PA Court Says No To $10 Million Tax Payments From Casinos To Communities

October 3, 2016
PA casino host tax

The Supreme Court of Pennsylvania ruled that the state’s current casino host tax is unconstitutional, marking a major win for plaintiff Mount Airy Casino and eight other casinos (three are exempt from the tax).

The state’s General Assembly has 120 days to discuss the decision and craft policy accordingly.

The decision, however, comes as a shock to communities and counties, who say the abolition of the tax will create serious budget shortfalls.

Justice David N. Wecht penned the majority opinion for the case. In his closing comments, he wrote, “We are mindful that our decision may significantly affect many counties and municipalities … For this reason, we will stay our decisions for 120 days in order to afford the General Assembly an opportunity to evaluate potential remedial measures.”

The footnotes of the decision say that Mount Airy wanted Monroe County and Mount Pocono to pay it back for previous tax payments.

Justice Wecht noted, however that Supreme Court decisions on tax laws take effect based on the date of the decision and are not retroactive.

What this means for casinos

The tax law required casinos to pay 4 percent of their slots winnings the county (2%) and town (2%) in which they’re located. If that number isn’t greater than $10 million, casinos are required to pay $10 million.

Mount Airy has long been in favor of axing the host fee. They made headlines this past summer when they called the law unfair, saying that the tax’s application is not uniform and that some casinos suffer more than others.

For example, the payment by Parx of $10 million in 2015 accounted for 2.8 percent of its gross slot machine revenue in 2014. Meanwhile, Mount Airy’s $10 million payment that same year represented seven percent of its total slots revenue.

There is a chance that the court ruling could spur action leading to PA online casinos.

Mount Airy not alone in disapproval

Mount Airy hasn’t been the only outspoken voice in the fight. Earlier this year, Pittsburgh’s Rivers Casino demanded millions in tax refunds from the city.

The Post-Gazette reported that Rivers said it simply wanted fair treatment; some casinos pay more, proportionally speaking, than others.

Pittsburgh Mayor Bill Peduto refused to concede, saying Rivers shouldn’t complain because casino management knew the tax existed when it applied for its operating license.

What this means for towns and counties

The impact on towns and counties is obvious — their yearly budgets will be losing millions of dollars if action isn’t taken by the statehouse.

Douglas Hill, executive director of the County Commissioners Association of Pennsylvania, told Pittsburgh’s WTAE the tax money was being put to good use for “improving the community” and “worthwhile local purposes.”

Bethlehem Mayor Robert Donchez said his community is “concerned” about the the Supreme Court decision because, he told the Morning Call, $10 million represents the salaries of 100 Bethlehem police officers. Sands Bethlehem is the biggest casino in the state in terms of revenue.

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