Casino-revenue tax to fund Pa. board

HARRISBURG - State officials have come up with a new plan to raise more than $9 million to keep Pennsylvania's gambling regulatory agency operating through the end of the current fiscal year.

The plan calls for the state Department of Revenue to impose a 1.5 percent tax on the gross gaming revenues of three racetrack casinos currently operating and two others scheduled to open between now and May - raising $5.4 million by June 30.

It also calls for the state to collect an additional $800,000 from each of the five casinos, which would be deducted from an escrow fund that the facilities pay into when they open to help defray regulatory costs.

State Revenue Secretary Greg Fajt and Pennsylvania Gaming Control Board Chairman Tad Decker announced the plan Tuesday during a Senate Community, Economic and Recreational Development Committee hearing.

Since the legalization of slot machines in 2004, gambling regulation has been funded by a $36.1 million loan from the state, as well as by application fees paid by the groups that pursued licenses last year. The board had projected that the money would run out by Feb. 9.

The plan reflects a compromise between the state and the casino owners, who balked at an earlier plan by the gaming board to begin collecting 5 percent of slot-machine revenues. They argued that it would be unfair to facilities that opened the earliest.

Current law gives the Revenue Department the authority to use slots revenues to fund gambling regulatory activities by the department, the gaming board, state police and Attorney General's Office.

Robert Soper, chief executive of Mohegan Sun at Pocono Downs, one of the three casinos already operating, said the plan was a fair compromise.

"I think in the short run it is consistent with what we expected" to pay for the gaming board's operations, Soper said.

But the casino owners also asked lawmakers to monitor the state's regulatory costs closely. Decker said the tax on gross revenues may need to be increased to as high as 1.9 percent in the 2007-08 fiscal year.

In all, 11 casinos are expected to be operating in Pennsylvania by the end of 2008.