WHO’S WINNING IN THIS GAME?
PA students could hit the jackpot if the players in Harrisburg would agree on how to tax “video-gaming” terminals in bars, fire halls, taverns, and convenience stores.
In a rare public display of intramural rivalry, the competition between gambling companies who profit from these games got so nasty that Pennsylvania Senate leaders allegedly expelled the lobbyist of one of the contenders.
Newspapers across the state “broke” the story, detailing the Senate leader’s call that a prominent lobbying firm either fire their gaming client or lose its political access altogether. But press attention on the Senate leader’s decision was about as useful as a Fox News in-depth story on Ukrainian President Zelenskyy’s decision not to wear a traditional business suit for a meeting in the White House. In both cases, reporters totally missed the real story.
Scant attention has been paid to the real story – the seemingly boundless earnings of legalized gambling and the policy debate about how those earnings should be taxed.
First, some background on why the issue of how much the gambling companies make and how they are taxed is so important.
Pennsylvania legalized casino gambling in 2006. The gaming industry estimated that it would likely generate about $1.5 billion in revenue, which a chorus of critics loudly argued was way overstated. Now, nearly 20 years later, Pennsylvania reported a record-setting $6.4 billion in casino revenues in the last twelve months alone.
With that revenue comes taxes. When then-Governor Ed Rendell championed the casinos, he argued that his proposed tax of 54% on their revenues – the highest in the country – could generate $500 million in school property tax relief. Taxes on slot machines are now generating more than $1 billion for school property taxes for nearly 2.5 million of state’s homeowners and farmers, and more than a half million seniors and renters get special property tax relief.
Today’s legislature is finally discussing how to tax the billions of revenue from gambling terminals already widely accessible outside casinos in bars and convenience stores that generate billions in profits for gambling companies. Euphemistically the terminals are called “skilled games of chance” because, in some far-fetched reality, video poker machines owned by gambling companies are markedly different than craps or slots operating in casinos.
The “skilled games of chance” industry itself admitted to earning $1.8 billion in Pennsylvania. If the legislature has the gumption to tax these gambling devices at the same rate that casino games are taxes, state revenue would jump by nearly $1 billion at minimum. Industry estimates of the surge in demand of people trying their skills on these gaming terminals point to a four-fold increase that could drive new tax revenue to over $4 billion.
Why does that matter to Children First? Because the state owes Pennsylvania school districts – and the students they serve – $4.5 billion. This amount is the result of a sweeping state supreme court decision that found the state method of funding schools is unconstitutional, and the legislature’s estimate of what it would take to come into constitutional compliance.
We’d wager that if lawmakers taxed and regulated skilled games of chance at the same rate as it taxes casino gaming and dedicated those funds to meet this constitutional obligation to fund public schools, the voters of Pennsylvania would reward their elected representatives with the ultimate win that matters to them – their re-election.
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