Annual national report shows Pennsylvania tops in commercial casino tax revenue
9 May 2011
HARRISBURG, Pennsylvania -- (PRESS RELEASE) -- In just three years, Pennsylvania ascended to number one in the amount of tax revenues generated by commercial casinos that offer legalized slot machines and table games.
Now, after the fourth full year of offering gaming at commercial casinos, Pennsylvania not only remained number one, but further increased the amount of tax revenue collected, according to an annual report released by the leading gaming association in the United States.
The annual State of the States survey released by the American Gaming Association (AGA) reports that the play of slot machines and table games at Pennsylvania’s 10 operating casinos generated $1.328 billion in tax revenue in 2010, an 18.8% increase from the previous year. That amount is also $450 million more than the second-place state, Indiana. Gaming at the Hoosier State’s 13 casinos produced $875 million in tax revenue last year, according to the report. Indiana also offers both slots and table games at its riverboat, land-based and racetrack casinos.
It was the second year that Pennsylvania has led nationwide in the amount of tax revenue generated from casino gambling. In 2009, the AGA reported that $1.118 billion was collected in taxes by the Commonwealth, compared to $878 million by Indiana.
The amount of taxes collected in Pennsylvania is fueled by a 55% tax rate on gross slot machine revenue and 16% on gross table games revenue. As a comparison, riverboat and land-based casinos in Indiana have a graduated tax rate of 15% to 40% of all gross gaming revenue and 25% to 35% at racinos. However, it also charges a $3 per patron admission tax that generated almost 10% ($81 million) of its total tax collection.
Nevada and New Jersey still generate more gross gaming revenue than Pennsylvania. But, those states assess a much lower tax rate on its gaming revenues, approximately 7.75% and 9.25% respectively.
"There’s no doubt that Pennsylvania’s tax rate of 55% on slots revenue plays a large part in the Commonwealth being highest in tax revenue collection," PA Gaming Control Board Chair Greg Fajt explains. "At the same time, the casinos continue to grow and flourish in Pennsylvania under this tax rate by providing top-flight facilities, service and game choices."
Fajt adds that the success of the Pennsylvania gaming market in such a short time frame is also a result of the work that the PGCB has done since its inception.
"It would be foolhardy to ignore the fact that Pennsylvania’s newest agency has taken the task given to it by the Legislature and performed exceedingly well over the past six years in every aspect of its work," says Fajt who joined the Board in June of 2009 as its third Chair. "This success is a further indication of the tough and sound decisions that the original members of the Gaming Control Board and their staff made in the first years after passage of the Gaming Act in 2004."
Executive Director Kevin O’Toole, who also joined the agency in 2009, agrees that the Board’s strict but fair regulations are permitting Pennsylvania casinos to grow toward their potential.
"The PGCB has developed an appropriate regulatory environment whereby the conduct of gaming at each casino is fair to the gaming public, reasonably profitable to the casino operators and beneficial to the local and county governments," O’Toole states.
But, O’Toole says those efforts extend beyond just creating an environment that permitted the casinos to find this level of success.
"The PGCB’s efforts over the past six years have successfully contributed to ensuring that our casinos are safe for the visiting public while also ensuring that they are educated on compulsive and problem gambling," O’Toole adds. "Understand that the success we have seen in Pennsylvania can only take place when a cooperative atmosphere is in place. This means not only working tirelessly with the casino operators, but also with the Horsemen’s organizations and the Pennsylvania Racing and Harness Commissions to truly accomplish the revitalization of the Commonwealth’s horse racing industry."
The AGA report notes that 22 states now offer commercial gaming whether that is a land-based, riverboat, or racetrack casino. Pennsylvania currently has six racetrack casinos (racinos) in operation along with four stand-alone casinos, all offering slot machines and table games.
Individually, the report ranked Philadelphia (9th) and Pittsburgh (19th) in the top 20 casino markets in the United States in 2010. Four markets that offer racinos – Philadelphia (Parx and Harrah’s), Grantville (Hollywood Penn National), Meadow Lands (The Meadows) and Wilkes-Barre (Mohegan Sun) were all included in a separate list of the top 10 racetrack casino markets during 2010.
According to the report, Pennsylvania also led with the highest increase in casino employment, 38.8% from 2009 to 2010. That increase moved Pennsylvania from the eighth largest United States casino employer in 2009 to sixth in 2010. The majority of those new hires were due to the introduction of table games.
The most recent number of direct casino jobs in Pennsylvania is 14,097 through the first quarter of 2011.
Among its other findings, the AGA reported that its polling of casino visitors nationwide showed that a vast majority (88%) set a gambling budget before they visit a casino, with 65% setting that budget at $199 or less.
Additionally, the AGA reports that 72% of those polled have seen responsible gaming messages during their casino visits. All Pennsylvania casinos must follow strict regulations that require wide-scale posting of problem gambling resources.
The jump in Pennsylvania revenue, coupled with a change in the Gaming Act last year, also has resulted in an increase in the amount of funding for problem gambling efforts by the Commonwealth. In 2009, that amount was $2,470,678 million under an assessment of .1% (with a minimum of $1.5 million) but increased to $5,756,376 million in 2010 as both revenue increased and the legislature increased the assessment to .2% (with a minimum of $2 million) of gross revenue.
The complete AGA State of the State’s report is available on the AGA web site.