Casino Tax Fix, PA Online Gambling On Sidelines Until 2017

November 5, 2016
Pa online gambling and tax

There was excitement accompanying the Pennsylvania House’s approval of a bill that would expand gambling to the internet, along with a fix to the state’s tax code for PA casinos.

The Pennsylvania Senate has previously approved a $10 million flat tax to replace the percentage-based tax benefiting casino host jurisdictions that was previously in place. (That tax had been declared unconstitutional by the state Supreme Court.)

The bill was passed along to the House, which then added online gambling and slots expansion to the tax fix. But optimism for online gambling passing has turned to pessimism.

Problems with the casino tax and gambling bill

However, Morning Call‘s Matt Assad wrote that the host tax likely won’t survive precisely because more controversial gambling measures were added to it.

“A state House bill that ties continuing casino host fee payments to legalizing internet gaming will almost certainly die in two weeks without a Senate vote,” Assad wrote.

While Assad predicted the bill wouldn’t make it through the Senate, he did say that there’s plenty of time for lawmakers to figure out a way to fix the tax, which has an economic impact of more than $140 million. Casinos are expecting their next payments in April, which are the last ones they’ll receive based on the Supreme Court’s ruling — at least without action by the legislature.

This scenario is more likely than the Senate passing an omnibus bill that includes online gambling and the tax fix, at least in the short term. Pennsylvania’s Senate has been more hesitant to pass multiple pieces of gambling legislation in one bill this year.

Local leaders hoping tax is reinstated

Under the host-fee regulation, casinos had to pay two percent to the county and two percent to the town in which they’re located.

Mount Airy Casino was a vocal opponent of the law, saying that casinos with smaller revenue were paying, proportionately speaking, higher fees than casinos with more revenue. It argued this unequal treatment was unconstitutional, and the state’s Supreme Court agreed.

Once the decision came down, counties and towns worried what would happen to their infrastructure. In some cases, the casino fee accounted for more than 10 percent of a local budget.

Supreme Court decision created domino effect

The Supreme Court’s decision stipulated that the state’s legislature had 120 days to fix the host-fee law. Because the legislature was forced by the court to re-examine that gambling law, some wanted to tackle other gambling measures in tandem.

Despite that impetus — mostly from the House — the Senate did not approve online gambling in its most recent session and the issue seems destined to wait until 2017.

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