PA Gaming Revenues Continue to Decline in Wake of Crippling Tax Rate

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Slot machine revenues in Pennsylvania have started the year in decline, but the state government continues to post big wins.

Earlier this month, the Pennsylvania Gaming Control Board posted its monthly report for total gross revenue and tax revenue generated from the play of slot machines at Pennsylvania’s 12 brick and mortar casinos during February 2017.

Gross revenue from slot machines fell 3.95 percent to $192,268,470 in February compared to $200,166,274 in the same month last year. This followed the month of January 2017 when the Pennsylvania Gaming Control Board also reported a 2.4% decrease in slots revenues from January 2016.

Of course, Pennsylvania tax revenues from slot machines still amounted to $102,145,159 in February 2017, thanks to the massive 54 percent tax rate on slot machines in the state.

While Pennsylvania’s casinos are only forced to pay a 16 percent tax on table games, the slots rate forces the state’s casino the pay the highest overall tax rates in the country.

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Proposed legislation in the state that would legalize online gambling calls for a much more competitive 14 percent tax rate on Internet gaming operations.

Pennsylvanians are still gambling. In fact, gross revenue from gambling at table games in Pennsylvania casinos in January 2017 rose 2.1 percent over January of last year. However, thanks to the decline in slots revenue, overall gaming revenue actually decreased approximately 1.2 percent in January over the same moth last year.

Plus, one third of Pennsylvania’s casinos did managed to post increases in slot revenues in February, including Lady Luck Casino (Up 18.96 percent), Valley Forge Casino Resort (Up 7 percent), Sands Casino Resort Bethlehem (Up 0.93 percent), and Rivers Casino (Up 0.12 percent).

The obvious migration to tables games elsewhere may be a direct result of the oppressive slot game tax rates, as casinos are forced to reduce the return-to-player rates on the slots to keep up, driving gamblers to other games.

It remains to be seen if PA online gambling legislation or a renegotiation of the tax rates will help turn things around, or if the Pennsylvania casino industry will continue in decline.

The Pennsylvania Gaming Control Board says there are 10 stand-alone and racetrack casinos, plus two smaller resort casinos, in the state, expected to generate approximately $1.4 billion in tax revenue annually. It also says the largest portion of that money is used for property tax reduction for Pennsylvania homeowners, even as it continues to decline.

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Marty Derbyshire has been covering online gambling for various industry media outlets since 2007.

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