Pennsylvania Gaming Expansion Delayed Until Fall
The Pennsylvania General Assembly adjourned for the summer without passing an omnibus gaming package. Officially delayed until fall is passage of a massive gaming expansion package that includes the legalization online gaming and daily fantasy sports, tablet gaming at airports, the creation of satellite casinos linked to current gaming licensees, and a controversial measure that would place video gaming terminals, or VGTs, at each of some 8,000 bars and other liquor-licensed establishments around the state.
Also on hold until fall is a bill replacing the local-casino host fee declared unconstitutional last year by the state Supreme Court.
The final days of the extended legislative session were dominated by the state budget, as lawmakers raced to find was to fund an unbalanced $32 billion state budget for the fiscal year that began July 1. Gaming issues were pushed to the back burner as bills were passed to authorize a huge package of tax increases and borrowing to fill a deficit hold of more than $2 billion.
The gaming expansion package had been meant to raise an estimated $250 million of the budget gap, but state House and Senate leaders remain at odds of key components of the legislative package, such as a tax rate for online gaming—the Senate passed an unworkable 55 percent revenue tax; the House, 14 percent—and newly introduced measures like the creation of up to 10 satellite casinos, and the VGT measure, a House favorite opposed by most Senate leaders.
Perhaps the most pressing gaming issue left until fall is the local-community host fee, which the state Supreme Court held last September was unconstitutional under the state’s tax uniformity clause.
The gaming law passed in 2004 provided that casinos give 2 percent of revenues or $10 million annually, whichever was greater, to the local municipalities where they were located, to cover extra costs caused by the casinos. Since no casino ever logged $50 million in annual slot revenues, the tax constituted a flat $10 million fee. Mount Airy Casino, one of the smaller in the state, sued under the uniformity clause, and the high court ruled that the fee constituted a higher tax rate on smaller casinos, and instructed the legislature to pass a new fee that would pass constitutional muster.
Both chambers agreed on a measure that would create a flat $10 million fee for all casinos—prompting Mount Airy officials to say they will sue again on the same grounds if it was passed. The problem was that it was lumped in with the gaming expansion bills, and since House and Senate leaders were at odds on those measures, it is still pending.
Many communities—notably, Bethlehem, which counts on money from the Sands casino for 12 percent of its budget—are now left to scramble to replace the money in their local budgets, since the quarterly payment normally due in August will now not be made. City officials say they have enough reserve cash to carry them through the fall.
The Sands was not among several operators who pledged to continue quarterly payments until a new bill is passed.