Regulators find that Atlantic City’s main casino did not pay $1.1 million in online gambling taxes

New Jersey gambling regulators disclosed that the Borgata, Atlantic City’s top casino, had underpaid some of its internet gambling taxes by erroneously taking nearly $15 million in credits it was not entitled to. This mistake resulted in the casino paying $1.1 million less in taxes than required. The Division of Gaming Enforcement mandated the Borgata to repay the full tax amount owed, including penalties and interest totaling $1.3 million, which has already been settled, including a $75,000 civil penalty.

Mary Jo Flaherty, the Division’s acting director, labeled the issue as severe in an August 15 communication to the Borgata. She pointed out that the initial violation involved an understatement of gross revenue by almost $10 million, and the subsequent error amounted to over $4.5 million. Additionally, she emphasized the repetition of this conduct within 18 months of a prior warning about potential penalties for such violations.

The Borgata and its parent company, MGM Resorts International, chose not to respond to requests for comments. The casino faced tax underpayment issues in March 2023, with $9.8 million in bonuses incorrectly included in deductions for slot games, leading to a $787,000 shortfall in taxes. A software update in July 2024 generated excess credits, resulting in a $365,000 tax underpayment. The company incurred interest and penalties for both incidents.

The credits that caused the tax discrepancies are meant to exempt casinos from taxes on certain levels of free play offered to customers. The Borgata rectified the software errors following regulators’ guidance. Despite these issues, the casino’s gambling revenue for the first seven months of the year exceeded $771 million, surpassing its closest competitor by over $300 million.