MGM’s Borgata Casino Owes New Jersey Over $1 Million in Taxes

MGM’s Borgata Casino in Atlantic City is facing a substantial tax issue after New Jersey regulators determined that the casino underpaid its internet gambling taxes. According to the New Jersey Division of Gaming Enforcement (DGE), Borgata mistakenly took $15 million more in tax credits than it was entitled to, resulting in a tax shortfall of $1.1 million. The DGE has since ordered Borgata to pay back the full amount owed, along with penalties and interest, bringing the total to $1.3 million.

Previous Warnings and Errors

The DGE noted that Borgata had previously been warned about similar issues.

• In March 2023, the casino incorrectly included nearly $10 million in table game bonuses as deductions, which were only intended for slot games. This mistake led to a $787,000 tax underpayment, plus $88,000 in interest and $40,000 in penalties.

• In July 2024, a software upgrade at MGM, Borgata’s parent company, caused the casino to deduct $4.5 million more credits than actually awarded to players. That led to a $365,000 tax underpayment, with $15,000 in interest and over $18,000 in penalties.

• Despite warnings, Borgata repeated errors in its calculations of promotional credits, creating a pattern of underpayments.

Promotional Credit System

The miscalculations stemmed from New Jersey’s tax relief system on free play promotions.

• Casinos pay taxes on the first $90 million in promotional credits, which count as gross revenue.

• Any promotional credits beyond that threshold are not taxed.

• Borgata’s software and reporting mistakes led to excessive deductions, triggering repeated underpayments.

Market Performance and Response

Despite these financial missteps, Borgata continues to dominate Atlantic City’s casino market.

• In the first seven months of 2024, Borgata reported over $771 million in winnings from gamblers.

• This figure puts Borgata more than $300 million ahead of its nearest competitor.

• The casino has already paid the full $1.3 million owed, including a $75,000 civil penalty, and has introduced new software safeguards to prevent future issues.

Looking Ahead

MGM Resorts International and Borgata have declined to comment on the controversy. However, regulators emphasized the seriousness of repeated violations, especially since Borgata had been previously warned.

While the casino remains the top earner in Atlantic City, it will now face heightened scrutiny from the DGE to ensure compliance with New Jersey’s strict gambling laws.

Borgata’s dominance in the market may continue, but its ability to maintain trust with regulators will be just as critical as its financial success.