Rivers Casino has challenged Pittsburgh ’s “local share tax” on slot machine revenue in the state’s highest court. The casino argued that the tax is both unfair and unconstitutional as it is at odds with a clause in the state constitution which imposes equal rates of taxation for same class of tax payers.
The company also said that the local tax also tramples on the 14th Amendment of the U.S. Constitution. It now seeks an end to the collection of the burdening tax which cost the company more than $10 million every year.
Holdings Acquisition Co., which operates the casino in Pittsburgh and filed the complaint, argued that hitting casinos with disproportionate rates of taxation is “unreasonable, not related to a legitimate government purpose.”
The casino said Thursday that it was inspired to start the legal battle by Mount Airy Casino and Harrah’s Casino which have also sued municipalities over the same reason in Poconos and Philadelphia respectively. The two casinos argued that the local tax uses an unconstitutional and unfair formula when calculating the municipality share.
The two casinos, which filed the lawsuits 18 months ago, also have their cases pending before the state Supreme Court.
Rivers Casino said that the reasoning behind the recent lawsuit is to ensure that the casino is treated equally by the Pa. Department of Revenue as other casinos. According to court documents, the plaintiff does not only want to dismiss the local tax, but it also seeks refunds of the money it has so far paid.
If it wins in court, the casino will be granted $65 million in refunds, which is the amount it paid municipality since 2009, when it first opened its doors. Pittsburgh will also lose its right to collect $10 million in taxes every year from the casino.
On the other hand, the lawsuit has already irked Mayor Bill Peduto, who noted that the plaintiffs had been aware of the tax long before getting their license. Peduto added that the casinos also knew that the tax will go to the city’s budget in return for hosting them.
The mayor pledged to fight “vigorously” in court.
The city desperately seeks to win the lawsuit as it has about $17 million blocked until a legal battle between the municipality and the Intergovernmental Cooperation Authority is settled. So if it loses the lawsuit against Rivers Casino, the implications could be statewide.
According to a recent report from the gaming control board, casinos have poured about $450 million to municipality budgets over the last 10 years.
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