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Pa Gambling Law Unconstitutional

Pa Gambling Law Unconstitutional

By on Sep 29, 2016

Pa Gambling Law Unconstitutional

Ruling Has Rippling Tax Consequences. Pennsylvania lawmakers are scrambling due to a recent Pennsylvania Supreme Court ruling. The ruling strikes down the current mechanism for casino local share taxation deeming the current Pa gambling law unconstitutional. This ruling will jeopardize the host community tax base and could lead to devastating budget crises for communities outside of Philadelphia.

The suit was brought on by Mount Airy Casino. Mt Airy disputed the current Pa gambling law calculation of the local share assessment tax. They felt that the calculation was unfair as it penalized smaller casinos with lower slot revenues. The tax is calculated by applying a two percent tax rate to the total slot take. The calculation is predicated on a minimum tax of $10 million dollars. Casinos like Mt Airy and others fail to hit that amount of slot revenue. Mt Airy’s claim is that this unjustly penalizes smaller casinos by not uniformly assessing taxes. For a casino with total slot revenue less than $500 million dollars, the minimum tax required by the Pa gambling law would then be more than the 2% applied to casinos with greater than $500 million in revenue.

Tax Issue a Concern for Municialities

Local community leaders are concerned about the loss of those tax revenues. With little new tax revenues, communities have come to rely on the local share assessments. Without such, plugging million-dollar budget deficits would be impossible. Further, if the Court determines that claw backs are necessary, the local municipal coffers could not support such a strain. Mt Airy has not objected to paying taxes but has objected in the uniformity of the application of the local assessment calculation. Now it is up to legislators to correct this problem with the Pa gambling law within 120 days to avoid unnecessary tax complications.

This new issue might just help those waiting for the online gaming bill to be moved along in the Senate. The bill has been dormant in the senate since July. The current budget relies on $100 million in new tax revenue as a result of online gambling efforts once passed. Without such, the state budget is systemically unbalanced. Proponents of the online bill such as Rep. Aaron Kaufer, R-120, Kingston, a member of the House Gaming Oversight Committee say “It’s likely the fix for the local share assessment will become part of a gambling expansion bill.” But others in the Senate want lawmakers to focus on fixing the local share assessment and internet gambling issues and stay away from relying more on gambling to solve state budget woes.

The local share assessment issue combined with the need to fill the $100-million-line item in the budget may be just what Pennsylvania online gambling needed. It will be hard to believe that in an election year, the lawmakers fail to act on either issue thereby creating an unnecessary tax issues for citizens and municipalities. One way or another, action must be taken to address the Pa gambling laws constitutional issues.

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