Pennsylvania Tom Wolfe Case Study
The Governor of Pennsylvania Tom Wolfe proposed a solution that would bridge the state budget gap that would also cause tax revenues received from the Keystone State’s twelve casinos to decrease. Wolfe proposed his idea to the American Gaming Association through a letter. In Pennsylvania, AGA represents Parx Casino, Sugar House Casino, Harrah’s Casino In Chester, Mohegan Sun Casino, Hollywood Casino at Penn National Race Course, Sands Bethlehem, Lady Luck Casino Nemacolin, and Lady Luck Casino Nemacolin in Farmington. These casinos represents a majority of casino operators in Pennsylvania.
The Governor proposed a new tax on promotional credit marketing programs, an important tool for casinos that incentivize customers to increase their real money wagering, spur increased visitation and empower casinos to respond to market conditions, customers’ preferences and the broader economic environment. Promotional credit marketing programs in casinos are similar to store coupons, which are used to attract customers to purchase and consume more goods. …show more content…
American Gaming Association’s vice president Sara Rayme, believes that taxing promotional credits would likely lead to a decrease in tax revenue from casinos which is the exact opposite of the intended result.
The AGA believes that taxing Pennsylvania casinos’ promotional credit programs will be an economic deterrent to casinos offering such incentives, and consequently, result in a decrease in patron play and lower tax revenues generated for state and local governments. Increased taxes discourage reinvestment and prevent Pennsylvania casinos from meeting consumer demand, which, as we have seen in other states, leads patrons to seek these the latest gaming products in markets outside of the state. This would hurt Pennsylvania’s burgeoning casino industry and jeopardize jobs and millions in tax revenues.If adopted, Pennsylvania’s policy shift on promotional tax credits would be
unprecedented.
In the past, no state has regressed from a policy of tax-free promotional credits to a subsequent policy of taxing them. Pennsylvania’s neighboring state such as Ohio, West Virginia, Maryland, Delaware, New Jersey and New York compete with the Pennsylvania for gaming dollars. AGA noted that imposing such a tax would only boost revenues from casinos for neighboring states. These neighboring states are among those that have recognized the important role of this casino marketing tool and have refrained from imposing taxes on promotional credits. These states recognize that with competition among gaming states at an all-time high, casino operators must adapt and implement innovative business practices to effectively attract and engage customers.
Not taxing promotional credit leads to greater economic benefits for the state. In 2015, a study by Ekay Economic Consultants that analyzed taxation of promotional credits in Colorado, where the $6.9 million collected in taxes on promotional credits in 2014 resulted in a total statewide impact economic impact of $11.9 million. If casinos had retained the $6.9 million and spent it to either issue additional credits or to upgrade existing properties, the economic impact would have more than tripled to as much as $35.2 million.
Pennsylvania’s 12 casinos already pay among the highest taxes of any casinos in the country. Yet few companies contribute to the Pennsylvania economy as gaming companies do. Each year, casinos in Pennsylvania provide more than $6 billion in economic impact, support more than 33,000 jobs and generate $2.4 billion in tax revenue when the significant ripple effect is considered. However, in order to maintain and build on these contributions, it behooves state legislators and regulators to view gaming companies as partners with the state and to seek progressive gaming policies. The tax treatment of promotional credits is just one of these important policies.
The Governor proposed a new tax on promotional credit marketing programs, an important tool for casinos that incentivize customers to increase their real money wagering, spur increased visitation and empower casinos to respond to market conditions, customers’ preferences and the broader economic environment. Promotional credit marketing programs in casinos are similar to store coupons, which are used to attract customers to purchase and consume more goods. …show more content…
American Gaming Association’s vice president Sara Rayme, believes that taxing promotional credits would likely lead to a decrease in tax revenue from casinos which is the exact opposite of the intended result.
The AGA believes that taxing Pennsylvania casinos’ promotional credit programs will be an economic deterrent to casinos offering such incentives, and consequently, result in a decrease in patron play and lower tax revenues generated for state and local governments. Increased taxes discourage reinvestment and prevent Pennsylvania casinos from meeting consumer demand, which, as we have seen in other states, leads patrons to seek these the latest gaming products in markets outside of the state. This would hurt Pennsylvania’s burgeoning casino industry and jeopardize jobs and millions in tax revenues.If adopted, Pennsylvania’s policy shift on promotional tax credits would be
unprecedented.
In the past, no state has regressed from a policy of tax-free promotional credits to a subsequent policy of taxing them. Pennsylvania’s neighboring state such as Ohio, West Virginia, Maryland, Delaware, New Jersey and New York compete with the Pennsylvania for gaming dollars. AGA noted that imposing such a tax would only boost revenues from casinos for neighboring states. These neighboring states are among those that have recognized the important role of this casino marketing tool and have refrained from imposing taxes on promotional credits. These states recognize that with competition among gaming states at an all-time high, casino operators must adapt and implement innovative business practices to effectively attract and engage customers.
Not taxing promotional credit leads to greater economic benefits for the state. In 2015, a study by Ekay Economic Consultants that analyzed taxation of promotional credits in Colorado, where the $6.9 million collected in taxes on promotional credits in 2014 resulted in a total statewide impact economic impact of $11.9 million. If casinos had retained the $6.9 million and spent it to either issue additional credits or to upgrade existing properties, the economic impact would have more than tripled to as much as $35.2 million.
Pennsylvania’s 12 casinos already pay among the highest taxes of any casinos in the country. Yet few companies contribute to the Pennsylvania economy as gaming companies do. Each year, casinos in Pennsylvania provide more than $6 billion in economic impact, support more than 33,000 jobs and generate $2.4 billion in tax revenue when the significant ripple effect is considered. However, in order to maintain and build on these contributions, it behooves state legislators and regulators to view gaming companies as partners with the state and to seek progressive gaming policies. The tax treatment of promotional credits is just one of these important policies.