Rivers Casino Drops Its Lawsuit against the Pennsylvania Revenue Department

Rivers Casino Drops Lawsuit against Pennsylvania

Rivers Casino dropped its lawsuit after the city of Pittsburgh joined the defense.

Rivers Casino dropped its lawsuit against the state of Pennsylvania this week. The Pittsburgh-area casino’s lawsuit claimed that the gambling taxes it is required to pay is unconstitutional.

Jack Horner, a spokesman for the Rivers Casino in the city of North Shore, did not give an explanation for why the lawsuit was dropped. The suit was filed to block the Pennsylvania Department of Revenue from collecting taxes esblished by lawmakers back in 2004.

Gaming Act Violations?

At the time the paperwork was filed, the Rivers attorneys said the Gaming Act unlawfully applies tax rates to Pennsylvania’s casinos. According to the Rivers Casino, the Gaming Act applies different tax levels on the slot machine revenues which are supposed to go to nearby municipalities.

Rivers Casino generated about $272 million in slots revenues in the 2015-16 fiscal years. The casino pays a local-share assessment to Pittsburgh of 2% of slots revenues or $10 — whichever is greater. Since 2009, that has amounted to $65 million in taxes.

Reasons for the Decision

Holding Acquisition Co., which owns the Rivers Casino, wanted to be reimbursed some of those taxes. It also wanted the discriminatory tax abolished.

Reports had surfaced recently that Pittsburgh was planning to join Pennsylvania in fight the lawsuit. There was some speculation that Pittsburgh might file a counter-suit against Holding Acquisition Co., too. It is not know whether those prospects had anything to do with the end of the lawsuit.

Kevin Acklin Releases Statement

A spokeman for the Pittsburgh’s mayoral office gave a statement on the decision. Kevin Acklin, who serves as the chief of staff for Mayor Bill Peduto of Pittsburgh, said, “We are pleased that the Rivers Casino changed course and withdrew this erroneous lawsuit. We remain vigilant to defend the commitments made by the casino to the residents of our city.

The Rivers Casino’s decision does not end the legal disputes for the Department of Revenue. Harrah’s Philadelphia and Mount Airy casino each have pending lawsuits over the same issue.

Market Dilemma for Harrah’s Philadelphia

Harrah’s Philadelphia is facing new competition when the $450 million casino and hotel Live! Casino opens in South Philadelphia. The Live Casino is expected to create 5,000 new jobs in the area.

Stadium Casino LLC agreed to a minimum $12 an hour wage for workers, both in the construction phase and the permanent casino staff phase. Councilman Kenyatta Walker said, “The jobs created must pay living wages and the workers at all stages of the process including construction, professional services, operations, and vending and contracting must represent Philadelphia’s diverse demographic makeup.

Runoff from Sports Complexes

Because the casino is so near sporting complexes which are active most days of the year, it is expected the Live! Casino is going to have a steady stream of customers, both from locals and visitors to the city. A percentage of these customers would have visited Harrah’s Philadelphia, so the Caesars Entertainment casino is concerned about losing a share of its customer base.

In that light, Harrah’s wants to change the way taxes are assessed on its slot machine revenues. Given that Pennsylvania currently is raising taxes on casinos, it is likely to fight the remaining two lawsuits with the same vigor that the Rivers Casino filing was fought.