New Jersey sports betting measure benefits casino authority
New Jersey’s Casino Reinvestment Development Authority will soon be getting a slice of the state’s growing sports betting revenues two years after losing a major cut of its funding from Trenton.
Gov. Phil Murphy signed a bill last week that funnels 1.25% of sports betting revenues to the Casino Reinvestment Development Authority, starting in December. The new earmarked funding source will arrive two years after New Jersey redirected the state’s casino investment alternative tax from the CRDA toward Atlantic City debt service under a state takeover plan that took effect on Nov, 9, 2016.
“After a three year hiatus, we are looking forward to filling the void with much needed promotion of Atlantic City as a world-class vacation destination", Larry Sieg, CRDA director of communications and marketing, said in a statement. “Our team looks forward to having the opportunity to once again get the ‘DO AC’ brand into the consumer market to increase visitation and economic impact.”
The CRDA was established in 1984 as a state agency to collect and distribute certain taxes and fees paid by Atlantic City casinos for development projects. Moody’s Investors Service downgraded CRDA bonds to Ba2 from Baa3 in April 2016 citing declining Atlantic City gaming revenue following four casino closures in 2014.
The new sports betting tax for the CRDA comes on top of the 8.5% of revenue now generated at New Jersey land-based venues along with a 13% tax on mobile and online wagers. Sports betting has generated nearly $16.5 million of revenue since it was introduced at the Garden State’s casinos and racetracks in mid-June, according to figures released by New Jersey’s Division of Gaming Enforcement last month. Atlantic City casinos and their online or mobile partners accounted for $8 million of that revenue.
The first state performance audit of the CRDA in the agency’s 34-year history released Sept. 11 highlighted fiscal mismanagement that occurred from 2014 to 2017 such as deals for the Miss America Pageant and summer beach concerts that failed in monitoring costs. The CRDA was also criticized for spending $14 million on an observation wheel in a Sept. 20 report recommending continued state control of Atlantic City finances until at least the fall of 2021.
The press office for Atlantic City Mayor Frank Gilliam did not immediately respond for comment on how the new law will impact the cash-strapped municipality. Atlantic City, which had $223.6 million of outstanding bond debt based on its latest budget documents, is rated in deep junk territory at Caa3 from Moody’s and CCC-plus from S&P Global Ratings.