PA Supreme Court Gives Lawmakers More Time On Slots Issue

[toc]It looked like time might run out for Pennsylvania lawmakers to come up with a solution to the state’s slot taxation issue. The state Supreme Court just granted them a little more time, though.

The slots problem

Lawmakers and casino operators have yet to reach a compromise following a September court ruling in a lawsuit filed against the state by the Mt. Airy Casino. The property contended that the existing taxation structure in Pennsylvania was unfair because a flat $10 million fee was imposed on casinos despite varying revenues.

The State Supreme Court agreed with the casino. With the rule considered unconstitutional, local governments reliant on gaming taxes found themselves in quite a bind.

Lawmakers held a closed-doors meeting with casino representatives on Jan. 3 where the projected $140 million shortfall in slots tax revenue for the state certainly came up.

Several Pennsylvania casinos reached handshake agreements with local governments and many even agreed to continue paying the $10 million fee until there is a permanent resolution.

PA legislators get deadline extension

Originally legislators were required to come up with a solution to the tax issue by Jan. 23. The General Assembly had an opportunity to temporarily reinstate the $10 million fee during the 2016 session, but the bill passed the House before failing to get voted on in the Senate.

On Friday, Jan. 20 the same State Supreme Court who ruled the tax plan unconstitutional voted 6-1 to give legislators an extension on the slots tax solution deadline. Now the new deadline will be May 26.

The lone dissenter on the court was Justice David Wecht.

“Stalled in a political traffic jam of their own making, the legislators ask this Court to build them a detour. We should decline to do so,” he explained.

Costa’s forthcoming bill includes possible solution

One bill that is expected to be introduced in the Senate shortly comes from Sen. Jay Costa and proposes a comprehensive framework for gambling expansion in the Keystone State.

The bill will reposition the $10 million fee as a percentage of the flat rate $50 million slots license rather than a percentage of annual revenue for a property.

In addition to reinstating the $10 million slots fee, Costa’s bill also wants to expand gambling to include online poker, online casinos and daily fantasy sports (DFS). Each venture comes with substantial taxation and licensing fees that are much higher than those that exist in other states with regulated intrastate gambling.

The General Assembly convened for a new session on Jan. 23, so the clock is officially ticking on reviewing Costa’s proposed bill or coming up with a different slots revenue solution.