Rivers Casino on Friday dropped a lawsuit it filed against the state last month claiming a gambling tax it pays to Pittsburgh is unconstitutional.
A spokesman did not offer an explanation for why the North Shore casino dropped its suit against the Pennsylvania Department of Revenue. Rivers was attempting to block the department from collecting the tax established by lawmakers when they legalized gambling in 2004.
Rivers attorneys claimed the municipal portion of the local share tax in the state's Gaming Act unlawfully applies different tax rates to Pennsylvania's 12 operating casinos and doesn't tax all casinos equally in terms of revenue from slot machines that goes to municipalities.
Similar lawsuits are pending by Mount Airy and Harrah's Philadelphia casinos.
For fiscal year 2015-16, Rivers earned $272 million in slots revenues, records show.
Rivers annually pays a local-share assessment to the city of 2 percent of slots revenues or $10 million, whichever is greater. It has paid $65 million to Pittsburgh since opening in 2009.
In addition to getting the tax abolished, Rivers' parent company, Holding Acquisition Co., wanted a refund on some of the money it has paid.
Pittsburgh planned to join the state in defending the claim and considered a counter-lawsuit against Rivers.
“We are pleased that the Rivers Casino changed course and withdrew this erroneous lawsuit,” said Kevin Acklin, Mayor Bill Peduto's chief of staff. “We remain vigilant to defend the commitments made by the casino to the residents of our city.”
A lawsuit was filed by Rivers Casino in Pittsburg challenging their yearly tax payment based on revenues from slot machine gaming just a few weeks ago and the suit has now been dropped. Late this afternoon, the casino announced the complaint has been withdrawn with no further comment on the matter.
The lawsuit was filed on June 27th within the Pennsylvania Supreme Court against the Pennsylvania Department of Revenue in an attempt to fight the local share tax based on the municipal portion. A spokesman for the casino, Jack Horner, did not speak any further on the matter, just to say that the lawsuit had been withdrawn.
The casino owner, Holdings Acquisition Co., filed the lawsuit, maintaining that the municipal portion of the local share tax was in violation of the clauses of uniformity and equal protection within the constitution of the state as well as the United States. The portion of tax was enacted when slot gambling was first legalized in 2004, with the company calling the tax an unequal rate on slot machine licensees.
Almost all casinos in the state are required by law to pay more than 2% of their gross terminal revenue on slot machine games or a rate of $10 million a year to the host municipality. The only venues exempt from this law are the resort destinations of Valley Forge and Nemacolin as well as casinos in Philadelphia.
2% of revenues is paid when the total amount is over $500 million or a $10 million fee if below this marker. Since the law was enacted in 2004, no casino has pushed past the $500 million marker. This means all casinos have paid $10 million in fees annually. The money paid was used by Pittsburgh to build up the pension fund. With the lawsuit, the casino was hoping to earn a refund for payments made to the city which would equal around $65 million.
When the lawsuit was filed, the city of Pittsburg asked the court to dismiss, citing that the potential for the refund would have a dramatic and immediate effect on the financial health of the city. With the suit dropped, similar lawsuits remain pending by the Harrah’s Philadelphia venue as well as Mount Airy Casino.