In a recent move The Pennsylvania Supreme Court ruled on Wednesday that the municipal portion of tax on slot machines outside Philadelphia violates the constitution and thus putting a stake $50 million on the line. As per Supreme Court the local slots tax is illegal. Supreme Court has now given general assembly to fix the 2004 law that legalised casinos in the Keystone State and made a way for the state to impose different rates on casinos depending upon their size.
This ruling which declared that the municipal portion of the tax on slot machines outside Philadelphia violates the state constitution has dealt a heavy blow to the cash stripped state that is now desperate for revenue. Because of this new law now the state would be staking nearly $50 million. In addition to this it also comes as Pennsylvania mulls on introducing video-gaming terminals in bars and online gaming.
Pennsylvania constitution required all taxes to be applied uniformly on the same class in this case casino. As per the Mount Airy Casino Resort most casinos outside Philadelphia need to pay a minimum of $10 million tax to their host municipalities while SugarHouse casino in Philadelphia is exempted from this. As per the Pennsylvania Gaming Control Board annual report there is a total of $48.5 million difference cost in nine Pennsylvania casinos in the year ended June 30.
In this essence the larger casinos will pay 2 percent of its slots revenue in a local municipal tax while the small casino sees a higher effective rate with a $10 million minimum.
Jennifer Kocher, spokeswoman for Senate Majority Leader Jake Corman (R., Centre) said:
“We are taking the time to review the details of the decision, the consequences of which could be far reaching,” “We are working to determine what those impacts will be. We will be considering our next steps, if any, in the coming weeks.”
Chairman of Obermayer Rebmann Maxwell & Hippel LLP, who argued the case in March for Mount Airy Casino Resort in the Poconos revealed to the Press that . “All the game-playing starts when you open anything up, and that’s what will happen here.”
He believes that the General Assembly will have a difficult time revising the law.
“They are going to have a hard time getting this through because they are used to give-and-take and horse trading,” he said. “It’s not a simple fix.”
