Tax rules for new casino table games taking shape
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HARRISBURG -- As the Legislature moves closer to allowing state casinos to add table games like poker and blackjack, a higher licensing fee and higher tax rate are taking shape despite objections from casino officials.
At a hearing today of a Senate committee that oversees gambling, senators talked about imposing a one-time, up front licensing fee of $15 million for each casino that wants to add table games.
Also under serious discussion, said Sen. Wayne Fontana, D-Brookline, is an annual state tax rate of 18 percent on table games revenue.
These are both higher than existing language in a table games bill that has been under consideration. Senate Bill 1033, proposed by Sen. Robert Tomlinson, R-Bucks, whose district includes the Philadelphia Park racetrack/casino, sets the licensing fee at $10 million and the tax rate at 12 percent.
Another bill, House Bill 21 by Rep. Bill DeWeese, D-Waynesburg, would set a 21 percent tax rate on table game revenue, but most legislators seem to think that's too high.
A tentative state budget of $27.9 billion, which the Legislature may vote on next week, projects generating $200 million in table games revenue in fiscal 2009-10, which began July 1.
Legislators said that target figure would be more easily reached with a $15 million license fee and an 18 percent tax rate. Nine casinos are now open, which would mean $135 million in one-time licensing fees.
The five casinos all said they could have their table games ready for play by April, which would mean three months of new tax revenue before the fiscal year ends June 30. The Meadows in Washington County said it could be open by March 1.
But officials of five Pennsylvania casinos, including Bill Paulos, a principal of The Meadows racetrack/casino in Washington County, warned senators that if the tax rate and licensing fee is set too high, it will restrict their efforts to add up to 1,000 new workers per casinos. Higher costs could even mean some casinos wouldn't add table games, though that possibility appears small, since many slots customers are also demanding poker, blackjack, roulette and dice.
When all 12 large casinos -- each with up to 5,000 slots -- are ultimately open in Pennsylvania, it could mean over 12,000 additional casino jobs, the officials said.
They said that table games are much more labor-intensive than slots -- because of the need to hire dealers, floor supervisors, added security workers and others. There has been some talk of a tax rate as high as 34 percent, but the casino officials said they wouldn't add table games with such a prohibitive tax rate.
Casinos already have complained about the state's 55 percent tax rate on slots, but all are still making money for themselves and for the state, which is helping lower property taxes moderately, helping the horse racing industry and providing economic development, including construction of the new hockey arena in Pittsburgh.
Mr. Paulos said table games would put The Meadows "on a level playing field'' with casinos in West Virginia, which are only 30 minutes from his casino.
Robert Soper, a principal of the Mohegan Sun casino near Wilkes-Barre, and Robert DeSalvio, president of the Sands casino near Bethlehem, said they would add table games even if the license fee is $15 million and the tax rate is 18 percent. But they warned they might not add as many as 70 to 100 table games, as they had planned with a lower tax rate and fee.
"As the tax rate goes up and our expenses go up, it could reduce the number of table games we add, but we would go forward as well," said David Jonas, president of Philadelphia Park race track casino.
But Mr. Paulos said he couldn't commit, at today's Senate meeting, to adding table games with the higher license fee and tax rate. The higher fee "would certainly have an impact on what we do," he said.
Robert Norton, chief operating officer of Presque Isle Downs racetrack/casino near Erie, also said that the higher startup costs for table games "would significantly affect our ability to go forward with table games."
Another major factor in how much Presque Isle Downs expands its gambling, he said, is whether Ohio voters approve slot machine casinos in a Nov. 3 referendum, because his facility now gets a lot of customers from the Cleveland area.
First Published September 23, 2009 12:43 pm
