Pennsylvania Governor Tom Wolf has proposed a tax on casinos to bring in revenues and help the state’s ailing budget. The American Gaming Association (AGA) does not agree with the proposal and let the governor know in a letter this week that his proposal would cause a decrease in tax revenues from gambling.
The AGA represents gaming industry operators across the United States including the majority of Pennsylvania casino operators.
Earlier in February, Wolf proposed a new tax on the programs of promotional credit marketing by the casinos. Casinos use the free credit promotions to bring gamblers in and have previously not been taxed to offer such incentives. This would change with Wolf’s proposal and casinos would most likely cut back on promotional credits offered if a tax was imposed.
AGA Senior Vice President of Public Affairs, Sara Rayme, stated that while the AGA appreciates the difficulties Pennsylvania is facing with it budget deficit, taxing the promotional credits would likely lead to a decrease in tax revenues from casinos, the opposite of the intended result. Rayme stated that taxing free play would deter casinos from offering such incentives, resulting in a decrease of player participation. This would lead to a decrease in tax revenues going to state and local governments.
Pennsylvania is in constant competition with neighboring states, including Delaware, New Jersey, Maryland, New York and others for casino dollars. If the tax is imposed, casinos in Pennsylvania would most likely not offer the player incentives and other states would benefit, as other nearby states do offer such promotional credits, according to the AGA.
In closing, Rayme wrote that the 12 casinos of the state already pay some of the highest taxes in the country when it comes to the gambling industry. Few companies contribute as much to the economy of the state as the casinos do, with $6 billion provided each year in economic impact as well as supporting 33,000 jobs and generating $2.4 billion in tax revenues when the significant ripple effect is considered. To be able to maintain and build on the casino’s contributions to the economy legislators and regulators need to view the gaming companies as partners and seek to create progressive gaming policies. Rayme stated that the tax treatment of the promotional credits is one of these important policies.
The AGA represents several casinos in the state including SugarHouse Casino, Sands Bethlehem, Harrah’s Casino in Chester, Parx Casino, Hollywood Casino at Penn National Race Course and the Mohegan Sun Casino.