PA Supreme Court Declares Casino Tax As Unconstitutional

In a decision that could have significant ramifications for counties and municipalities in Pennsylvania, the highest court in the state has ruled that the local share assessment tax, levied on certain casinos is unconstitutional.

The four percent local share casino tax is currently not levied on all the 12 casinos in the state. The Sugar House Casino in Philadelphia, and two other smaller casino resorts in the Valley Forge Casino in outlying Philadelphia and Lady Luck Casino Nemacolin in the southwestern area of the state are exempted from paying the mandatory four percent tax.

The tax was laid down as a part of the state’s 2004 law which legalized casinos in the state. The law states that at least 4 percent of gross gambling revenue from slot machines needs to be passed on to the host communities. Two percent of this must be given to the county while 2 percent or $10 million whichever is greater must be handed over to the municipalities.

The Supreme Court held that since the tax affects the casinos differently it was unconstitutional. Acknowledging that the ruling will have a heavy impact, the court has given legislators up to four months to implement the ruling so that state legislators can use the time to rectify the situation and bridge the gap that was founded to be unconstitutional.

Gov. Tom Wolf's office is yet to comment on the ruling but senate members have noted that its effects could be far-reaching. In a statement, Senate Appropriations Committee Chairman Patrick Browne said

We will take action and we'll do it in such a way to maintain the casino obligation to our local communities. This would absolutely devastate these towns

Around $141 million was paid last year to counties and municipalities that host casinos, with $48 million paid by them towards the $10 million provision. The case against the tax was brought by Mount Airy Casino located in Pocono Mountains in northeastern Pennsylvania which argued that the tax unfairly put a heavier burden on lower performing casinos. The court has announced monetary relief for the casino but it is not yet confirmed how much has been granted.

Various legislators expressed their concern at the judgement. Bethlehem Mayor Robert Donchez said that the host fee amount was equivalent to the cost of having 100 police officers. Douglas Hill, executive director of the County Commissioners Association of Pennsylvania pointed out that the money was being used for the benefit of the community and the municipalities and stopping this could severely impact both communities and municipalities.