Pennsylvania Casinos File Lawsuit Over Disparate Slot Machine Taxation
Pennsylvania is facing a major legal challenge as 12 casino owners are suing to challenge the state’s tax action on slot machine revenue. The action, filed Monday, could potentially disrupt more than $1 billion a year in tax revenues currently funding property tax rebates and economic development plans.
Constitutional controversy and casino arguments:
The essence of the lawsuit lies in arguing that casinos are an unequal taxation policy. The state imposes a significant 54% tax on casino slot machine revenues. In contrast, profits from skill game handsets (electronic games that pay cash located in bars and stores) remain tax-free. These skill games are not subject to strict regulations such as casino operations.
Casino owners, in their legal filings, claim, “While requiring licensed companies to pay about half of their slot machine revenues to the Commonwealth, there is no basis for allowing unlicensed companies to pay taxes on such revenues.” Casino owners are hoping for a court ruling to standardize tax rates across all similar gaming platforms or eliminate any slot machine tax altogether.
The legal action includes key players in the casino industry, including well-known companies such as Caesars Entertainment Inc and Penn Entertainment Inc. The meaning of the lawsuit extends beyond direct parties, as Pennsylvania’s approach to gaming taxes has historically been unique, as the American Game Association reported that casinos earn more than any other state in the country.
The outcome of the lawsuit could hinge on another ongoing case being deliberated by the Pennsylvania Supreme Court. The related case involves skill game makers Face-O-Matic Inc. and the state attorney general’s office. The controversy revolves around whether such skill games amount to unlicensed gambling machines that must be kicked out of casinos but not casinos.
A lower court’s previous ruling ruled that Face Omatic’s machines require player skills, not mere coincidences, to distinguish them from traditional gambling devices regulated by state law. However, the state government has consistently treated them as illegal gambling devices subject to police confiscation.
State Government Position Assessment:
The exact number of skill game handsets remains uncertain, as debates continue among state lawmakers over how to regulate and possibly tax these devices. Estimates suggest that there are at least 67,000 such handsets across the state of Pennsylvania, more than any other state.
Meanwhile, casinos maintain around 25,000 regulated slot machines. Gamblers bet nearly $32 billion on these machines last year alone, losing a total of more than $2.4 billion. That’s almost evenly distributed revenue between the state and casino operators.
The Pennsylvania Department of Revenue has opted not to comment on the ongoing lawsuit, but the Pennsylvania Game Management Board has acknowledged its awareness of the lawsuit and is evaluating the current situation. 동행복권파워볼
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