Mount Airy Casino Threatens Additional Lawsuits Against Pennsylvania

Posted on: October 25, 2016, 02:00h. 

Last updated on: October 25, 2016, 10:57h.

Mount Airy Casino Pennsylvania local share tax
Pennsylvania House Gaming Oversight Committee Chairman John Payne, seen here with his hand raised, is one of many state lawmakers scrambling to make sure the state’s Supreme Court ruling in favor of Mount Airy Casino doesn’t cost local towns millions of dollars. (Image:

Mount Airy Casino in Mount Pocono, Pennsylvania, is fresh off its monumental win in the state’s Supreme Court, and now the resort is flexing its muscles.

In late September, the Pennsylvania Supreme Court ruled that the state’s $10 million minimum gambling tax, or two percent of a casino’s gross slots revenue, whichever is greater, was in violation of the Uniformity Clause.

Since no casino has ever pulled in $500 million from slots in a given year, gaming companies are all writing varying tax checks at unequal rates.

The $10 million fee goes towards local counties that allow casinos to operate in their cities and towns.

Since the Supreme Court ruling comes with grave consequences for communities that heavily rely on the tax revenue, the high court stayed its decision for 120 days to give the state legislature time to amend the tax law.

But Mount Airy said this week through its legal team that the current negotiations in Harrisburg won’t suffice.

“What we’re hearing is they’re coalescing around the idea of doing a flat dollar amount, as a replacement for the current levy of two percent, or $10 million, whichever is greater,” Michael Sklar, a lawyer for Mount Airy, told The Philadelphia Inquirer. “We’ll be right back in court. We’re prepared to file the litigation again.”

The Four Percent

Sklar believes a flat tax payment for casinos still violates the Uniformity Clause because the tariff wouldn’t be based on revenues, and therefore isn’t uniform. Pennsylvania’s Uniformity Clause dictates, “All taxes shall be uniform upon the same class of subjects.”

“Imagine that we are going to replace the current income tax with a flat $5,000 tax,” Sklar told the Pocono Record. “If you look at a person making $20,000 a year, that’s an effective tax rate of 25 percent. A person making $500,000 is paying an effective tax rate of one percent.”

Mount Airy is recommending that the legislature amend the casino tax law to require casinos to pay four percent of their gross slot revenue to their local municipalities.

In 2015, Mount Airy generated $139.1 million in slot income. Instead of paying $2.78 million to Mount Pocono based on the two percent tax rate, it paid $7.22 million more to reach the $10 million threshold.

Should politicians in Harrisburg take Mount Airy’s recommendation, Mount Pocono would be out about $4.4 million based on 2015 revenue.

Casino Said, State Said

It appears additional legal action might be forthcoming. Though Sklar believes a flat tax would be unconstitutional, the Pennsylvania Department of Revenue has proposed precisely that.

“We’re going to do whatever we can to make sure these municipalities that have counted on this money for a decade don’t end up with a hole in their budgets,” State Sen. Pat Browne (R-District 16) told The Morning Call, a daily newspaper based in Allentown. “That’s our goal.”

The state will do everything in its power to keep casinos on the hook for $10 million. But Mount Airy, armed with the Pennsylvania Supreme Court on its side, will do everything in its power to reduce its tax burden.