Increased Tax On PA Casino Table Games Not Received Well By Gaming Industry

August 22, 2016
Increased taxes PA casinos

Those in the Pennsylvania casino industry already know they’re paying more in taxes than any other gambling jurisdiction in the country.

Call insult it to injury, but earlier this month, a tax increase approved by state legislators on July 24 kicked in, raising table-game taxes for PA casinos from 14 percent to 16 percent.

Geoff Freeman, CEO of the American Gaming Association, had enough. On Aug. 5, the head of the national casino lobbying group penned an acerbic reaction to the new tax in an op-ed for The Morning Call.

“State lawmakers in Harrisburg decided to punish an industry that already contributes an outsized amount to the state’s budget each year,” Freeman wrote in The Morning Call.

Freeman says tax inhibits casinos from growing

While some of Freeman’s frustration is surely rooted in the state’s baseline tax rates, he also expressed another drawback to the approved hike: Less money for casinos to invest in revenue-generating projects.

How much less? Freeman estimated the increased tax would rake in about $17 million more from Pennsylvania’s 12 casinos.

That money could have “been directed toward generating more revenue in a productive way that attracts customers, such as through refreshing the current array of amenities, from restaurants and bars to hotel rooms and the gaming floor.”

And those refreshed and refurbished amenities equal revenue for casinos. Constant reinvestment, Freeman pointed out, is the name of the game.

Of course, PA casinos are also coming off another record-setting fiscal year in terms of revenue. Some casinos in the state were already fighting existing taxes they page.

Tax weakens PA casinos’ fight against out-of-state competition

Another bullet in Freeman’s arsenal of arguments against the tax was the topic of out-of-state competition. Not only are Pennsylvania casinos competing against each other to stay profitable, but they’re also battling revenue-reducing competitors in New Jersey and New York.

He alluded to the November referendum in New Jersey, which, if it passes, will open the doors for two new casinos (and two new PA competitors) in North Jersey.

While Freeman made an impassioned plea during his op-ed, one only has to look at the headlines from other states to realize that competition is a concern for all states with legalized gambling.

Customers may suffer, too

Another possible outcome of the tax hike would be a decrease in the types and volume of perks offered to customers. Perks, Freeman said, reduce churn and enhance the gambling experience.

“A 15 percent increase of the table games tax rate would decrease benefits that loyal casino patrons have to enjoy,” Freeman wrote. “Free meals, rooms and other perks, normally given to loyal customers, will diminish and could altogether vanish.”

Casino industry pushes on despite surprise tax

Just days after the new tax hike was approved, Sands Bethlehem CEO Mark Juliano seemed unfazed by the otherwise bad news, as if the tax was a mild jab that snuck past his gloves as he was battling bigger punches.

He told The Morning Call he and his colleagues spend a lot of time fighting for and against state laws and regulations, and that “this one sort of came out of nowhere.”

Though surprised, Juliano was resolute: “We’re not happy about it, but it doesn’t stop us in our tracks.”

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