Lawmaker: North Jersey casino tax rate of 40 to 60 percent

TRENTON - A key lawmaker pushing for casinos in northern New Jersey says the state could impose a tax rate of 40 to 60 percent on their winnings.

Assemblyman Ralph Caputo, a northern New Jersey Democrat, said yesterday the exact tax rate will be negotiated and included in "enabling legislation." Lawmakers have not committed to deciding details of that legislation before a proposed statewide referendum on north Jersey casinos in November.

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

New Jersey currently taxes casino revenue at 8 percent.

Jeff Gural, operator of the Meadowlands Racetrack in East Rutherford, where he proposed a casino with Hard Rock International, has offered to pay a 55 percent tax rate.

But state Senate president Steve Sweeney has said that tax rate should be lower than that in order to ensure that the new casinos can thrive financially, particularly with a requirement that owners of the new casinos spend at least $1 billion on their projects.

The exact tax rate that two new proposed northern New Jersey casinos would pay is one of several key details that lawmakers have not settled, even as they hurdle toward a statewide referendum on the question this November.

The second of two required public hearings for a referendum was held yesterday in the state Assembly.

All that remains for a referendum to happen is for a bill authorizing it to be approved by three-fifths majorities in both houses of the Legislature, something that could happen as early as next week.

Caputo said the state has no alternative but to approve northern New Jersey casinos, given the continuing decline of Atlantic City, which has seen its casino revenue plunge from $5.2 billion in 2006 to $2.56 billion last year. Four of the resort's 12 casinos shut down in 2014, and Atlantic City officials and some Wall Street analysts predict two or more additional ones could close when faced with in-state competition.

Assemblyman Chris Brown, an Atlantic City-area Republican, said revenue from the two new casinos will not make up for the additional loss of revenue from Atlantic City that the new casinos will cause.

"What you're saying is in this oversaturated market, the answer is to add casinos to the market," he told Caputo.

Brown said a threat last week by billionaire investor Carl Icahn to scrap a proposed $100 million investment into the Trump Taj Mahal casino if north Jersey casinos are approved shows that the possibility of in-state competition is already hurting Atlantic City.

"Doesn't that just prove the point that the uncertainty in the market is what has been holding Atlantic City back?" he asked.

The referendum would ask voters whether to approve two casinos in separate counties at least 72 miles from Atlantic City. It does not specify where they would be built, but the two leading candidates are the Meadowlands, where the NFL's New York Jets and Giants play, and in Jersey City, where footwear magnate Paul Fireman has proposed a casino resort costing up to $5 billion.