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Does A Casino Tax Make Sense?

Added: Aug. 15, 2016

That is the question of the moment that only just recently started being asked. Asked by lawmakers from the state of Pennsylvania, that is. Here’s what this is all about. You may already know that like quite a few other states around the U.S., the Pennsylvania legislature has been scrambling recently to fill a rather gaping hole in the state budget. How big a hole are we talking about here? Would you believe that the State of Pennsylvania is about $1Billion short? Yes, that is Billion with a big ‘B’.

You won’t be surprised at all to learn that Pennsylvania legislators took a good hard look at the size of the revenue stream flowing into the existing gambling operations and came to the obvious conclusion that the state needed its fair share. As a result, despite quite a bit of pushback from the gambling industry in the state, as of this writing, each and every gambling establishment will be paying a higher tax on so-called table games.

For the record, table games have been subject to a 14% tax rate for some time. Under the new law, this table game tax rate is now 16%, or 2% more. Although 2% may not sound like such a big deal, that 2% tax bump is projected to bring in another $17 Million per year in additional tax revenue. Pay attention to the fact that the $17 Million per year amount only represents the additional amount. In other words, it is rather obvious that Pennsylvania is extracting a rather hefty tax on existing casinos and gambling facilities.

Interestingly, at this point it is not clear how this will play out when and if online gambling legislation makes it all the way through the legislative process and gets signed into law. Recall that quite a number of online casino pundits continually point to the state of Pennsylvania as the next state in line to legalize online gambling action.

One would suppose that once approved, the Pennsylvania taxes and fees would apply equally to online gambling sites that are approved. After all, as you must have noticed when any sort of government entity enacts a tax or fee, that tax has a way of growing and expanding over time. Rarely, if ever do such fees and taxes ever go away.

So what does all of this mean? Actually, the meaning is rather simple and easy to understand. Casino action and increasingly online casino action is becoming increasingly popular. States such as Pennsylvania are simply reaching out and demanding a piece of the gambling revenue pie.