Tax earnings from slot machines keep property taxes low in Pennsylvania

Pennsylvania gambling

 

Pennsylvania’s gambling scene brought in almost $1.4 billion in tax last year, but slot revenues continue to decline.

Slots made up for 71.9% of the revenue. It is thought that changes to gambling laws may continue to affect this number in the years to come.

The machines have, in fact, fallen in revenue since the first Pennsylvania casino was opened in 2010 when slots accounted for 82.2% of tax revenue.

The Pennsylvania gaming board is said to be responsible for the year-on-year drop, after introducing online games, mobile betting, in-person sports betting, and VGTs (video gaming terminals) at truck stops.

Casinos in the state are charged a slot tax rate of 54%, while table games demand just a 16% return.

For that exact reason, it’s a wonder that the state is allowing slot revenues to go into such decline.

Casinos have been happy to pay such a high tax rate on their machines up until now, thanks to the popularity of the games, but it seems the enthusiasm is dropping and casinos are not prepared to hang around.

Three casinos cut a total of 684 slot machines across the month of August, with more to be dropped if revenue continues to fall.

Each machine normally brings in around $90,000 in bets each year.

The reduction in revenue is immediately affecting the state’s property relief fund, which was the whole reason behind the introduction of gambling in the first place.

Despite the state’s efforts to introduce online gambling and VGTs bringing in the same tax

rate, vendors are being put off downloading and offering the games due to a lack of interest from gamers.

These machines are limited to bets no higher than $5.  Truck stops are allowed a maximum of five machines on site, automatically stunting revenue.

Chairman of the House Appropriations Committee Joseph Markosek predicted income of about $14M annually from VGTs, which are located at over 150 participating truck stops.

Terminal revenue for these machines would, therefore, be less than half of that brought in by slot machines.

As a whole, however, the gambling scene in Pennsylvania remains strong. 

The state got off to a modest start in the world of online gambling this year when its three main gambling resorts took in $812,306 between July 15 and 31.

Together, Hollywood Casino at Penn National Race Course, Parx Casino in Bensalem, and SugarHouse Casino in Philadelphia recorded  $517,712 in revenue from online slots in July.

PlaySugarHouse broke records in May when it launched the state’s first desktop and mobile sportsbook.

Sports betting has struggled to take off, however, after a tax rate of 36% was introduced, the nation’s highest-ever at the time.

That title has now been taken over by Rhode Island, whose tax is 51%.  However, as expected, both are struggling to get companies to apply for licenses.

It is thought that around 80% of Pennsylvania’s sports betting will soon take place online.

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