Pennsylvania cities and counties could find themselves short of money soon — and legislators have to locate even more cash on short notice, as though the current budget 
impasse wasn’t trouble enough. The commonwealth has been given three months, tops, by the Pennsylvania Supreme Court to fix the host-fee regime under which Keystone State casino disburse funds to their surrounding communities. The court found that the current law — which Mount Airy Casino and Rivers Casino have loudly decried — violates the state constitution’s ban on non-uniform taxation. (Bethlehem counts on the tax for 12% of its budget but Sands Bethlehem pointedly refrained from litigation, saying it was happy to pay the levy.) Bethlehem Mayor Robert Donchez equated the upcoming shortfall to the cost of 100 police officers, adding that the city would have to scramble to cover an anticipated $9 million shortfall — on top of a $2 million budget gap that was already looming.
The law in question, enacted in 2004, imposes a 2% levy on gross slot machine receipts. But that was only if slot revenue went above $500 million a year. If not, a $10 million mandatory fee was required. Sounds fair, right? Wrong. What’s a relative drop in the bucket for Sands is a big bite of the apple for Mount Airy. According to The Morning Call, the latter was paying 7% of its slot revenue to the state while Parx Casino was paying slightly less than 3%. The real sticking point, though, was the “true-up” payment that casinos had to make to the state if they fell short of $10 million. Mount Airy’s “true-up” was much bigger than Sands’, while Presque Isle Downs had one of the largest true-ups in the state: nearly $8 million. The only consolation lawmakers could salvage from the court’s ruling is that the 16% local tax on table games remains in place.
There’s talk of replacing the old tax regimen with a flat-fee system. But a timely solution may prove elusive if all legislators are as obstreperous as state Sen. Pat Browne (R), who said, “They knew the deal when they applied for a gaming license. We’re not going to just let them avoid this obligation.”
In other Keystone State business, Internet-gaming legislation is running on fumes but continues to wheeze and sputter a bit. A House Gaming Oversight Committee hearing on ‘Net-betting practices in other states, recently scrubbed, has been rescheduled for Oct. 18. The hearing will also delve into daily fantasy sports. The hope is that the House hearing will jolt the state Senate into action. The full House already passed enabling legislation for Internet gambling, as well as for slots at airports and OTBs. Internet-wagering revenues would be taxed at 16% while DFS operators would pay 5% of winnings to the state. (Not a bad deal.)
* Global diversification of gaming investment ultimately benefits Las Vegas. That’s the argument MGM Resorts International spokesman Alan Feldman was making at Global Gaming Expo this week. “Frankly, the T-Mobile Arena and a lot of other expansions, additions and renovations that we’ve done have been enabled by the fact that we are making profits in other parts of the world and bringing them back to Nevada and investing them here,” he told the Las Vegas Review-Journal. For all the recent talk about Japan, both Feldman and International Game Technology International (that’s not a typo) CEO Walter Bugno focused on Brazil as the next target of opportunity, especially as it might well legalize both terrestrial and Internet casinos … quite a bonanza if it happens.
