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Pennsylvania casino owners leery of table games tax plan

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Wednesday, Oct. 7, 2009

Casino operators in Pennsylvania pay some of the highest tax rates on their revenues in the nation, a fact many of them point out to state legislators as the General Assembly considers bills to legalize — and tax — table games.

While Pennsylvania's 55-percent gross tax rate is in line with most states' racetrack-casino taxes, it is the highest rate in the country for stand-alone casinos. The state Legislature is considering proposals to legalize table games with tax rates from 12 percent to 34 percent, which is closer to the range of tax rates for stand-alone casinos in other states.

Lawmakers also are considering one-time, table games license fees of up to $20 million.

"State officials are kind of trying to balance a desire not to totally open up the state to gambling, but at the same time to have it be profitable for (casino) owners," said Ian Pulsipher, a gambling policy specialist at the National Conference of State Legislatures in Denver. As budget crises spread across the country, more states have tried to expand gambling, he said.

Pennsylvania has been without a budget since July as lawmakers battle over how to fill a gap initially estimated at $3.2 billion. They are looking at revenue from the tax on table games to help pay the bills.

"State finances are really what drive gambling expansion," Pulsipher said. "Where we are now is that states are still in a really tough financial spot. They've already been making cuts to everything they can cut. Gambling is one of the few revenue opportunities out there that doesn't involve raising taxes."

At least one Pennsylvania casino said it will not add table games if the tax rate is too high. Owners of the Meadows Racetrack & Casino in North Strabane are backing a bill that taxes table games at 12 percent and charges a $10 million license fee.

"We want people to understand, if the tax rate and the fees are too high on table games, it simply won't work for us," said casino spokesman David La Torre. With the millions of dollars in regulatory fees paid to the Pennsylvania Gaming Control Board, the casino pays close to 60 percent of its gross revenue to the state, he said.

"We're not going to do table games if it doesn't make sense," he said.

The lowest tax rate on stand-alone casinos is Nevada's 8 percent, according to data from the American Gaming Association. The highest, behind Pennsylvania's, is Illinois, where the graduated tax rate can surpass 50 percent, but averages 36.1 percent.

Racetrack casino tax rates range from a low of 23.2 percent in Iowa to Rhode Island's 72.7 percent tax rate.

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