on top of a 9 percent luxury tax, a 3 percent sales tax and a $2-per-room flat fee whose revenues support marketing programs run by the Atlantic City Convention and Visitors Authority.

Manufacturers of progressive system slot machines, meanwhile, would pay about $10 million in new taxes.

"The casino industry is an important economic engine. This represents their role in helping the state weather this crisis," said Eric Shuffler, a counselor to McGreevey.