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.
