PA Casinos Take Legal Action Over Slot Machine Taxes

By Jerry Smith Staff Writer Updated: 08/14/2024

Jerry Smith Staff Writer See Full Bio

Jerry’s greatest advantage is his extensive experience on the casino floor. His time as a casino manager taught him everything about what makes a player tick. Besides being a skilled poker player, he has deep knowledge of all live table games and gambling regulations in the US.

Twitter X

Slot Machine Taxes

According to recent reports, a group of casino operators in Pennsylvania have decided to take legal action over the taxes imposed on slot machine revenue in the state. It has emerged that a dozen casino owners have come together to file a lawsuit contesting the state’s tax demands on slot machine revenue, which stands at 54 percent.

The lawsuit was filed by the casino operators in late July, and it could have an impact on around $1 billion in state taxes in Pennsylvania. The taxes raised from slot machine revenues are currently allocated toward a range of projects and services, including economic development initiatives and property tax rebates.

Unequal Taxation Policy

One of the key things that the casino operators argue in the lawsuit is that the state operates an unequal taxation policy. While casinos are taxed at 54 percent on slot machine revenues, there is no tax levied on skill game terminals that are located in stores and bars.

In the lawsuit, the casino operators claim,

There is no basis for requiring licensed entities to pay about half of their slot machine revenue to the Commonwealth while allowing unlicensed entities to pay no tax on such revenue.

Those involved in the lawsuit are demanding standardization of taxes across the industry. They want to see all gaming platforms taxed at the same rate, or taxes on slot machines to be scrapped completely to ensure the taxation regime is fair.

A number of household names are involved in the lawsuit, including Caesars Entertainment and Penn Entertainment. According to the American Gaming Association, the state’s revenue intake is higher than any other state in the country, so the implications of the lawsuit could be far-reaching.

It was further reported that the outcome of this lawsuit could be affected by another lawsuit that is currently being considered by the Pennsylvania Supreme Court. This lawsuit involves the state attorney general’s office and the skill game manufacturer, Pace-O-Matic Inc.

The lawsuit relates to whether skill games should be classed as unlicensed gambling machines, and whether they should be removed from venues other than casinos.

Billions Gambled on Slots in Pennsylvania

The impact of this latest lawsuit filed by casino operators could be huge for Pennsylvania, and it could have a profound effect on state finances.

Casinos in the state have around 25,000 regulated slot machines, and these are extremely popular with gamblers. Data shows that last year gamblers wagered nearly $32 billion on these slots, and the losses came in at more than $2.4 billion. The revenue was split almost evenly between the state and the casinos, with the state taking slightly more than half.

Given the amount of money that is raised by the high tax rate on casino slot machines in the state, there is a lot at stake. Loss of this revenue could mean state coffers suffer to the tune of billions, and this could have serious consequences when it comes to funding services and projects in Pennsylvania.