The Sands Bethlehem’s lawsuit against a 2017 gambling law successfully struck down part of the law. The Pennsylvania Supreme Court confirmed that a fund for redistribution of slots taxes violated the state constitution.

In the law, the state took 0.5% of its slot tax revenue from each casino and racino in the state. The money funded the Casino Marketing and Capital Development Account, designed to help promote lower-performing casinos.

Casinos like Sands Bethlehem would contribute a small percentage of their slots taxes to promote Mount Airy Casino Resort and Presque Isle Downs. Based on 2017-18 numbers, Mount Airy Casino Resort and Presque Isle Downs received about $4 million apiece.

Three other casinos would have received smaller contributions, while seven Pennsylvania casinos would have received nothing at all. The top seven casinos therefore were paying to help market the lower five casinos.

Sands Bethlehem Lawsuit

Sheldon Adelson‘s Sands Bethlehem believed the slots tax was unfair and sued to have it eliminted. Sands lawyers argued the tax violated the due process and equal protection clauses of the state and US constitutions. Pennsylvania high court judges agreed, and struck down that single provision in the law this week.

The Associated Press reported that Chief Justice Tom Saylor wrote, “The benefit received and the tax burden imposed made the provision unconstitutional.”

Las Vegas Sands Leaves Pennsylvania

It is a parting shot by the Las Vegas Sands Corporation. LVS is in the process of selling Bethlehem Sands to Wind Creek Hospitality, a gaming company owned by the Poarch Band of Creek Indians of Alabama. Wind Creek Hospitality paid $1.3 billion to buy Bethlehem Sands, the most lucrative casino in the state.

Las Vegas Sands grew unpleased with several aspects of Pennsylvania gambling. It didn’t like the $10 million a year local casino tax imposed by Pennsylvania cities (and sued). The company didn’t like the fact Bethlehem Sands security staff unionized — a first for an LVS casino.

More than anything, LVS did not like that Pennsylvania passed online gambling. Starting this year, Pennsylvania casinos launch their online poker, online casinos, and mobile sports betting apps. To the company that opposes online gambling of any kind, it is a bridge too far. Instead, LVS plans to focus on a casino in New York state.

$21 Million in Development Fund

At the time of the decision, the Casino Marketing and Capital Development Account Fund had $21 million in it. That money will be refunded to the casinos that paid into the system.

LVS Issues with Pennsylvania Taxes

This is not the first dispute Las Vegas Sands Corp. has had with Pennsylvania’s tax laws. The company and state continue a battle over a $10 million tax each year which is earmarked for the cities which house a casino.

Bethlehem Sands and several other state casinos fought the local tax in the court system. In 2016, Sheldon Adelson said he would no longer pay the tax. Instead, LVS sent the $10 million to an escrow account and challenged the state to enforce its local casino tax.

The Pennsylvania Supreme Court issued a 120-delay on the quarterly payments (of $2.5 million apiece) and called on the legislature to remedy the situation. The 2016 session ended without the General Assembly and Gov. Tom Wolf solving the dispute.

Casino Companies Agree to Pay

Penn National Gaming in Reading and Rivers Casino in Pittsburgh each pledged to make their payments. The Bethlehem City Council discussed the hardship LVS’s refusal to pay meant for its city budget, as well as the residents of the city.

Las Vegas Sands faced a labor dispute in 2017. The Bethlehem Sands’ security staff unionized, which was the first time an LVS casino ever had staff unionize. A few months later is when rumors began to circulate that Bethlehem Sands was on the market.

The passage of an online gambling legalization act in October 2017 also went against Las Vegas Sands’ wishes. Sheldon Adelson is the leading advocate of an 100% online gambling ban in the United States. When Gov. Tom Wolf signed the online gambling bill in 2017, it forced LVS to operate in a state which allowed interactive gaming.

In fact, LVS had to apply for an online poker and casino license. While it was finalizing the $1.3 billion sale of Bethlehem Sands to the Poarch Band of Creek Indians (Wind Creek Hospitality), it needed to secure the license on behalf of Wind Creek Hospitality.

About the Author
April Bergman avatar
April Bergman

April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

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April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

READ MORE
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