New Jersey Regulators Say Borgata Underpaid Online Gambling Taxes by $1.1M

The New Jersey Division of Gaming Enforcement (DGE) says that the Borgata casino underpaid taxes related to online gambling revenue by taking far more in credits against free ply than it was allowed to do so.

According to the DGE, the Borgata underpaid its taxes by $1.1 million. With interest and penalties, including a $75,000 civil penalty, the total amount due came to $1.3 million. 

Boosted Credit Totals Led to Inaccurate Tax Bills

Regulators say that the amount owed has already been paid. 

This is the second time in less than two years that the Borgata has been hit with fines and penalties for underpayment of taxes. Both instances involved credits that are available to casinos to offset taxes on some free play rewards given to players, provided the casinos give out enough of these promotional rewards. New Jersey treats the first $90 million in credit as gross revenue, but all additional bonuses are untaxed. 

In March 2023, the casino incorrectly included $9.8 million in bonuses that included table games in a category for deductions that are only supposed to be for slot machine games. The result was an underpayment of $787,000, along with nearly $130,000 in interest and penalties.

DGE Slams Borgata for Second Error in Under 18 Months

The more recent violation came in July 2024, when Borgata’s parent company, MGM, went through a software upgrade that resulted in deducting more credits than it actually awarded to players in bonuses on its BetMGM platform. 

The result was that the Borgata reported $4.5 million in tax credits that the casino wasn’t entitled to. In that instance, the underpayment came to $365,000, with $33,000 more in interest and penalties. The DGE says that MGM has since fixed its software. 

“The Division views this matter as series,” DGE acting director Mary Jo Flaherty told the Borgata in a letter sent on August 15. “The original violation was an understatement of gross revenue by almost $10 million. This second understatement of gross revenue was in an amount over $4.5 million. The fact that this conduct was repeated less than 18 months after the Division warned an additional violation of this type could result in a civil penalty is also to be considered.”

The Borgata is the most successful casino in Atlantic City in terms of total revenue, collecting $437.8 million in gross revenue from in-person gambling for the current year through July. It has also made another $304.1 million via its internet gaming platforms.

However, casinos prize their in-person gambling revenue from the brick-and-mortar casinos more highly, as online revenues are often shared with service providers and platform partners. The issue of live gaming revenue has been a key point on contention in recent efforts to ban smoking in Atlantic City casinos, as casino operators say such a ban will drive away customers, while the workers pushing for the ban disagree.

(Image: Wayne Parry / AP)