PITTSBURGH _ The owner of Rivers Casino in Pittsburgh no longer wants to pay the portion of the tax on slot machines that goes to the City of Pittsburgh each year.
In a lawsuit filed before the state Supreme Court, Holdings Acquisition Co. is seeking to abolish the so-called "local share tax" that has been in place since slot machine gambling was legalized in the state a decade ago.
Under the law, all casinos except those in Philadelphia must pay a local share to host municipalities that is the greater of either 2 percent of their gross terminal revenue or $10 million.
In its complaint filed June 27, Holdings Acquisition maintains that the levy "imposes unequal rates of taxation" on casinos and violates uniformity and equal protection provisions in the state and U.S. constitutions, respectively.
"The different rates of taxation resulting from this provision are arbitrary, unreasonable, not related to a legitimate government purpose, and not based on a legitimate distinction between taxpayers to warrant their imposition," the lawsuit states.
If Holdings is successful, it could cost the city about $65 million, according to state revenue figures provided by the Pennsylvania Gaming Control Board. As part of its challenge, Holdings is demanding refunds of the local portion it has paid to the city since Rivers Casino opened in 2009. It also could cost other municipalities throughout the state hundreds of millions of dollars if other casinos demand refunds.
Pittsburgh receives $10 million a year from Rivers Casino as its local share. Some of that money has been tied up in a battle with the Pittsburgh Intergovernmental Cooperation Authority, which has been withholding $17.1 million due the city from 2014 and 2015. Mayor Bill Peduto has sued the authority to compel the release of that money.
In the complaint, Holdings maintains the local share tax lacks uniformity because it imposes two different rates on the same class of taxpayers depending on whether gross terminal revenue exceeds $500 million, in which case a casino is taxed at 2 percent, or is less than that amount, in which case a venue pays the minimum $10 million.
Neither Holdings nor Pittsburgh officials were immediately available for comment. Named as defendants in the lawsuit are the state Department of Revenue and its secretary, Eileen McNulty.
While Holdings is challenging the local share paid to municipalities, it is not seeking to abolish the county portion, which is 2 percent of gross terminal revenue for all counties but Philadelphia, where it is 4 percent.
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