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The Pocono casino’s beef is with the Pennsylvania law that says casinos must pay a yearly $10 million “host” fee, in which they give the amount to the municipality in which they’re located.
The fees are not an issue for successful casinos bringing in huge revenues, but Mount Airy reps say the substantial fee creates hardship for some casinos, and that the fee is unconstitutional.
Mount Airy says fee isn’t fair, uniform
In an article earlier this week, The Morning Call outlined Mount Airy’s position. The argument boils down to the interpretation of the state constitution’s use of the word “uniform” when talking about how taxes should be uniform “upon the same class of subjects.”
The host fee’s amount is an either/or proposition. Either casinos pay two percent on $500 million in gross slot machine revenues, or they pay $10 million.
Since the nine casinos who are subject to the law don’t bring in the $500 million, they pay the two percent on slots revenues. Then they pay out of pocket to make up the difference between those taxes and $10 million.
More from the Morning Call:
“That creates an unequal tax that has some casinos paying a much bigger portion of their revenues to their host community. So, while the $10 million paid by Pennsylvania’s most lucrative casino, Parx in Bensalem, was just 2.8 percent of the casino’s 2014 gross slot machine revenue, the $10 million Mount Airy paid was more than 7 percent of its $140 million in revenue for 2014.”
Mount Airy’s attorney, Michael Sklar, said the casino’s demands are simple: “uniformity and fairness.”
Communities say fee is necessary
The host municipalities in which the casinos are located are also crying foul at the prospect of the yearly fee being changed.
Sen. Pat Browne, head of the Senate Appropriations Committee, told the Morning Call that getting rid of or cutting back on the tax would put communities in dire situations.
“I don’t know exactly how we’d go about it, but given that this fee has been established for a decade,” Browne said, “we’re not just going to let this money be stripped from municipalities that rely on it.”
Mount Airy not the first casino to go after host fee
Earlier this summer Rivers Casino raised the same issue. On June 27, the casino’s holding group, Holding Acquisitions Co., sued the Department of Revenue and Secretary Eileen McNulty.
Like Mount Airy, Rivers said in a statement that it didn’t want to be treated differently than other casinos.
Meanwhile, Pittsburgh Mayor Bill Peduto’s office released a statement saying it would fight the Rivers lawsuit.
“Rivers Casino knew about this funding commitment prior to applying for their license, and knew this funding was due to the city for hosting them,” Peduto said.
About one month later, the casino dropped the suit without explanation.
Harrah’s Philadelphia has also fought the fee in court.