Jake's 58 should pay property taxes on hotel, land

Suffolk OTB officials can tick off the reasons why the quasi-governmental agency shouldn't pay Islip Town property taxes on its 210-room hotel and undeveloped land at Jake's 58 Casino Hotel in Islandia. 

But for each of Suffolk Off-Track Betting Corp.'s arguments, there's a more persuasive counter. 

Islip received more than $1 million annually since Jake's 58 opened in 2017, when entertainment giant Delaware North owned the facility. Delaware North sold Jake's to OTB in 2021. Now, OTB is suing Islip, saying it's being wrongly taxed. 

OTB officials say Jake's 58 is Suffolk County OTB property, like the police headquarters in Yaphank or the H. Lee Dennison Building in Hauppauge, which can't be taxed by the town. But that comparison is absurd. Jake's annual gross revenue stood at $273 million last year and could grow to $388 million once its expansion that broke ground Monday is complete. No government facility rakes in that kind of money. And Jake's and its patrons do pay taxes, including sales tax and the state and county's hotel/motel tax. Why not property taxes, too?

Many hotel rooms are given away, known as “comps,” OTB officials argue. But those rooms aren't contributed to charity. They're handed to big bettors, who help make Jake's a vibrant cash cow. That's all the more reason why the entity can afford to pay Islip. And many casino patrons are day guests, leaving hotel rooms for those who aren't using the casino at all.

It's the village of Islandia, not the town, that's responsible for most services provided to Jake's 58, OTB advocates say. But the casino-hotel uses the town's ambulance and fire services and customers travel to Jake's on town roads.

About 94% of casino revenue goes back to the players, OTB officials note. Of the remaining chunk, 45% goes to education, while additional funds go to the village, county, state Gaming Commission and state breeders and horsemen associations. The village of Islandia will receive more than $4 million a year after the $210 million expansion is complete, allowing it to eliminate its property taxes.

It appears every player's a winner here — except the town and its taxpayers.

The hotel and surrounding property at Jake's 58 are no different from other hotels, restaurants or entertainment venues in the area, which all pay taxes. Jake's expansion will add more pubs, restaurants and conference and wedding space, resulting in more revenue, jobs and ability to pay town taxes. At the least, Islip and OTB should come to a Payment in Lieu of Taxes, or PILOT, agreement that provides the town with sufficient tax revenue and stops the battling over the lucrative property.

Allowing OTB to avoid paying Islip also sets a dangerous precedent. To the west, Sands New York proposes a casino resort on county land and it is expected to pay too. A moneymaking venture on public land, even when run by a quasi-public entity, is still a moneymaking venture — one that has to pay its fair share.