Pennsylvania District Attorney Sends Sands Bethlehem Casino a Warning about Host Fee Payments

Pennsylvania District Attorney Sends Sands Bethlehem Casino a Warning about Host Fee Payments
Morganelli told the casino if it did not pay local taxes, he could not devote limited resources to the casino's financial well-being.

Northampton County District Attorney John Morganelli released a letter he wrote to Sands Bethlehem president Mark Juliano, saying the Sands would face consequences if it refused to pay a new set of taxes.

Morganelli’s letter did not directly threaten charges against the casino, but he wrote that he would not feel obligated to pursue charges against those caught cheating at the Sands Bethlehem, the most profitable casino in Pennsylvania.

The disputed taxes center around the $10 million community “host fee” that the Pennsylvania State Legislature passed earlier this year. In September, the Pennsylvania Supreme Court struck down the host fee, saying a special tax on casinos and an additional slots tax were unconstitutional.

The Supreme Court said the challenge to constitutionality is based on the fact the state’s dozen casinos pay different rates, based on the size of their gaming operations.

Pennsylvania Supreme Court Decision

In September, the Supreme Court justices stayed their decision until January 26, 2017, to give legislators time to fix the situation. A quick fix bill at the end of the 2016 legislative session was not passed, so the issue was never resolved. Casinos are expected to make their next payment on January 15, eleven days before the deadline to have a fix implimented.

Morganelli’s Letter to Mark Juliano

John Morganelli, whose office handles county-level prosecutions in matters involving Sands Bethlehem Casino, gave the casino a warning it needed to pay its taxes. If they did not, then Morganelli “would not feel honor bound” to prosecute a variety of criminals who might try scams on the Bethlehem casino. That includes anyone caught cheating or passing bad checks at the casino.

Morganelli wrote in his letter to Mark Juliano that he “would not, in good conscience, be able to justify the use of my limited resources to help a profitable, billion-dollar corporation while the Sands maintains the position they are an island unto themselves.

Sands Bethlehem Statement

Sands spokesman Ron Reese said his company would keep a close watch on what the Pennsylvania legislature does with the matter, and Sands Bethlehem would “act accordingly”.

January 2017 Deal Coming?

In mid-December 2016, Pennsylvania Sen. Kim Ward invited members of the gambling industry of Pennsylvania to a Junuary 3 meeting. That meeting will discuss all aspects of the state’s gambling industry, including taxes like the host fee.

Also on the docket for that meeting are discussions of the potential legalization of online gambling and daily fantasy sports in Pennsylvania. Sen. Ward hopes to build a consenses which would allow several quick decisions on gambling in Pennsylvania, instead of delaying those decisions until June, when the so-called “horse trading” period of the legislative session traditionally begins.

Because the next payment of the host fee is January 15 (and another comes on April 15), the brick-and-mortar casinos might be amenable to reaching a deal earlier than later. If so, a comprehensive online/offline gambling bill might be forthcoming in January and February 2017. Such hopes have evaporated before in the past several years, so no one is holding their breath. But Senator Ward’s meeting shows how intertwined all gaming in the state is.

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