Casino Local Share Payments Stop in Some Pennsylvania Counties, Towns Out Millions

Posted on: August 9, 2017, 06:00h. 

Last updated on: August 10, 2017, 07:49h.

Casino.org Staff Writer Read More
Expertise: Commercial Gaming.

Casino local share checks delivered quarterly to counties in Pennsylvania have stopped in certain regions, and that’s taking a substantial financial toll on some local governments.

casino local share Pennsylvania
Once a robust manufacturing city due to Bethlehem Steel, the eastern Pennsylvania town of Bethlehem fell on tough times after the steelmaker filed for bankruptcy in 1995. Welcoming Las Vegas Sands was thought to be one way to change its economic fortune, but now promised casino local share payments have stopped. (Image: Associated Press)

In September, the Pennsylvania Supreme Court ruled on the side of the Mount Airy Casino Resort that the state’s law mandating that each gambling facility pay $10 million, or two percent of its gross slot revenue, whichever is greater, annually to its host community violates the Uniformity Clause of the Pennsylvania Constitution.

Knowing that local towns heavily rely on the four casino checks a year to fund vital government services, the high court delayed the impact of its ruling 120 days. When the legislature failed to pass new rules to assure that communities continued receiving the funds, the Supreme Court stayed its decision by another four months.

And Pennsylvania’s General Assembly still failed to act. With the final deadline in the rear view mirror, the state’s 12 casinos legally aren’t required to pay the $2.5 million quarterly disbursements. Most are, however, in good faith, but at least one is not: billionaire Sheldon Adelson’s Sands Bethlehem.

“From a cash standpoint, we’re good. But we’ll start to see a decline in that cash balance starting right now,” Bethlehem City Business Administrator David Brong told NPR this week.

The first quarterly payment with the casino local share no longer enforced is due this month.

Simple Fix

The issue is the way Pennsylvania wrote its casino local share law back in 2006. Since no casino in the Keystone State has taken in over $500 million in slot revenue in a single year, which would be the threshold to make the “or two percent, whichever is greater” come into play, companies are paying varying rates to make up the difference to reach the $10 million minimum.

A proposal was introduced that would change the legal statute to require casinos to pay 20 percent of their $50 million original slot license fee each year. A presumably easy solution that would have kept money flowing to towns that have allowed gambling venues to be built in their backyards.

But the local share issue seemed to get lost as the state worked to pass a budget, and gambling expansion became a key focal point.

Retroactive Payments

Governor Wolf (D) allowed an under-funded $32 billion budget approved by the legislature to be approved without his signature. The task now is to find a way to bridge the $2.2 billion financing shortfall that the spending blueprint creates.

Unwilling to raise taxes, the GOP is considering a variety of new forms of gambling to generate new income for the state. Video gaming terminals in bars and restaurants, satellite casinos, slot machines in airport terminals, daily fantasy sports and online casinos, and internet lottery sales are all being looked at.

Lawmakers have stated they hope to pass a resolution to the casino share debacle along with the final funding plan. The expectation is that however the $10 million problem is resolved, it will be retroactive to make sure casinos like Sands Bethlehem pay in full.