Casinos may be able to pass part of tax hike to gamblers

7/22/2003 (Judy DeHaven, The Star Ledger) Now that the dust has settled, it seems the 12 Atlantic City casinos will not fare as badly as Wall Street thought under Gov. James E. McGreevey’s tax hike.

Initially, plans called for the casinos to come up with an additional $135 million, mostly by increasing the casino revenue tax from 8 percent to 10 percent. What passed, however, was a package of taxes and fees that the state says will raise $90 million. And analysts expect only about half of that will be paid by the casino companies. The rest likely will be paid by gamblers.

While a major component of the package is a 7.5 percent tax on net profit and management fees, much of the rest includes things casinos can easily pass on to gamblers, such as higher parking and hotel charges. Already, many casinos are charging more than the $3 state fee for parking to make up for revenue lost elsewhere.

“Operators come out ahead under this plan,” Deutsche Bank Securities analyst Marc Falcone said in a recent report. “In reality, we think they will end up paying $50 million to $55 million of the $90 million, while passing the remainder along to customers.

Borgata boosts union’s ranks

Borgata didn’t just add 2,000 rooms and 3,640 slot machines to the Atlantic City market. It also will boost membership of the Hotel and Restaurant Employees International Union Local 54.

The union organized nearly 2,000 Borgata workers, including food and beverage workers, bellmen, doormen, housekeepers and public-area attendants– “by far the broadest classifications we have in the city,” said Bob McDevitt, the local’s president.

In an unusual move, the casino also allowed workers at restaurants not owned by Borgata to join the union, McDevitt said. “It was incredibly important for our union,” he said.

The additions will boost the union’s membership to 17,500, making it the second-largest local in the gambling industry outside Las Vegas, McDevitt said.

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