Sands holds steady on refusal to pay
Two more casinos have agreed to voluntarily make payments on the $10 million minimum host-community fee struck down as unconstitutional last fall by the Pennsylvania Supreme Court, as state lawmakers prepare to draft a new local-community gaming revenue tax that will pass constitutional muster.
In the fall, the high court, ruling on a lawsuit brought by Mount Airy Casino Resort and other casinos, held that the portion of casino revenues set out by the 2004 gaming law for local host communities—2 percent of revenues or $10 million annually, whichever is higher—violated the tax uniformity clause of the state constitution, as it resulted in higher proportionate fees for smaller casinos.
State lawmakers, unable to muster enough support for a legislative fix during the November lame-duck session of the General Assembly, will now scramble to pass a new local host fee before mid-April, when the first quarterly payment on the new year’s fees comes due.
In the meantime, several casinos have pledged to continue payments on the original $10 million minimum until the legislature institutes a new fee. The latest two are Pittsburgh’s Rivers Casino, which announced an agreement last week with the administration of Mayor William Peduto to pay the city $10 million in 2017; and Valley Forge Casino, which has agreed to continue paying Upper Merion Township 2 percent of its slot and table-game revenue should the General Assembly fail to come up with a new fee arrangement by January 27, the deadline for a new law that was set by the Supreme Court in its late September decision.
The two casinos join Harrah’s Philadelphia in Chester, Parx Casino in Bensalem and SugarHouse in Philadelphia in pledging to continue support for their local communities. The Rivers agreement was expected, since the Pittsburgh casino is owned by the same group as SugarHouse, headed by Chicago’s Neil Bluhm. “I want to thank Rivers Casino for their commitment to the city,” Peduto said. “The next step is working with legislators in Harrisburg to find a long-term solution to this funding gap, which is impacting cities and counties throughout the commonwealth.” (The city had already prepared plans for cuts in police and fire-fighting budgets in the absence of casino revenues.)
Meanwhile, one operator that has so far refused to maintain payments under the old system is Las Vegas Sands, whose Sands Casino Resort Bethlehem provides 12 percent of that city’s budget. In late December, local officials fought back. Northampton County District Attorney John Morganelli wrote a letter to the casino threatening to refuse to prosecute cases involving chip thefts or bad checks at the Sands if the casino continues its hard line on the local-community fee.
Bethlehem Mayor Robert Donchez criticized Sands officials last week for refusing to commit to the host fee, and for failing to follow through on its master plan to redevelop the remaining buildings in the former Bethlehem Steel site on which the casino sits. “Many of us who voted for the casino voted because of their commitment to the host fee and their commitment to developing the BethWorks site,” Donchez, who cast the deciding vote on the Sands casino approval, told the Allentown Morning Call.
Morganelli was more direct in his criticism in a letter he sent last week to Sands President Mark Juliano: “As perhaps the most successful casino in the state of Pennsylvania, it is disheartening to see that the Sands does not believe it has to be a good corporate citizen.”
Las Vegas Sands spokesman Ron Reese took issue with Morganelli’s characterization.
“In no way has this company moved off of its commitment to being a good corporate citizen, and anyone suggesting otherwise is being disingenuous,” Reese said. “We opened a casino and hotel in the middle of the Great Recession, created more than 2,500 jobs and have been very active in the community. We remain committed to having the best resort casino on the East Coast, and we’re disappointed in any view that suggests otherwise.”
Reese pointed out that a recently announced $90 million expansion at Sands Bethlehem would be much more valuable than any $10 million payment.
“The success of that expansion will drive more development in the future,” Reese said. “This company has never wavered in its commitment to the community.”
State Senator Kim Ward scheduled a closed-door meeting with representatives of all 12 state casinos for January 3 at the state Capitol to discuss the changes that must be made to the gambling law. The local host fee is at the top of that agenda, which also includes possible expansion of gaming to include internet wagering, slots at airports and off-track betting facilities and other issues.
The host-community fee issue is among the top priorities in the Pennsylvania legislature’s new session, which began last week. Ward’s closed-door meeting last week notwithstanding, no legislation is expected to receive serious consideration until the end of January.
