Pennsylvania Casinos Urge for Equal Taxation on Skill Games

A dozen casinos in Pennsylvania turned to the highest court in the state with a request to either impose the same tax rate that applies to slot games for skill games or declare the tax unconstitutional. Currently, land-based operators across Pennsylvania pay a tax rate on their slot machine revenue between 48% and 54%.

However, the slots’ biggest rival, skill games, currently are not subject to any taxes or regulations. Despite the availability of tens of thousands of devices across the state, skill games are yet to be regulated as efforts by lawmakers have failed so far.

According to the American Gaming Association, there are nearly 70,000 skill game terminals across Pennsylvania. The games can be found in different retail outlets, from bars and restaurants to convenience stores and gas stations.

However, the expansion of skill games did not go unnoticed, considering that 12 out of the 17 casinos in Pennsylvania supported the petition filed with the Pennsylvania Supreme Court. As noted, the casinos across the state are asking for a court to declare the tax rate applicable for slot games unconstitutional or enforce the same rate for skill games.

The land-based licensed casino sector argues that it pays approximately half of its proceeds from slots to Pennsylvania while at the same time, skill games do not pay any taxes. The operators explained in their legal claim: “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.”

A Total of 12 Land-Based Casinos Support the Legal Claim

Leading betting and gaming giants, including PENN Entertainment and Caesars Entertainment, joined the legal fight. The petition with the Pennsylvania Supreme Court is supported by Harrah’s Philadelphia, Rivers Casino Pittsburgh and Rivers Casino Philadelphia. Parx Casino, Parx Casino Shippensburg, Hollywood Casino at Penn National Course, Hollywood Casino Morgantown, Hollywood Casino York, Hollywood Casino at The Meadows, as well as Wind Creek Bethlehem, Live! Casino Pittsburgh and Live! Casino and Hotel Philadelphia also support the petition.

Last year, land-based casinos paid more than $1 billion in tax revenue in Pennsylvania. However, considering the recently filed petition, that revenue may be at risk and depending on the decision of the state’s highest court.

Earlier this year, Parx Casino’s chief executive, Eric Hausler, warned that skill games are cannibalizing the slots revenue across Pennsylvania. The controversial gaming devices provide entertainment that closely resembles slot gambling. According to Hausler, skill games may be one of the reasons why Pennsylvania doesn’t record significant slot revenue growth when compared to other states.