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Nazareth, Pa., United States

Tuesday, July 26, 2016

Are Casino Host Fees Legal?

Three Pennsylvania casinos are challenging the constitutionality of the host fee it must pay each year to their municipal hosts, according to The Pittsburgh Post-Gazette, Rivers Casino (Pittsburgh), Mount Airy (Poconos) and Harrah's (Philadelphia) have each filed complaints alleging that the host fee, or "local share tax," is unconstitutional. They are being heard by the state Supreme Court.

Under current law, casinos are subject to two different rates of taxation. If gross revenues are more than $500 million, the host fee is two per cent. But if revenues fall under that amount, the host fee is $10 million. So a casino with gross revenues of just $1 million could hypothetically be subject to a $10 million host fee.

Pennsylvania's Constitution (Article VIII, Section 1), states that “[a]ll taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be collected under general laws." This single sentence is why Governor Wolf is unable to impose a graduated income tax.

Casinos argue that the Gaming Law unconstitutionally imposes two different tax rates on the same class, i.e. gaming houses with licenses. The Rivers lawsuit calls this "arbitrary and not rationally related to any legitimate governmental purpose.”

If the Sands Casino were to file this kind of suit and win, it would have a devastating impact on Bethlehem. In his State of the City, Mayor Bob Donchez said that without the $9.7 million host fee he received last year, he'd have to increase taxes 39% or lay off 110 cops.


Anonymous said...

It is time to look at the local share distribution in the LV. It is unconsionable that over $100M dollars has been disbursed in the LV and a municipality like Whitehall, Lehigh County's 2nd largest municipality with a funded police department has been rejected 3 times by Lehigh County and has received ZERO benefit. Northampton County municipalites have recevied $8,926,655 in grants from Monroe County share while Lehigh County has received $6,718,903 for distribution. By law, Lehigh County awards table games to contiguous communities however has restricted the slots award to only two other communities. How is it possible that a Northampton municipality 35 miles qualifies for gaming grants however if you are 5 mikes from the Sands casino and located in Lehigh County need not apply. Time fkr Harrisburg to review this issue. I would love to participate in a Legislative hearing on matter. Deal me in.

Anonymous said...

Why would the mayor's ax go directly and/or exclusively at cops? Are there no hall walkers in city hall? Pareto's Principle says there are lots.

Anonymous said...

If you look at Bethlehem's history, the beg what the need and spend on what the want. For years Bethlehem Steel carried Bethlehem, now the Casino. How lucky can you get. It's about time Bethlehem grew up and count your blessings. Lehigh County, you got your enterprise zone in Allentown and are trying to steal any business in Northampton County to move to the zone, quit your complaining. If any national corporations such as PPL or Mack Trucks or Air Products had to pay like the Casino, they would all move out of the State.

Anonymous said...

A 39% tax increase? Whatever happened to the "reduce property taxes" sales pitch they used to get the casino? What a load of BS.

Jeffrey Anthony said...

You know I love your blog, Bernie; content-wise it's A+ and very often courageous in the topics you tackle.

But, man, I *hate* the new headline typeface you're using. And the point size within the article bodies too. Please, please go back to the comforting, stodgy old layout.

OK, I'm done griping now.

Anonymous said...

The City of Bethlehem's real estate taxes are already the 4th highest in the county, behind Easton, Hellertown, and Walnutport. A 39% increase would make it #2.

Anonymous said...

Amazing this wasn't uncovered years ago. Why is that?