The economy purportedly is recovered from the Great Recession, but in Pennsylvania there’s apparently a crisis that sports betting taxes could help alleviate. But it might not be good for the casino industry.
Under a piece of legislation (House Bill 498) introduced Feb. 12 by Pennsylvania Rep. Tina Davis, all of the sports betting tax revenue that the state currently collects would be earmarked to helping Pennsylvanians on the verge of effective homelessness. Davis wants to use the 34% state sports betting tax for the Keystone State’s Property Tax Relief Fund.
“Pennsylvania homeowners continue to face rising property taxes,” Davis wrote in a memo last month calling for support for her proposal. “Seniors on fixed incomes are especially challenged by the issue, particularly those who struggle to pay for food and medications and still be able to afford to keep their homes. Given this difficult and challenging situation, it is incumbent upon us as concerned public officials to do everything we can to help provide much-needed property tax relief to our citizens. My bill would amend this new statute to provide that the net revenues generated from sports betting be utilized to provide property tax relief for our citizens.”
Under Davis’ plan, the 2% sports betting revenue cut that local governments receive via the Pennsylvania General Fund would remain untouched.
“Gaming was authorized in Pennsylvania with the intent to provide property tax relief for hardworking Pennsylvanians, so expansions to gaming should go toward increasing property tax relief for our constituents,” Davis added. “Please join me in seeking to provide additional property tax relief for this Commonwealth’s homeowners.”
The additional funding would be in addition to the hundreds of millions of dollars Pennsylvania slots and table games already contribute annually to the fund.
The potential drawback
It might sound a little callous to point this out, but Davis’ bill, if enacted, could create a major hurdle to Pennsylvania one day reducing the state sports betting tax rate, the highest of its kind in the country. Once the state’s take starts flowing into the Property Tax Relief Fund, common wisdom says it would be hard to ever reform the tax rate.
Pennsylvania’s first brick-and-mortar sportsbook opened in November, so the state’s industry is still in its infancy. Pennsylvania also legalized mobile sports betting statewide, but none of the state’s 12 casinos have launched that offering yet. The mobile launch could come by the summer and greatly grow the state’s sports betting market. It would make sense to let the market mature before setting in stone the 36% effective tax rate on sports betting win.
Pennsylvania also has a $10 million licensing fee for sports betting, which would similarly be untouched under Davis’ proposal. That fee goes into the General Fund as well.
Davis’ proposal isn’t without merit. According to a report last year from CBS Philly, Pennsylvania homeowners were expected to receive about $300 annually in property tax relief under the state’s legalization of gambling more than a decade ago. In 2018, the average savings were about $180.
Part of the problem has been that gaming revenues for the casino industry have been flat for several years.
Davis has tried before
Davis had the same proposal on the table last year, but it didn’t advance. Her measure then had 10 co-sponsors. Her legislation this session has 13 co-sponsors.
The one-page bill sits with the House Gaming Oversight Committee, where it was introduced last year.
The efforts from the Bucks County Democrat come amid a larger conversation about the burden of Pennsylvania property taxes. There have been talks of eliminating them altogether.
Only a few Pennsylvania sportsbooks were open in December, the most recent month from which revenue data is available. Pennsylvania collected more than $700k in sports betting tax revenue from December alone. A 2017 study commissioned by the U.S. casino industry projected that Pennsylvania could eventually see roughly $100 mm in annual sports betting tax revenue.
Photo by Andrey Popov / Shutterstock.com
