Borgata Casino Lawsuit Will Be Dismissed By Atlantic City
The casino industry in Atlantic City has been through a rather torrid time during 2014 as customers stopped spending and casino revenues plunged considerably when compared year on year revenue.
Four casinos were forced out of business and the ones that survived were forced to lay off staff and bring down their overhead in an effort to control costs and stay afloat.
The Borgata Hotel Casino & Spa in Atlantic City had filed a case in the Atlantic County Superior Court as it wanted to stop the municipality from paying back a $40 million loan to New Jersey. The deal initially took place in December 2014 when Atlantic City applied for a loan and borrowed $40 million from New Jersey with an interest rate fixed at 0.75 percent.
Atlantic City officials stated that they were forced to enter into this deal as they were unable to find a lender who was willing to give them a better rate on the $140 million in bonds that was up for sale.
Atlantic City needed the money urgently and was forced to use its $140 million in bonds to manage casino tax appeals. One of those casino tax appeals came from the Borgata Hotel Casino & Spa to the tune of $88 million that was due based on the 2011 – 2013 fiscal years. The Borgata wants Atlantic City to first settle its outstanding dues before paying back the state.
However, Atlantic City authorities have filed a motion to dismiss the casinos lawsuit stating that the borrowed money from New Jersey is “is a rational and critical part of the revitalization of the city’s financings” and will benefit taxpayers in New Jersey. The motion also went on to say that “the beneficiaries include the plaintiff whose representatives have never had a problem articulating its carefree attitude in the event that it forces the City into a bankruptcy”.
Atlantic City was supposed to pay back the $40 million loan to New Jersey before the end of March 2015. The City was unable to pay back the loan and hence requested the state to give it an extension period of 60 days and New Jersey approved the request. Atlantic City now has additional time till the end of May to pay back the state loan but the Borgata Casino is pushing hard to ensure that it gets its tax refund at the earliest. Borgata attorney Jack Plackter stated that the casino would not tax the matter lightly but would file an opposition against the city and fight to win the case till the very end.
