This decision handed down on Monday, hit Governor Phil Murphy and the state’s legislative leaders, who fast-tracked the legislation through the Legislature last year.

It is also a rebuke to the gaming industry, which had argued the bill was needed because it was struggling amid the COVID-19 pandemic.

The local taxing program known as PILOT, or payment in liew of property taxes suffered some changes.

A little of history: since 2016 each casino has paid a share of an industrywide assessment that was distributed to Atlantic City, its school district and the county fo funde various operations. The number was calculated based on the prior year’s total gaming revenue.

Last year, the industry pressed for and won a key legislative change to the initial formula, excluding online gaming — a fast-growing sector of its business — from the program.

This alteration reduced the gaming companies’ total PILOT liability this year by $55 million — revenue cuts that disproportionately impacted Atlantic City, one of the state’s most distressed cities.

Due to these issues, the court decided to intervene.

The constitutionality of the law was challenged by a conservative nonprofit group called Liberty and Prosperity 1776 by arguing the state’s founding document bars preferential tax treatment.

The state countered that the new law was exempt from that prohibition because it served a “permissible public purpose.”

On Monday, Michael Blee, the Atlantic County Assignment Judge, sided with the nonprofit, potentially increasing casinos’ tax bills and sending tens of millions of additional dollars into local coffers.

by Alison Burdo and Michelle Brunetti