AGA Warns of Negative Impact From Pennsylvania’s Proposed Tax

The American Gaming Association (AGA), which represents a majority of casino operators in Pennsylvania has warned that a new tax proposal by Pennsylvania Governor Tom Wolf could backfire, leading to a widening of the state’s budget.

Gov Tom Wolf announced a new proposal in his most recent budget by which promotional credit marketing programs conducted by casinos would be taxed. He hopes to collect additional tax revenues of $51 million a year through this new tax bill from the state’s twelve casinos.

Sara Rayme, AGA’s senior vice president of public affairs for the AGA has sent a letter to Gov. Wolf voicing the concerns of the AGA and has asked for a review to be conducted into the new proposal.

The AGA contends that these programs are vital mechanisms by which the casinos attract customers to their facilities. The programs help increase real-money wagering from customers, encourage visits and support casinos in their efforts to cater more efficiently to their customer needs. The association maintains that they are not in any way different from grocery store coupons which are used as a tool to bring customers into the store and get them to buy more.

In a statement, Sara Rayme, AGA’s senior vice president of public affairs said,

While we appreciate the difficult budget deficit facing Pennsylvania, taxing promotional credits would likely lead to a decrease in tax revenue from casinos – the exact opposite of the intended result. Taxing Pennsylvania casinos’ promotional credit programs will be an economic deterrent to casinos offering such incentives, and consequently, result in a decrease in patron play and lower tax revenues generated for state and local governments.

Rayme pointed out that none of the nearby states such as Ohio, New Jersey, Maryland, West Virginia, Delaware and New York have levied such taxes and if Pennsylvania were to implement this, it would be a regressive move that would harm the industry, especially given that all the neighbouring states are in competition for capturing market share in the gambling industry.

According to Rayme, the move is likely to hamper casinos from offering their customers the best deals possible, which would lead to them exploring other avenues including casinos in neighbouring states. This, she said, would ultimately result in a decline in tax revenues for Pennsylvania and endanger jobs in the state.

Pennsylvania casinos pay the highest taxes when compared to all the other casinos in the country, contributing more than $6 billion in economic impact and $2.4 billion in tax revenue apart from supporting 33,000 jobs.