Pennsylvania Casinos See Their Taxes Increased, Sheldon Adelson’s Sands Bethlehem Suffers Most
Posted on: July 27, 2016, 04:00h.
Last updated on: July 27, 2016, 02:40h.
Pennsylvania casinos will soon begin paying higher taxes on revenues generated at their tables. Lawmakers in Harrisburg continue to look for new sources of income to bridge a $1 billion budget gap in the state’s spending plan for the upcoming fiscal year, and gambling is enemy #1.
The Republican-controlled legislature recently approved increasing taxes on casino table games from 14 to 16 percent, a seemingly modest hike that in reality will pay substantial dividends. According to calculations, the state stands to receive an additional $17 million annually from the two percent bump.
The 16 percent tax rate goes into effect next week.
“This one sort of came out of nowhere,” Sands Casino Resort Bethlehem CEO Mark Juliano told The Morning Call in Allentown. “We’re not happy about. Pennsylvania is already the highest tax environment for casinos, but we’ll deal with it.”
Toes in the Sands
The tax increase on Pennsylvania casinos will most impact the Sands Bethlehem resort. Owned by billionaire Sheldon Adelson, one of Donald Trump’s biggest financiers in the 2016 presidential election, Adelson’s venue is the most profitable casino in the Keystone State.
Through June 30, 2016, Sands Bethlehem has generated over $228 million this year in gross table gaming revenue.
At 14 percent, Sands will pay the state $31.92 million in taxes. At 16 percent, Sands would be on the hook for $36.48 million, a difference of $4.56 million.
Of course, those posted revenues won’t be subject to the two percent surcharge, but the difference clearly illustrates the forthcoming impact on Sands.
Juliano said the resort will likely be forced to reduce free stays and meals for VIPs and rewards customers.
$100 Million Problem
Pennsylvania lawmakers approved a budget this month that Governor Tom Wolf (D) allowed to pass without his signature. The $31.6 billion budget assumes $100 million in new gambling revenues, but where those funds are coming isn’t yet clear.
The General Assembly will reconvene in September to iron out the details. On the agenda includes online gambling and expanding slot machines to airport terminals and off-track horse racing facilities.
In the most recent proposal, current land-based casinos would be given the opportunity to purchase Internet gaming permits for $8 million, with revenues taxed at 16 percent. Off-track betting venues and casinos could also partner to offer slots at a cost of $5 million per location, and airport slot fees would be dependent on passenger traffic.
Daily fantasy sports is also expected to be in the mix when the legislature hones in on gaming expansion.
Nothing is set in stone and details of the individual outlines could change.
Casinos have already shrugged off the state’s proposal to allow gambling facilities to serve alcohol between 2 and 6 am due to the expanded alcohol license’s $1 million price tag.
Pennsylvania has some of the highest gambling taxes in the country. The state has an effective rate of 55 percent on gaming revenue, with 34 percent going directly to the state and 12 percent to the Pennsylvania Race Horse Development Fund.
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