S2400

An Act concerning temporary modifications to the payment and use of certain casino gaming taxes and fees due to COVID-19 Public Health Emergency and State of Emergency, and permanent modifications to the types and taxation of promotional gaming credits and amending P.L.2008, c.12.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. Notwithstanding the provisions of the “Casino Control Act,” P.L.1977, c.110 (C.5:12-1 et seq.), or any law, rule, or regulation to the contrary, any license or other fee imposed on a casino licensee required to be deposited in the Casino Control Fund established by section 143 of P.L.1977, c.110 (C.5:12-143), other than as provided under subsections b. and c. of this section, shall be deferred during the period the licensee’s casino hotel facility remains closed due to the COVID-19 Public Health Emergency and State of Emergency declared by the Governor in Executive Order No. 103 of 2020, and during the six-month period immediately following the date that the casinos are permitted to reopen after the declarations. The amounts deferred shall be paid by each casino licensee in equal monthly installments over the 12-month period following the deferment period.

b. The annual license fee of $500 imposed under section 140 of P.L.1977, c.110 (C.5:12-140) on each slot machine maintained for use or in use at a licensed casino establishment, and that fee imposed on a pro-rata basis, shall be waived from July 1, 2020 through June 30, 2021, inclusive. If a fee due on July 1, 2020, or a pro-rata fee, is paid by a casino licensee on each slot machine maintained for use or in use during that period, the licensee shall receive a reimbursement of that fee within 30 days following the effective date of this act, P.L. , c. (pending before the Legislature as this bill).

c. This section shall not apply to any fees imposed on a casino licensee or its Internet gaming affiliate for the issuance or renewal of any Internet gaming license or permit under section 27 of P.L.2013, c.27 (C.5:12-95.29), or any amounts required to be deposited in the Casino Control Fund under section 22 of P.L.2013, c.27 (5:12-95.24).

2. Notwithstanding the provisions of the “Casino Control Act,” P.L.1977, c.110 (C.5:12-1 et seq.), or any law, rule, or regulation to the contrary, any surplus funds held by the Division of Gaming Enforcement in the Casino Control Fund, or held by the division due to an overpayment of the investment alternative tax imposed pursuant to section 3 of P.L.1984, c.218 (C.5:12-144.1) in the case of a downward adjustment of a casino licensee’s audited gross revenues, shall be returned to each casino licensee in proportion to the licensee’s share of the surplus or overpayment, if any, within five business days following the effective date of this act, P.L. , c. (pending before the Legislature as this bill), and then, for the six months following the effective date of this act, within 30 days following the end of each fiscal quarter, to mitigate the impacts on the casino licensee due to the COVID-19 Public Health Emergency and State of Emergency declared by the Governor in Executive Order No. 103 of 2020.

3. Notwithstanding the provisions of the “Casino Control Act,” P.L.1977, c.110 (C.5:12-1 et seq.), section 7 of P.L.1996, c.118 (C.5:12-173.3a), and sections 2 and 3 of P.L.1993, c.159 (C.5:12-173.2 and C.5:12-173.3), the minimum charge for and minimum fee imposed upon the use of a parking space for the purpose of parking, garaging, or storing a motor vehicle in a parking facility or property owned or leased by a licensed casino hotel, or by any person on behalf of a casino hotel, shall not be in effect and shall not be collected from the period beginning on the date that the casinos are permitted to reopen after the COVID-19 Public Health Emergency and State of Emergency declarations, and ending on the first day of the 25th month thereafter.

The Casino Reinvestment Development Authority may use or redirect any funds under its purview, notwithstanding that such funds may be dedicated to other purposes, to replace the amounts from the minimum charge or fee for the payment of any bonds secured by proceeds from such charges or fees.

4. Notwithstanding the provisions of the “Casino Control Act,” P.L.1977, c.110 (C.5:12-1 et seq.), section 6 of P.L.2003, c.116 (C.5:12-145.8), or any other law, rule, or regulation to the contrary, the fee of $3 per day imposed on each hotel room in a casino hotel facility that is occupied by a guest, for consideration or as a complimentary item, shall be waived commencing on the effective date of this act, P.L. , c. (pending before the Legislature as this bill) through December 31, 2020. The fee shall be imposed again commencing January 1, 2021 and thereafter. The Casino Reinvestment Development Authority may use or redirect any funds under its purview, notwithstanding that such funds may be dedicated to other purposes, to replace the amounts from the hotel room fee for the payment of any bonds secured by the fee’s proceeds.

5. Notwithstanding the provisions of P.L.1991, c.376 (C.40:48-8.45 et seq.), or any other law, rule, or regulation to the contrary, the fee of $2 per day for each occupied room in the case of any hotel in the eligible municipality which provides casino gaming, and the fee of $1 per day for each occupied room in the case of the other hotels or transient accommodations in the eligible municipality shall be waived commencing on the effective date of this act, P.L. , c. (pending before the Legislature as this bill) through December 31, 2020. The fees shall be imposed again commencing January 1, 2021 and thereafter.

6. a. Notwithstanding the provisions of the “Casino Control Act,” P.L.1977, c.110 (C.5:12-1 et seq.), or any law, rule, or regulation to the contrary, a casino licensee reopening a casino property following the property’s closure due to the COVID-19 Public Health Emergency and State of Emergency declarations issued by the Governor under Executive Order No. 103 of 2020, shall be entitled during the 24-month period commencing on the date that the casinos are permitted to reopen after the declarations and ending on the last day of the 24th month thereafter to receive a reduction in their tax liability on the 8 percent tax on gross revenues, as that term is defined in section 24 of P.L.1977, c.110 (C.5:12-24) and imposed under section 144 of P.L.1977, c.110 (C.5:12-144), and on the investment alternative tax on such gross revenues imposed under section 3 of P.L.1984, c.218 (C.5:12-144.1). The reduced tax liability required to be provided under this act, P.L. , c. (pending before the Legislature as this bill), shall be calculated in accordance with subsection b. of this section, and shall be subject to the provisions specified under subsection c. of this section.

b. A casino licensee reopening a casino property following its closure due to the emergency declarations as provided under subsection a. of this section shall be entitled to a reduction of the licensee’s gross revenues tax and investment alternative tax liabilities on a monthly basis, which obligations shall be calculated subject to rounding, as follows:

(1) for each calendar month in which the gross revenues are less than 25 percent of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations shall be zero for each tax;

(2) for each calendar month in which the gross revenues are at least 25 percent and not more than 49 percent of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations shall be 25 percent of the full amounts that would normally be due for each tax;

(3) for each calendar month in which the gross revenues are at least 50 percent and not more than 74 percent of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations shall be 50 percent of the full amounts that would normally be due for each tax; and

(4) for each calendar month in which the gross revenues are at least 75 percent and not more than 99 percent of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations shall be 75 percent of the full amounts that would normally be due for each tax.

The reductions in the tax liabilities enumerated under paragraphs (1) through (4) of this subsection shall not apply in each calendar month in which the gross revenues are 100 percent or more of the gross revenues for the same calendar month immediately prior to March 1, 2020, in which case the gross revenues tax and investment alternative tax obligations shall be the full amounts that would normally be due for each tax.

c. Each casino licensee entitled to receive a reduction in their tax liability under this section shall submit to the State Treasurer and the Division of Gaming Enforcement, at the same time that the reduced tax payments are made, a report documenting that an amount equal to the entire dollar amount reduced under this act that was not subject to collection by the State is being expended by the licensee for any of the following purposes:

(1) the prompt re-hiring and employment of the casino licensee’s former employees and new applicants;

(2) attracting tourists, gaming, and hospitality patrons to visit and stay at the casino hotel property;

(3) marketing and promotion for events that would draw visitors to the property or Atlantic City, such as entertainment and conventions; and

(4) any other activity deemed by the State Treasurer or the division to be beneficial to the return of pre-emergency economic, gaming, and tourism levels to Atlantic City.

A casino licensee’s failure to submit the report required under this subsection shall deem the licensee ineligible to receive the reduced tax liabilities under this act.

7. Section 1 of P.L.2008, c.12 (C.5:12-38a) is amended to read as follows:

1. "Promotional gaming credit" - A slot machine credit, sports wagering credit, match play coupon, table game wager coupon, or other item approved by the division that is issued by a licensee to a patron for the purpose of enabling the placement of a wager at a slot machine, a gaming table, or in a sports pool in the licensee's casino or through the licensee's Internet gaming system. No such credit shall be reported as a promotional gaming credit unless the casino licensee can establish that the credit was issued by the casino licensee and received from a patron as a wager at a slot machine, a gaming table, or in a sports pool in the licensee's casino or Internet gaming system.

(cf: P.L.2018, c.33, s.13)

8. Section 2 of P.L.2008, c.12 (C.5:12-144.2) is amended to read as follows:

2. a. A casino licensee shall receive [an annual] a deduction from the gross revenue taxed pursuant to subsection a. of section 144 of P.L.1977, c.110 (C.5:12-144) in an amount equal to [either (1)] the promotional gaming credits, including match play coupons and table game wager coupons, reported by that licensee [in its annual tax return or (2) such other portion of the promotional gaming credits reported by all casino licensees as the division may allocate to a particular licensee to reflect that licensee's pro rata share of the costs of the 2008 agreement executed between the New Jersey Sports and Exposition Authority and the Casino Association of New Jersey for the benefit of the horse racing industry].

b. [Casino licensees] A casino licensee shall be allowed a deduction from gross revenues [for a tax year] pursuant to subsection a. of this section for the total value of promotional gaming credits, match play coupons, and table game wager coupons redeemed by its patrons [at all licensed casinos for that tax year in excess of $90,000,000. For the first tax year in which this act becomes operative pursuant to section 3 of this act, P.L.2008, c.12, the division shall reduce the $90,000,000 deduction threshold for that tax year in proportion to the part of the tax year that has elapsed prior to that operative date].

c. [The division shall establish, by regulation, procedures and standards for allocating the deduction established pursuant to this section to reflect each licensee's pro rata share of the costs of the 2008 agreement executed between the New Jersey Sports and Exposition Authority and the Casino Association of New Jersey for the benefit of the horse racing industry and procedures and standards for each licensee to take the deduction established pursuant to this section to reflect those deductions that exceed the costs of the 2008 agreement. Such regulations shall include standards for the allocation of the $90,000,000 deduction threshold established in subsection b. of this section, the timing of the application of deductions, and all other matters related to the provisions of this section.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

d. [(1) The division shall establish, by regulation, procedures to ensure that the promotional gaming credit deduction established pursuant to this section does not result in a negative fiscal impact to the Casino Revenue Fund. If necessary, the division may reduce the value of the available deduction to eliminate any negative fiscal impact to the Casino Revenue Fund attributable solely to the deduction and not to other economic or other factors that cause a negative fiscal impact to the Casino Revenue Fund.

(2) For the purposes of this subsection, "negative fiscal impact to the Casino Revenue Fund" shall mean that the amount generated from taxation of promotional gaming credits falls below the level generated in calendar year 2007.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

(cf: P.L.2011, c.19, s.100)

9. Notwithstanding the provisions of the “Casino Control Act,” P.L.1977, c.110 (C.5:12-1 et seq.), or any law, rule, or regulation to the contrary, the Casino Reinvestment Development Authority, established under P.L.1984, c.218 (C.5:12-153 et seq.), shall commit any available funds in that agency’s general fund to the purpose of undertaking a marketing campaign to assist in returning Atlantic City’s tourism and gaming activities to their levels prior to the Public Health Emergency and State of Emergency declarations issued by the Governor under Executive Order No. 103 of 2020 due to the COVID-19 pandemic. The Casino Reinvestment Development Authority shall include input from the casino industry in developing the marketing campaign required to be conducted under this section which shall commence immediately upon the effective date of this act, P.L. , c. (pending before the Legislature as this bill), and shall continue through June 30, 2021. Nothing in this section shall be interpreted to impair the distribution of any funds otherwise committed under this act, statutorily obligated or pledged by the authority for other purposes, the payment of bonds issued by it or otherwise contractually obligated by the authority, or any bonds issued to refund those bonds.

10. Nothing in this act, P.L. , c. (pending before the Legislature as this bill) shall affect the tax liabilities imposed on any amount received by a casino from casino simulcasting pursuant to the “Casino Simulcasting Act,” P.L.1992, c.19 (C.5:12-191 et al.), from Internet gaming pursuant to section 17 of P.L.2013, c.27 (C.5:12-95.19), or from sports wagering pursuant to P.L.2018, c.33 (C.5:12A-10 et al.).

11. This act shall take effect immediately.

STATEMENT

This bill provides for temporary modifications to the payment and use of certain casino gaming taxes and fees due to the COVID-19 Public Health Emergency and State of Emergency declared by the Governor in Executive Order No. 103 of 2020. This bill also amends current law concerning the use of promotional gaming credits by casino licensees and their deduction from gross revenues.

The bill allows for certain licensing and other fees imposed on casino licensees, that are deposited to the Casino Control Fund, to be deferred during the period the licensee’s casino hotel facility remains closed due to the emergencies, and during the six-month period immediately following the date that the casinos are permitted to reopen after the emergency declarations. The amounts deferred would be required to be paid by each casino licensee in equal monthly installments over the 12-month period following the deferment period. However, the annual license fee of $500 imposed on each slot machine, and that fee imposed on a pro-rata basis, would be entirely waived from July 1, 2020 through June 30, 2021, inclusive. The deferment or waiver would not apply to any fees imposed on a casino licensee or its Internet gaming affiliate for the issuance or renewal of any Internet gaming license or permit, or to any amounts required to be deposited in the Casino Control Fund from Internet wagering inactive or dormant accounts.

The bill requires any surplus funds held by the Division of Gaming Enforcement in the Casino Control Fund, or held by the division due to an overpayment of the investment alternative tax in the case of a downward adjustment of the casino licensee’s audited gross revenues, to be returned to the casino licensee within five business days following the effective date of the bill, and then, for the six months following that effective date, within 30 days following the end of each fiscal quarter, to mitigate the impacts of the emergencies.

The bill also waives, for a period of 24 months beginning on the date that the casinos are permitted to reopen, the provisions of law requiring the imposition of a minimum charge of $3.00 and minimum fee of $3.00 for any parking space in a casino parking garage. In addition, the bill waives certain hotel room fees related to casino gaming for the remainder of calendar year 2020. The fee of $3 per day on each hotel room in a casino hotel facility that is occupied by a guest, and the fee of $2 per day on each occupied room in a casino hotel and fee of $1 per day fee on each occupied room in a non-casino hotel in Atlantic City, are waived for the remainder of calendar year 2020. The fees will again be due starting January 1, 2021. The bill allows the Casino Reinvestment Development Authority to use other funds in its possession to pay for the bonds and other obligations that are currently secured by the parking and hotel proceeds, notwithstanding that the agency’s other funds are committed to other purposes.

This bill provides for a reduced tax liability on casino gross revenue tax and investment alternative tax obligations for brick-and-mortar casino properties reopening following their closure due to the COVID-19 emergency declarations. The reduced tax liability would be in effect during the 24-month period commencing on the date that the casinos are permitted to reopen after the declarations and ending on the last day of the 24th month thereafter. Under current law, casinos are required to pay an 8% tax on gross revenues, plus a 1.25% investment alternative tax for reinvestment by the Casino Reinvestment Development Authority, on the gross revenues generated from gaming at their brick-and-mortar casino properties. Under the bill, each casino’s tax obligations would be reduced, on a monthly basis during that period, to be calculated subject to rounding, as follows:

(1) for each calendar month in which the gross revenues are less than 25% of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations would be zero for each tax;

(2) for each calendar month in which the gross revenues are at least 25% and not more than 49% of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations would be 25% of the full amounts that would normally be due for each tax;

(3) for each calendar month in which the gross revenues are at least 50% and not more than 74% of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations would be 50% of the full amounts that would normally be due for each tax; and

(4) for each calendar month in which the gross revenues are at least 75% and not more than 99% of the gross revenues for the same calendar month immediately prior to March 1, 2020, the gross revenues tax and investment alternative tax obligations would be 75% of the full amounts that would normally be due for each tax.

The full tax obligations would be due in each calendar month in which the gross revenues are 100% or more of the gross revenues for the same calendar month immediately prior to March 1, 2020.

To remain eligible to receive the tax liability reductions, the bill requires each casino licensee to submit to the State Treasurer and the Division of Gaming Enforcement, at the same time that the reduced tax payments are made, a report documenting that an amount equal to the entire dollar amount reduced, that was not subject to collection by the State, is being expended by the licensee to: (1) promptly re-hire and employ former employees and new applicants; (2) attract tourists, gaming, and hospitality patrons to visit and stay at the casino hotel property; (3) market and promote events that would draw visitors to the property or Atlantic City, such as entertainment and conventions; and (4) any other activity the State Treasurer or the division deem beneficial to the return of pre-emergency economic, gaming, and tourism levels to Atlantic City.

This bill amends current law to permit each casino licensee to take a deduction against gross revenues equal to the full amount of promotional gaming credits, including match play and table game coupons, that are issued by the licensee and redeemed its patrons. Currently, casinos are permitted to take such deductions only for the amount of promotional gaming credits redeemed in a tax year that exceed $90,000,000. This bill also removes the division’s ability to limit the negative fiscal impact of the promotional gaming credit deduction on the Casino Revenue Fund.

This bill directs the Casino Reinvestment Development Authority to commit any available funds in its general fund to undertaking a marketing campaign to assist in returning Atlantic City’s tourism and gaming activities to their levels prior to the emergencies. Under the bill, the authority would include input from the casino industry in developing the marketing campaign, which would begin immediately upon the bill’s effective date and continue through June 30, 2021. The bill would not be interpreted to impair the distribution of any funds otherwise committed under the bill, statutorily obligated or pledged by the authority for other purposes, the payment of bonds issued by it or otherwise contractually obligated by the authority, or any bonds issued to refund those bonds.

This bill does not impact any casino licensee’s tax liabilities on gross revenues realized from casino simulcasting, internet gaming, or sports wagering.