State Supreme Court Strikes Down Pennsylvania Gambling Laws

Beware when words are sugar-coated, especially on paper. In 2017, Pennsylvania gambling expansion included new laws that included online casinos and sportsbooks among other things. The fancy language made everything look good on paper. Some casinos took offense when the legislation showed an absolute lack of equity across the gambling industry in Pennsylvania. A lawsuit was filed against the gambling expansion bill.

 

What contributed to the 2017 lawsuit?

 

The fancy language used in the gambling expansion bill deciphered into the story of Robin Hood who took from the rich and gave it to the poor. Sands Casino Resort in Bethlehem filed a lawsuit over the element of the bill that created the Casino Marketing and Capital Development Account. According to the gambling expansion bill, the state would take 0.5 percent of slot tax revenue from each property. This tax would be put into Casino Marketing and Capital Development Account. The fund would be redistributed and given to the state’s poorest performing casinos. The bottom line was, the poorly performing casinos would get an opportunity to spend on marketing and improve their business.

 

The lawsuits

 

The lawsuit filed by Sands Casino Resort in Bethlehem was one of the three lawsuits filed against Pennsylvania gambling expansion bill. Penn National, the owner of Hollywood Casino, sued over the plan that allows mini-casinos. They filed against the bill stating that the plan would favor small casinos. Penn National dropped the lawsuit after they launched two mini-casinos to protect their asset.

 

The 2019 verdict

 

Sands Casino argued that the move violated state and federal laws. Supreme Court Justice Thomas Saylor agreed that the law violated the due process and equal protection clauses of both the state and U.S. Constitution. It was decided that that portion of the bill is illegal. According to Act 42, taxpayers who pay the least into the Casino Marketing and Capital Development Account are likely to receive a mandatory distribution from that account and vice versa. This was found to be an unorthodox practice. Justice Thomas Saylor stated that the benefit gained and the tax burden imposed made the provision unconstitutional.

The State of Pennsylvania was ordered to stop collecting the funds. The state will have to reimburse $21 million contributed by the casinos. The lion’s share of $4 million each was given to Presque Isle Downs and Casino and Mount Airy Casino Resort. While three other casinos are set to receive a refund, seven casinos will not receive anything.