Each year, the Pennsylvania legislature is not only required to devise a budget plan for the state, but is required to have it balance. In 2016, the process of doing this was a mess and with just a few days left before 2016, the budget still doesn’t balance. One of the sticking points revolved around Pennsylvania’s gambling industry; gambling expansion looked like it would happen, but after much wrangling, things are still up in the air. As such, State Senator Kim Ward has scheduled a meeting with the leaders from Pennsylvania’s twelve casinos in the Capitol on January 3rd, this according to the Associated Press.
It is not known exactly what they will discuss, but Sen. Ward said, “The days of doing nothing are over at this point.”
There is a good chance the main topic of conversation will be how to settle the issue of casino “host fees.” The nine casinos that are located outside of Philadelphia were required to pay a tax to the municipalities where they were located in the form of either two percent of slots “gross terminal revenue” or $10 million per year, whichever is higher. A total of $142 million in host fees were paid last year and are an important part of city and county budgets.
Mount Airy Casino & Resort’s owner, though, sued the state, arguing that the host fees were an unconstitutional tax. Because of how the host fee was structured, all nine casinos routinely paid the $10 million because they weren’t large enough to have more than $500 million in gross terminal revenue. Because of this, the casinos were effectively paying different tax rates, hence Mount Airy’s problem with the host fee.
In late September, the state Supreme Court agreed with Mounty Airy’s owner, but rather than eliminating the host fees immediately, it gave the legislature 120 days to come up with a solution.
The Senate has supposedly devised a very basic solution that would simply make the host fee a flat $10 million. This would have the same effect on the casinos, but there would be no tie to revenue. Nothing has been settled upon, though.
Online poker is also an issue. There was a big push to legalize and regulate internet poker in the state and though it got plenty of support in the legislature, no bill ever got so far as to passing. The budget has counted on online gambling to fill a $100 million hole, a hole which is actually now even bigger than expected. Many lawmakers still expect positive developments on internet poker in 2017, but it was disappointing it didn’t get done this year.
When the Senate sent its host tax amendment to the House, the House added a part to legalize online gambling, including fantasy sports, but the Senate didn’t like that.
Senate majority leader Jake Corman told The Morning Call at the time, “We told the House before, we don’t have consensus on I-gaming, yet they chose to load it into the host fee bill. That basically killed it for this session.”
