Former Pennsylvania governor condemns proposed skill game tax rate

June 19, 2024 7:38 PM
  • Sam Bentham, Special to CDC Gaming Reports
June 19, 2024 7:38 PM
  • Sam Bentham, Special to CDC Gaming Reports

In an opinion piece in the Erie Times-News, former Pennsylvania Governor Ed Rendell condemned plans to introduce lower tax rates on skill game machines compared to other types of gambling in the state. The issue has come to the attention of Pennsylvania lawmakers as skill games have spread rapidly across Pennsylvania.

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Two officials have proposed new rates for skill games to replace the current 52 percent tax that applies to most casino games in the state: Governor Josh Shapiro has advocated 42 percent, and Senator Gene Yaw 16 percent.

“Pennsylvania’s Constitution requires that taxes be imposed in a ‘uniform’ manner. Specifically, taxes must be the same for the same class of property,” Rendell wrote, suggesting that the introduction of a lower tax rate for skill games, which are claimed by some to be similar to other gambling machines like slots, would constitute a breach of the constitution.

The former governor, who served from 2003 to 2011, referenced the decision he faced regarding gambling tax rates when negotiating the state budget for 2004-2005, which included the Gaming Act. The Gaming Act brought many kinds of casino gambling to the state, including slot machines. He recalled “gaming industry representatives bombarded me with messages and meeting requests. They wanted to convince me that the slot machine tax rate that I proposed — 52 percent, the highest in the country — was too HIGH.”

He highlighted where the revenues from those high taxes are directed, including boosting the agricultural community through support for horse and harness racing, lowering the property taxes that support schools, and economic development projects.

Talking about the benefits of the higher tax rate on gambling, Rendell commented, “Pennsylvania’s legal gaming industry reliably provides the commonwealth with more gaming tax revenue than any other state in the nation, including Nevada and New Jersey. In fiscal year 2022-2023 alone (the last full year on record), Pennsylvania’s gaming tax revenue totaled $2.36 billion.”

Rendell concluded that the state should not support any “sweetheart deal” for skill games as it will “cost Pennsylvanians millions of dollars a year in corporate tax revenue.”