Casino drops suit over $10M tax to city

Rivers statement doesn’t explain why

In gambling parlance, Rivers Casino has folded its hand.

It dropped a high-stakes lawsuit Friday challenging the $10 million payment it makes each year to Pittsburgh as part of the taxes it pays on slot machine revenues.

The casino made the announcement in a one-sentence statement. It did not say why. It had filed the complaint June 27 before the Pennsylvania Supreme Court against the state Department of Revenue contesting the municipal portion of the local share tax.

Jack Horner, a casino spokesman, said there would be no further comment.

In the lawsuit, casino owner Holdings Acquisition Co. maintained that the municipal portion of the local share tax, enacted when slot machine gambling was legalized in 2004, violated the uniformity and equal protection clauses in the state and U.S. constitutions by imposing “unequal rates of taxation on slot machine licensees.”

The law requires all casinos in the state except those in Philadelphia and the resort venues in Nemacolin and Valley Forge to pay the greater of 2 percent of their gross terminal revenue on slot machines or $10 million each year to the host municipality.

They pay 2 percent if revenues exceed $500 million or $10 million if they are below it. Since the law was enacted, no casino has exceeded the $500 million threshold, meaning all have paid $10 million annually.

The casino argued that the different rates of taxation were “arbitrary, unreasonable, not related to a legitimate government purpose,

and not based on a legitimate distinction between taxpayers to warrant their imposition.”

Pittsburgh has used the money to shore up its ailing pension fund, as required under the Act 47 recovery plan. The payments the last few years have been tied up in a battle with the Intergovernmental Cooperation Authority.

Nonetheless, without the money, the city has said it would not be able to meet the state mandate regarding the pension fund or would have to cut $10 million from “core municipal services” to do so.

In the lawsuit, the casino also sought refunds for the payments it already had made to the city — about $65 million, according to the state gaming control board.

In a petition to intervene, Pittsburgh contended that potential refunds posed “a dramatic and immediate threat to the city’s financial health.” It asked the court to dismiss the lawsuit.

“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,” Kevin Acklin, chief of staff to Mayor Bill Peduto, said in a statement.

Both Mr. Peduto and Allegheny County Executive Rich Fitzgerald had questioned the merits of the lawsuit, noting that the casino had agreed to the funding commitment when it applied for the slot machine license.The $10 million payment is a small part of the $272 million the casino generated last year in gross terminal revenue, 54 percent of which goes for taxes, including the local share.

Two other casinos — Mount Airy and Harrah’s Philadelphia — have filed similar complaints before the Supreme Court. Both remain active.