Under the new budget passed by Pennsylvania Governor Tom Wolf, all Keystone State casinos may face a new tax on one of their main marketing schemes, promotional and free play vouchers.
Geoff Freeman, president and CEO of the American Gaming Association, says:
“The idea of taxing free play makes little or no sense. It is counterproductive. It will cost the Commonwealth of Pennsylvania in terms of tax revenue and will steal dollars away from reinvesting in properties.”
For those who are unfamiliar with this concept, free play coupons or vouchers are given to “frequent flier” casino guests. This tactic has been used since the inception of casinos and is used in hopes that the guest will spend much more than the allotted amount given to them in promotional value.
“Casinos don’t make money off free play. They make money off the spending that is expected to be generated by free play,” Managing Director of Spectrum Gaming Group, Michael Pollock, told the Post-Gazette.
What does this mean to customers?
If this tax were to be introduced under the new budget, it would mean a number of things for gamblers across Pennsylvania.
- Casinos will be cutting back on gaming vouchers, both digital and those sent through the mail.
- Customers will most likely flock to states where casinos do not have this tax, such as Pennsylvania’s neighboring state to the west, Ohio.
- Gamblers may be forced to find their own mode of transportation to Pennsylvania casinos and gambling facilities, as when most large groups such as bus tours take trips to casinos, there is a gambling voucher usually built into the purchase price.
What does this mean for the state?
Naturally, the most obvious question is, “Why?”
Had this tax been introduced last year, the state would have generated $49.7 million in additional revenue. This figure is taken from the estimate that promotional vouchers would be taxed at 55 percent as proposed in the bill.
The Pennsylvania deficit as of April, 2016 is roughly $2 billion. If this tax were implemented, it would decrease the hole by 2 percent annually.
Pennsylvania would be the first state to introduce this tax after establishing casinos. All other surrounding states that house gambling establishments implemented the tax before casinos were built (New York, West Virginia, and Maryland).
If this tax is not imposed, it is likely that other areas will be cut in order to trim the budget deficit. These areas include education, prisons, public protection, and emergency services.
Casinos will obviously take a hit too
The casino that will hurt the most? The Sands Bethlehem Casino, which is known as a destination due to promotional play and offers, will be at a loss of roughly $12 million annually under this new proposed tax by Governor Wolf.
A breakdown of the additional taxes each land-based casino in Pennsylvania would be facing should the increase be approved can be found at the Morning Call website.