Impact of Pennsylvania casino closures remains to be seen, though industry was surging this fiscal year

After more than a decade of continued growth for Pennsylvania’s gaming industry that has pumped billions of tax dollars into state coffers and local communities, the casino industry — and that cash flow — were largely upended in 2020 by the coronavirus pandemic.

But the industry was on the rebound for the first five months of the current fiscal year, which began July 1. State and local tax revenues were up more than $33 million through the end of November, according to latest figures available from the Pennsylvania Gaming Control Board.

That was until the most-recent emergency orders from Gov. Tom Wolf, designed to counter a surge in covid cases, again shut down casinos for the second time.

Those closures aside, strong numbers early this fiscal year, along with the opening of a new casino in Westmoreland County and substantial growth in new gambling sectors, bodes well for the allotment counties and municipalities could see.

“Even with the decrease in revenue from casinos due to covid-19 closures, it is likely that (the 2020) calendar year will see an approximate 25% increase in the total local share tax revenue from all forms of legalized gambling,” said Doug Harbach, spokesman for the Gaming Control Board, the agency that regulates the state’s casino industry.

Through November, total tax revenue for state and local governments was at $471.4 million — considerably ahead of the $438.1 million collected through the first five months of the 2019-20 fiscal year, records show.

For the calendar year, the local share assessment through taxes on casino revenue stood at $106.7 million through the first three quarters. Last year, local tax revenues stood at $120.3 million through the third quarter, with another roughly $40 million added in the fourth quarter for a total of $160.2 million in 2019.

The Gaming Control Board will report December figures in the comings weeks, as will the state Department of Revenue release tax revenue totals for the final quarter of 2020.

Projections from the state Gaming Control Board suggest the 2.5-month closure in the spring caused a $265 million reduction in anticipated tax revenue. It was still not clear how the most-recent closure would impact tax revenues.

Casinos across the state, including the new Live! Casino Pittsburgh at Westmoreland Mall, have been closed since Dec. 12. They are to reopen Monday morning, when Wolf’s orders expire.

There remains a possibility for local tax dollars — traditionally used by counties and municipalities to lower property taxes, fund improvement projects and balance budgets — to bounce back thanks to new forms of legal gambling, namely sports betting and online casino games.

According to the Gaming Control Board, sports betting and iGaming could add about $130 million in tax revenue, helping to offset the losses from traditional casino games.

During the 2019-20 fiscal year, sports betting generated $40.9 million in tax revenue, while iGaming added $97.2 million, the report shows. Funds from those types of gaming are collected by the state and then made available to all 67 counties through grants, Harbach said.

As things stand, however, tax revenue from traditional forms of gambling continues to struggle to bounce back. Those revenues are generated through a 54% tax on slot machines and a 16% tax on table games. That money is then distributed based on several factors, and often vary between communities.

But this year, with casinos closed for several months to help mitigate the spread of covid-19, revenues have largely decreased. Comparing fiscal year 2018-19 to 2019-20, slot machine tax revenues decreased by $361.7 million while table games decreased by $38.8 million statewide, Gaming Control Board reports show.

Counties and local communities count on this money for a variety of projects and budgets, officials said.

“These revenues are very important in continuing to advance development opportunities and improvement opportunities in all of our communities,” said Diana Irey Vaughan, commissioner board chair of Washington County, which is home to The Meadows Racetrack and Casino.

All county municipalities benefit from tax revenues generated through The Meadows. North Strabane Township, where the casino is located, typically receives about $2.7 million, while the remaining 64 municipalities split $3.5 million through a formula that includes population.

While that money seemingly remained consistent this year, dollars that go to the Redevelopment Authority of the County of Washington were drastically lower compared to 2019. The authority received $3.2 million last year compared to $8.2 million the preceding year, figures show.

That money is put into a local share account, which is then distributed across the county for infrastructure and community improvements as well as economic development.

“The casinos were shut down about two, three months there in the spring, so that’s made the money coming into the casinos go way down,” said Bill McGowan, executive director of the redevelopment authority. “So we’re not sure what we’re going to have this year” to award for projects.

On Pittsburgh’s North Shore, Rivers Casino last year generated more than $10.6 million in tax revenue, a decrease from $17.5 million in 2019. Those dollars are split among the city, Allegheny County, the Pennsylvania Department of Education and the Visitors Bureau of Monroeville.

Pittsburgh receives a set $2.5 million each quarter, totaling $10 million a year. That money in the past has been used to balance the budget. Money from the casino also has been used to pay for the Pittsburgh Penguins’ Fifth Avenue arena, an agreement established in 2007. The final payment, for a total of $228 million, is due in 2038.

Allegheny County received $2.4 million last year, compared to $5.8 million in 2019. That money has gone into the general fund, said spokeswoman Amie Downs, who noted there is not a specific line item it is used to pay for.

The state Department of Education this year also received less money, totaling almost $658,000 compared to $1.4 million in 2019. The Monroeville visitors bureau saw a similar decrease, receiving less than half of the $121,000 it got in 2019.

In Westmoreland County, Live! Casino opened in Hempfield on Nov. 24, generating more than $2.2 million before covid-19 mitigation orders forced it to temporarily close. It is not yet known how much tax revenues will be generated for the township and the county from the casino.

Early predictions, however, suggested that about $1.7 million could be brought into Hempfield, with a boost of $152 million for the county in a year of normal operation.

Neither the county nor the township factored casino tax revenues into their 2020 budgets. Hempfield officials, however, did include it in the 2021 budget to cover some revenue shortfalls. Any money left over will be used for capital expenses, said Jason Winters, township manager.

Revenues were not included in the county’s 2021 budget because they have not been given specific estimates for how much they could expect, said Meghan McCandless, director of financial administration. Any casino tax revenues that do come in will be put toward operating expenses, she said.

Megan Tomasic is a Tribune-Review staff writer. You can contact Megan at 724-850-1203, [email protected] or via Twitter .

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