HARRISBURG, Pa. (CN) — The Pennsylvania Supreme Court ruled that a municipal tax on slot machines outside Philadelphia violates the state constitution because it imposes different rates on casinos depending on their size.
The Mount Airy Casino Resort, in the Poconos, sued the Pennsylvania Department of Revenue, claiming it "imposes grossly unequal local share assessments" based on gross revenue from slot machines, or terminals.
The court agreed, but stayed its Sept. 28 ruling for 120 days to give the Pennsylvania General Assembly time to fix the law that legalized casino gaming.
"We think it most appropriate to leave to the legislative branch the responsibility of fashioning a constitutional local share assessment," Justice David Wecht wrote for the majority.
The state's gaming act allows for two different assessments: a $10 million lump sum or a tax of 2 percent of gross terminal revenues, subject to an exemption for the first $500 million of each casino's gross terminal revenue.
"The non-uniformity inherent in such a scheme is unmistakable," Wecht wrote.
Mount Airy asked the court to strike the $10 million minimum local share assessment, leaving a uniform 4 percent tax rate for all casinos. The Department of Revenue proposed the opposite. It suggested that the court leave the $10 million minimum local share assessment intact, but eliminate any additional taxes for casinos with gross terminal revenues above $500 million.
"This court is not in the business of drafting complex tax statutes, nor are we experts on the financial condition of Pennsylvania's casinos or the financial needs of Pennsylvania's municipalities," Wecht wrote.
"Under the circumstances presented, we think it most appropriate to leave to the legislative branch the responsibility of fashioning a constitutional local share assessment."
The General Assembly will have until the last week in January to decide how to tax casinos.
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