Boyd Gaming Corp. (BYD:US) and MGM Resorts International (MGM:US) won a 61 percent reduction in property taxes on their Borgata Hotel and Casino in Atlantic City, a cut reflecting the decline in business there.
The assessed value of the resort, New Jersey’s top-grossing casino, was reduced to $870 million from $2.26 billion for 2010, according to an Oct. 18 decision released today by the Tax Court of New Jersey.
The tax reduction will boost profit for the casino’s owners while reducing revenue for the city. The Borgata, under its previous valuation, represented about 16 percent of Atlantic City’s $14.4 billion tax base, according to Michael Stinson, the city’s director of revenue and taxation.
“We certainly didn’t expect this,” Stinson said in a telephone interview. “The city’s expert came up with a value of $2.3 billion.”
The companies will be owed refunds totaling $48.8 million for the 2009 and 2010 tax years, or by about 61 percent, as well as interest, according to calculations by A. Paul Genato, a tax attorney in Princeton, New Jersey, who wasn’t involved in the case.
“This is a devastating blow to Atlantic City,” Genato said in an e-mail.
Stinson said the city will appeal the decision. “We certainly don’t have $50 million sitting in the bank,” he said.
Increased competition for players on the East Coast has hurt Atlantic City casinos prospects “for the foreseeable future,” according to the decision.
Casinos in the city routinely challenge their tax valuations, and the Borgata decision was the last for the 2010 tax year, Stinson said. Boyd and MGM, which co-own the property, have challenged the 2011 and 2012 assessments as well, he said. The decision, if it stands, will impact values for all of the casinos going forward, Stinson said.
Boyd, based in Las Vegas, fell 2.3 percent to $13.72 at the close in New York. MGM International, also based in Las Vegas, rose 0.4 percent to $20.77.
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