Pennsylvania Casino Closures Cost State $424M in Lost Taxes

Posted on: August 11, 2020, 12:49h. 

Last updated on: August 11, 2020, 01:29h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Pennsylvania casinos were closed for nearly three months this year by the coronavirus, and the government-ordered shutdowns of the gaming operations was a costly decision for all parties involved.

Pennsylvania casinos revenue tax
Pennsylvania casinos are back open under strict health safety measures, including plexiglass dividers at table games, such as the ones seen here at Rivers Casino in Philadelphia. (Image: FOX Philadelphia)

Brick-and-mortar table games and slot machines missed out on nearly $1 billion in gross gaming revenue (GGR) because of their mandatory suspensions. In 2019, Pennsylvania’s 12 commercial land-based casinos won $968.8 million during the same period.

As a result, Pennsylvania, which taxes casinos at some of the highest rates in the entire country, missed out on roughly $424.2 million in tax income.

How exactly taxpayers will be affected remains to be seen. But entities that typically receive tax money from casino revenues, including school districts for property tax relief, should expect and likely will see a decrease in funding in the coming fiscal years,” explained the Allegheny Institute for Public Policy.

Pennsylvania casinos share 54 percent of their slot machine win with the state, and 16 percent of their table game money.

Internet Lifeline

Fortunately for Pennsylvania casinos, the state is one of only four that has online casinos, the others being Delaware, New Jersey, and West Virginia. Nevada has online poker, but not interactive slots and table games.

In the immediate month following the shuttering of the brick-and-mortar casinos, online gaming networks experienced a surge in play. April 2020 GGR from internet operations surged 73 percent compared with March 2020, and skyrocketed 84 percent year-over-year. Internet casinos won $43 million in April, and $55.8 million in May, a 79 premium on May 2019.

“Call it intuition, or just plain luck that internet gaming made its debut in Pennsylvania casinos in July 2019,” added the Allegheny Institute.

Internet slots are also taxed at 54 percent, and tables 16 percent. Online taxes stemming from internet slots and tables totaled $80 million in the first half of 2020. In addition to online casinos, Pennsylvania sportsbooks are permitted to conduct mobile wagering. Over the past 12 months, more than $2.5 billion was bet on sports, with nearly $2 billion via online.

Casino Layoffs

Employment data from the Pennsylvania Gaming Control Board (PGCB) reveals the coronavirus had a devastating impact on the Keystone State’s gaming industry.

The number of workers employed in casinos totaled 16,617 last year. Most of those workers were furloughed during the closure of their workplaces. The PGCB’s 2019-20 fiscal year concluded June 30. Because of the pandemic, GGR fell 18 percent, total revenue coming in at $2.72 billion.

The pandemic has additionally bedridden any sort of vigor Pennsylvania casino operators had for their so-called mini casinos. The satellite gaming venues, authorized under the state’s 2017 expanded gaming act, were never real popular with the state’s full-scale Category 4 commercial casino operators.

Nonetheless, four companies — Penn National Gaming, Stadium Casino, Mount Airy, and Parx — made successful bids to acquire satellite casino permits. None have opened.

Penn National told Casino.org that their two satellite projects, in York and Morgantown, have been put on hold by the coronavirus. Construction was underway on both facilities.