Borgata Owes Over $1.3 Million in Underpaid Taxes and Penalties

Borgata Underpays Over $1.1 Million in Online Gambling Taxes

By Lisa Spencer Senior Editor Updated: 09 September 2024

Lisa Spencer Senior Editor

As a Senior Editor at Betting.US, Lisa Spencer is a valuable member of our expert team. With a Master’s degree in Applied Mathematics, Lisa is adept in gambling theory and analyzing odds. She contributes by writing online sportsbook reviews and finding competitive markets to help our readers make an informed choice.

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How Did Borgata Underpay Its Taxes?

The amount of $1.1 million was not accumulated in just 2024. This is a result of two consecutive instances where the casino has underpaid its taxes to the state from its online gambling services. The first time was in March 2023. Then, Borgata wrongly included table game bonuses of $9.8 million in deductions, when they were supposed to be only for slots.

This resulted in the first tax underpayment of $787,000. Nearly $88,000 in interest and $40,000 in penalties were calculated. The second case happened in July 2024 when a software upgrade issued by MGM deepened the issue by deducting more credits than should be compared to the awarded player bonuses.

This software error resulted in over $4.5 million in additional credits, which the casino was not entitled to. In this case, the brand paid $365,000 less in online gambling taxes. The regulators assessed over $15,000 in interest and over $18,000 in penalties.

In the end, from the two violations in 2023 and 2024, Borgata underpaid $1.15 million in taxes, and except for paying that back, it will have to pay over $161,000 in penalties and interest. Bear in mind that this is the largest casino brand in Atlantic City, making over $770 million in the first 7 months of 2024 from gamblers.

Casino Credits

The casino credits system was designed to relieve casinos in the US from paying taxes on free play given to their players when their bonuses reach a certain level. A great example is a loyalty program. In the case of casinos located in New Jersey, the first $90 million in promotional credits are taxed as part of the brand’s gross revenue. When this threshold is passed, the rest are not taxed.

Regulator Statements and Solutions

The Acting Director of the New Jersey Division of Gaming Enforcement, Mary Jo Flaherty, wrote a letter to Borgata on 15 August, stating that the regulator considers these violations very serious. She then continued reviewing the two violations of $9.8 million in 2023 and over $4.5 million in 2024 understatements in gross revenues.

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.

– Mary Jo Flaherty, Acting Director of the NJDGE.

After that, Borgata declined to comment on the subject, and their parent company, MGM Resorts International, did not respond to any questions or requests. The NJDGE Acting Director ensures that Borgata has already paid the money and that MGM has made a software update to fix this issue.