Pennsylvania Casinos Push for Tax on Skill Games
PA Slot Machine Tax Remains Topic of Contention
The owners of 12 Pennsylvania casinos are asking that a tax on slot machine revenue be declared unconstitutional. A lawsuit filed Monday could threaten more than $1 billion in annual tax revenue that’s reserved for property tax rebates and economic development projects.
“There is no basis for requiring licensed entities to pay about half of their slot machine revenue to the Commonwealth while allowing unlicensed entities to pay no tax on such revenue” they said in the lawsuit.
As it is now, the state taxes 54% on casino revenue from slot machines, but not on revenue from skill games that are generally found in bars and stores. Casino owners argue that violates constitutional guarantees.
The Pennsylvania Gaming Control Board acknowledged the lawsuit and said it’s evaluating it.
Here’s more on the PA slot machine tax.
Skill, Not Luck
A separate case between the state attorney general’s office and Pace-O-Matic Inc., a distributor of skill games, could lead to such games being shut down. Others have found that skill games are based on a player’s abilities as opposed to chance, like traditional casino slot games.
Lawmakers have long considered regulating and taxing skill games, but to no avail. The American Gaming Association estimates there are at least 67,000 such games in Pennsylvania, more than any other U.S. state. Any games that are unlicensed and thus operate illegally are subject to seizure by state police.
Players are required to be at least 18 years old to play skill games, which can be found at bars, gas stations, restaurants and other locations. That makes them more convenient than, say, online casinos.
Casinos Seek Level Playing Field
Pennsylvania has 17 different licensed casinos including BetMGM casino, 12 of which are represented in the lawsuit. They include major companies such as Caesars Entertainment Inc. and Penn Entertainment Inc., which owns ESPN BET.
Owners contend that the state either impose an equal tax rate on skill games or prevent it from collecting taxes on slots. Essentially, they’d like an even playing field.
The state’s Gaming Control Board reported a record $2.46 billion in slot revenue from brick-and-mortar casinos in 2023, a 3% increase from the previous year. The PA slot machine tax has led to unmatched proceeds from gaming terminals.
Other states such as Kentucky, Texas and Virginia have taken a different stance than Pennsylvania, imposing more regulations on skill games. Pennsylvania Gov. Josh Shapiro has proposed taxing these machines at a rate of 42%. Estimates say that could generate approximately $150 million in revenue for the upcoming fiscal year.
Mike Barley, a Pace-O-Matic lobbyist, said earlier this year that the 42% rate is “higher than the industry can sustain.” Meanwhile, Parx CEO Eric Hausler said Shapiro’s proposal would be a “good start.”
Critics argue the state is leaving tax dollars on the table by not regulating skill games. Time will tell if that changes.
Stay tuned for more updates on the PA slot machine tax.
A Pennsylvania casino lawsuit could endanger a tax that delivers more than $1 billion annually to the state and local governments for property tax rebates and economic development. https://t.co/YUhfBIuP6Z
— lehighvalleylive.com (@lehighvalley) July 30, 2024
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