Governor Tom Wolf of Pennsylvania unveiled his budget plans this week, for the 2016-2017 fiscal year. The plans were released even though Wolf and the legislators of the state have yet to come to an agreement on the 2015-2016 budget, a budget that is overdue by many months. Online gambling has been discussed as a way to help the current budget woes and in the new proposal, Wolf suggests free-play slot promotions have an 8% tax imposed.

The 2016-2017 budget proposal includes the new tax on the promotional credits of free-play that are offered by the casinos of the state. January 1st would see the tax applied retroactively, with Wolf stating that the tax would create $21m for the state for the remainder of the fiscal year. This amount would then increase to close to $51m for the full fiscal year, which would begin on the 1st of July.

Currently, casinos of the state are allowed to deduct the play credits that are used in promotions from the slot winnings before the state is paid. In 2014-2015, the slots revenue total was 26.6% based on the current deductions. Casino operators are not happy with the proposal by Wolf, with the Mohegan Sun Pocono President speaking out on the matter. Mike Bean spoke with the StandardSpeaker, stating that free-play is a primary marketing tool that allows the state casinos to compete and that if the activity was taxed, the casino would rethink using the tool.

Taxing free-play promotions is nothing new in the United States but the state of Pennsylvania already pays a very high tax rate of 55% on slot gaming revenue. Actually, the highest tax rate on slots in the nation. The casino venues do not want to see this tax rate go even higher, due to the proposal by Wolf.

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