Borgata's House Edge

It’s hard to figure out what’s worse: the dead Revel rotting on the boardwalk, or the flourishing Borgata refusing to share its wealth.

In the latest Atlantic City quagmire, the spotlight is on the Borgata. Upon opening in 2003, it took the city by storm and became the state’s most consistently successful casino. (Perhaps even, the most successful casino on the East Coast.) Where many other casinos have started strong but have since faded, Borgata continues to reinvent itself and caters to every demographic over the age of 21. Young or old, rich or not-so, clubber or diner, gambler or shopper… anyone who enjoys a break from the norm can find plenty to see and do at Borgata. For over 12 years that has been an undisputed fact.

So as AC’s king of the hill, it’s no surprise the Borgata rakes in a windfall every month… largely for itself. Granted that is the nature of business, but keep in mind the whole reason casinos were allowed in Atlantic City was so they could pay it forward. Keep most for themselves but give Atlantic City itself a share, so they could fix up the town and re-spark the magic (that it so desperately needs). Though they all pay their taxes, almost every casino company operating in AC is guilty of not doing their part in revitalizing the city. Instead they feed their profits toward their (Vegas-based) parent companies, neither helping out the city nor really themselves, allowing the casinos to remain stuck in the 80s. Only recently have the AC casinos gone through heavy renovations; and in places like Tropicana and Bally’s one can still find old ‘relics’ that do little to boost their image. Other casinos that have remained almost untouched since 1984, such as the Atlantic Club and Trump Plaza, didn’t renovate but chose to shutter.

Borgata is arguably the only casino in Atlantic City on par with the best of Las Vegas.

Borgata though, is a bit different. It is owned by Marina District Development, a company that, put very simply, only exists for the Borgata. It started out as various things with various owners (Wynn, MGM, and Boyd among others all having some affiliation now or at one time) all converging on this one resort to galvanize AC’s marina district. The Borgata is the result of their disjointed joint efforts, and has become a major success. The ends justified the means. Because the Borgata has no overhead to pay to, it has been allowed to put all of its profit back into itself, continuing its expansions and maintaining the gold standard. This is the simple reason why the Borgata has always been in the lead.

With big profits come big taxes, and the Borgata generally played along, doing the right thing paying its property taxes and being a good little boy… until now. As incredulous as it sounds, Atlantic City is almost out of money. The city itself is nearly bankrupt and Gov. Christie is this close to having the state take over the city’s affairs. How this managed to happen, especially in a city with casino profits in the billions, is mind-numbing. Despite all this, for years the Borgata knew it were owed hundreds of millions in tax appeals by the city, and its finally put its foot down. Taxes it overpaid (that they barely financially felt) to a city with no money currently in the bank.

A rich entity giving too much to a broke entity. Let that sink in. That hypocrisy. That asininity.

Now, understandably, Borgata wants its money back. All $170 million of it. Until it starts getting back their returns, it will withhold paying its current taxes. So far it already refused to make a $7.2 million payment. That is money the city needs very badly right now (though honestly it’s middling compared to the larger picture). On one hand, one can’t blame the Borgata. That $170 million is money it dutifully paid over they years and is entitled to have back. It was not the city’s to have in the first place. Imagine you not getting your tax return because the country couldn’t afford it, of course you’d be upset but also in awe as to how that situation is possible.

But at the same time, see it the other way. This city that gave the Borgata life is in a bad position, and stressing it even further with tax returns runs the risk of financially destroying the casino’s home. If the Borgata was a team player, they would pardon the refunds and maybe even give the city a little more of the resort’s major profits to try and help it out.

Only these are not two schoolyard friends having each other’s back. One is a cold, hard business and the other is cold, hard government. And business is not entitled to help government. There’s no reason to be “nice.” It’s capitalism, pure and simple. The American Way. Trump 2016.

Borgata's main expansion, The Water Club, is a perfect example of the resort's constant innovation.

Even if Atlantic City shut down completely and the Borgata closed (which would never happen), the Marina District Development execs would simply “cash out” and open somewhere else. Or even just rest on their lucrative laurels. They’ve already won. The city and the government at large would be forced to deal with it, on top of all their other issues. And like most other Americans, wary of big government, by refusing future tax payments and insisting on their returns, the Borgata is simply saying, “Screw ‘em.”

Here’s hoping it all works out, though unless someone really goes off-script it’s unlikely anything will.