North Jersey Casino could face Huge 40-60% Tax Rate

At the beginning of the year, we discussed how there’s serious talk about putting casinos in northern New Jersey. But if this does indeed happen, the casinos might pay a massive tax rate between 40% and 60%.

Assemblyman Ralph Caputo, the northern New Jersey Democrat who’s pushing for the casinos, said that the tax rate could be negotiated. However, he added that the rate would be much different from the current 8% taxes on New Jersey gaming winnings.

“As a guess, it will be 40 to 60 percent, as opposed to what we have now,” said Caputo.

App.com reports that Jeff Gural, who operates the Meadowlands Racetrack and wants to build a casino with Hard Rock, has no problem paying the 55% tax rate. However, state Senate President Steve Sweeney believes that the tax rate should be lower so that the new casinos get off to a good start. This is especially important considering that any new casino would need to spend at least $1 billion on their project.

New Jersey lawmakers have had difficulty agreeing on several issues about northern New Jersey casinos, particularly the taxes. And it’ll be important to get this ironed out before a statewide referendum in November.

Before the referendum happens, a bill authorizing the casinos must be approved by three-fifths majorities in both legislature houses – something that could take place next week.

Sweeney had previously cautioned the state to wait and see if Atlantic City casinos could reverse their decline before building more in the northern part of the state. However, there seems to be no end in sight for Atlantic City’s revenue drop, leading Caputo to say that there’s no other alternative than to approve the new casinos.

Wall Street analysts believe that two or more Atlantic City casinos will close if they must face in-state competition. And Atlantic City Assemblyman Chris Brown doesn’t think that adding more casinos in the state will bring in enough revenue to combat Atlantic City’s decline.

“What you’re saying is in this oversaturated market, the answer is to add casinos to the market,” Brown said to Caputo.

Brown added that a threat from billionaire Carl Icahn to halt his potential $100 million investment into the Trump Taj Mahal casino if north New Jersey casinos are allowed is yet another problem to worry about.

“Doesn’t that just prove the point that the uncertainty in the market is what has been holding Atlantic City back?” Brown asked.

Despite the questions, momentum is building for the new casinos. The two leading spots for the casino resorts are the Meadowlands, where the NFL’s New York Giants and Jets play, and Jersey City, where Reebok founder Paul Fireman wants to build a $5 billion casino.