Twelve Pennsylvania casinos have filed a complaint to the Supreme Court of Pennsylvania, arguing that taxes on slot machines are unconstitutional because of the lack of oversight skill games have in the state.
Skill games have been operating in the gray area for several years. However, Pace-O-Matic, a Georgia-based skill games manufacturer, has been seeking regulation.
There’s a separate case in which the Supreme Court will rule on the legality of the machines at some point in the near future. Until then, the Pennsylvania casinos’ lawsuit is hoping for one three outcomes:
- Remove 54% tax rate casinos pay to the Commonwealth
- Tax skill games at the same 54% rate
- Ban skill games altogether
PA casinos take a stand against skill games, once again
Pennsylvania casinos have been known to strongly oppose skill games that have proliferated across the state. This new lawsuit ultimately puts pressure on the Supreme Court to make a decision, which will be one of the three bullet points above. The casinos involved in the complaint against the Department of Revenue and Pennsylvania Gaming Control Board include:
- Hollywood Casinos
- Live! Casino Philadelphia and Pittsburgh
- Parx Casino Bensalem and Shippensburg
- Wind Creek Bethlehem
- Harrah’s Philadelphia
- Rivers Casino Philadelphia and Pittsburgh
Those properties argue in the court documents:
“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.
“Accordingly, Count I seeks a declaration that the Gaming Act’s slot machine taxes are unconstitutional insofar as they apply to revenue generated from all slot machines in licensed casinos but not revenue generated from slot machines operated elsewhere in the Commonwealth.”
There are certainly least likely outcomes than others. For example, it’s extremely unlikely the Supreme Court removes the 54% slot machine tax casinos have to pay. Taking that out of the equation, Pennsylvania casinos are essentially asking the highest court to tax skill games at the same rate.
Pennsylvania casinos paid around $1 billion in total slot revenue last year, which is in danger should skill games continue to be unregulated, according to casinos.
Next steps to consider for skill games
This new lawsuit adds to the several moving parts involving casinos and skill games in the Keystone State. The Supreme Court already has to rule on the legality of games.
In addition, there are multiple bills, as well as opinions, on the tax rate of skill games. POM supports a bill introduced by Pennsylvania Senator Gene Yaw (R-23), which includes a 16% tax.
Gov. Josh Shapiro suggested a 42% tax on skill games in February during his FY budget address. However, that has been left out of the budget since the deadline passed earlier this month.
Former Gov. Ed Rendell, who was instrumental in instituting the Gaming Act, believes skill games should be taxed similarly to casino slot machines. Anything lower “is the definition of fiscal irresponsibility, in my opinion,” he said last month.
There are a lot of decisions to come in the near future for skill. First and foremost, the Supreme Court has to answer whether the games are legal in the first place, despite the Commonwealth Court unanimously favoring skill games last December.
Once the Supreme Court makes a ruling, the rest of the dominos will fall into place.
