The owner of Rivers Casino is suing the Pennsylvania Department Of Revenue in order to challenge a local share tax that it has paid to Allegheny County and the city of Pittsburgh since opening in 2009.
According to a report from the Pittsburgh Business Times newspaper, Holdings Acquisition Company filed its motion in the Supreme Court Of Pennsylvania in Philadelphia on June 27 and claims that the municipal portion of the local share tax “imposes unequal rates of taxation” that are “arbitrary, unreasonable…and…not related to a legitimate government purpose”.
The local share tax was passed as part of 2004’s Pennsylvania Race Horse Development And Gaming Act, which established the eastern state’s casino industry and its Pennsylvania Gaming Control Board regulator. Under the scheme, Rivers Casino handed over $10 million to Pittsburgh through the Intergovernmental Cooperation Authority conduit for the 2014/15 financial year with more than $5.5 million going to Allegheny County alongside a further $1.3 million set aside for local public education.
“Over a year ago on April 20, 2015, Mount Airy Casino [Resort] filed an application with the Pennsylvania Supreme Court challenging the Pennsylvania Department Of Revenue’s statutory formula used to calculate local share tax paid by casinos,” read a prepared statement from Rivers Casino spokesperson Jack Horner. “The Mount Airy [Casino Resort] case, which was argued and is currently pending before the Pennsylvania Supreme Court, claims that the formula for calculating local share tax is unconstitutional and inequitable. As a protective application, Harrah’s Philadelphia [Casino And Racetrack] subsequently filed what’s known as a “me too” lawsuit.”
Horner declared that Rivers Casino filed its lawsuit in response to the Mount Airy Casino Resort action with the venue additionally lodging a “protective application” as a way to “preserve our rights pending the outcome of the Mount Airy [Casino Resort] suit, in which a decision is anticipated soon”. He proclaimed that a “bona fide, actual, imminent, present and practical need” led to Holdings Acquisition Company filing the action as it continues to “suffer direct economic harm”.
“The purpose of our application is to ensure that Rivers Casino is not treated differently by the Pennsylvania Department Of Revenue than other casinos in the Commonwealth,” read the statement from Horner. “The filing of our application is not expected to have any impact on the merits or the outcome of the Pennsylvania Supreme Court’s decision.”
Horner stated that the suit asks the court to declare the municipal portion of the local share tax in violation of an equal protection section of the United States Constitution as well as the state’s uniformity clause. The action additionally seeks a refund of the cash the casino has paid under the municipal portion of the local share tax, which could equate to tens of millions of dollars.
In response, Pittsburgh mayor Bill Peduto issued a statement that claimed Holdings Acquisition Company had understood and agreed to the local share tax arrangements before breaking ground on its casino in 2007.
“Rivers Casino knew about this funding commitment prior to applying for its license and knew this funding was due to the city for hosting it,” read the statement from Peduto. “Our intent is to fight this lawsuit vigorously.”