City Wants Guarantee for Remainder of Host Fee

City Wants Guarantee for Remainder of Host Fee

Nearly a year ago–September 28th will mark the anniversary–the Supreme Court struck down language in the 2004 law legalizing slot machine gaming as it pertains to the local share assessment (host fee) that slot facilities (at horse racing tracks and stand alone locations) had to remit to the county and municipality where they were situated. The Court gave the General Assembly 120 days in order to craft a solution to the municipal language that said a host fee had to be either 2% of gross terminal revenue or $10 million, whichever was greater (the deadline was extended by the Court).

The most recent proposal, which has been caught up in the budget impasse and the talk of expanded gaming, would have mandated a 2% share of the annual licensing fee casinos pay, thus moving it away from the amount of play (measured by gross terminal revenue) and making it a $10 million annual payment.

In the interim, with no language outlining how a casino is supposed to pay its hosts, several casinos have carried out voluntary agreements with municipalities and/or counties.  We were able to find published reports for six (there are ten category 1 and 2 casinos)–Mohegan Sun, Parx, Harrah’s, Penn National, Rivers, and Presque Isle . 

In fact, the Sands, although it has made payments this year under the ruling (according to page 21 the 2015-16 report of the Gaming Control Board, the casino made $16 million in payments from slots revenue to Lehigh and Northampton Counties, and the Cities of Allentown and Bethlehem) it is the City of Bethlehem that receives the most (55% of the $16 million total) and wants to gain assurance it is going to get its full payment as it would if there had been legislation in place.  The City wants to make sure it gets what it budgeted, the casino is taking a wait and see approach on the remainder of what they have not paid, noting that the host fee essentially does not exist at the present time.

It might take a budget agreement to sort out the whole host fee issue.