In a decision rendered yesterday, the PA Supreme Court severed some of the language contained in Act 71 of 2004, the act that legalized slot machine gaming. The language, contained in 1403 (c) 2 and (c) 3, which outlines host fees that counties and municipalities receive from facilities that have slot machines within their boundaries.
The opinions can be read here.
Allegheny County, a county of the second class, and Pittsburgh, a city of the second class, host a category 2 casino, the Rivers Casino. A category 2 casino is distinguished from a category 1 casino and a category 3 casino in that the former is primarily for the licensed horse racing tracks in the state and the latter is primarily reserved for resort type facilities. The law states that for a category 2 facility in a second class county the host fee is 2% of gross terminal revenue, and for a second class city, 2% or $10 million, whichever is greater.
It was the language of the allocations to municipalities, primarily that a casino in Philadelphia (a combined city-county) had no dollar threshold that led the Mt. Airy casino to bring the lawsuit. Earlier this summer Rivers Casino had briefly joined the suit. Even though the lawsuit was primarily focused on the municipal share (this is where a % or dollar amount was specified) the Court also severed the language on the local share assessments to counties, which by and large are all 2% (the law does specify that in certain classes of counties 1% goes to counties but must be used for municipal grants).
The opinion is stayed for 120 days, so the General Assembly would have time to rework the local share assessment language (“…in order to afford the General Assembly an opportunity to evaluate potential remedial measures”). Probably what would make sense is to move to a flat dollar amount for all facilities regardless of the class of county or municipality in which they are located. For example, $10 million for the municipality and $5 million for the county. And in future years, if casinos become more profitable, this could be revisited.
