Gov. Tom Wolf wants to add a new 8 percent tax on casinos as part of his 2016-17 budget.
Mohegan Sun Pocono, Mount Airy Casino & Resort and Pennsylvania’s 10 other casinos already pay taxes on their slot machine and table game revenues, but the state would levy the new tax on the promotional coupons and rewards for free play that casinos offer customers to play slots.
The casinos would pay the tax, not customers.
The tax would go into effect retroactively to Jan. 1, and the governor’s budget office estimates it would produce about $21 million through June 30. In the 2016-17 fiscal year that starts July 1, that estimate rises to about $50.9 million.
Casinos pay a 55 percent tax on revenues produced by slot machines and a 12 to 14 percent tax on revenues derived from table games.
Mohegan Sun Pocono President Mike Beansaid casinos already have a high tax burden. In addition to paying about $1 billion in taxes to the state since 2005, he noted the investment in the Plains Township property is approximately $659 million including a $50 million hotel and other amenities.
“Free play ... is one of the primary marketing tools that allows Pennsylvania casinos to compete,” he said, adding that if that is taxed, “we’d have to rethink using that tool.”
Efforts to reach Mount Airy Casino & Resort representatives in Paradise Township, Monroe County, were unsuccessful.
Under the present system, casinos are allowed to deduct promotional play offers from the money they have left after they collect wagers and pay out winners. Promotional plays used to represent a relatively small part of a casino’s slots gross terminal revenue, but Jeffery Sheridan, Wolf’s press secretary, released figures that show casinos how they have grown. Eighteen other states tax promotional plays in one way or another.
Gross terminal revenues represent the net revenues subject to the slots tax.
In the 2007-08 fiscal year, promotional plays amounted to 7 percent of gross terminal revenue. By 2013-14, they had climbed to 28.1 percent before dropping back to 26.6 percent in 2014-15, Sheridan said.
In 2014-15, Mount Airy’s promotional plays totaled $38.45 million, reducing its slots gross terminal revenue to $139.2 million, according to state gaming commission records. The casino paid more than $88 million in slots and table game taxes. An 8 percent promotional play tax would have meant the casino paid another approximately $3.1 million in taxes.
For Mohegan Sun, promotional plays totaled almost $46 million, reducing its gross terminal revenue to $212.3 million. The casino paid more than $125.9 million in slots and table game taxes. A promotional play tax would have meant $3.68 million more in taxes.