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.

LVS Spokesman Defends Sands Bethlehem

Ron Reese, a spokesman for the Las Vegas Sands Corp., replied to Morganelli’s directive by saying that local officals have a short memory about the Sands’ local contributions. Reese said that the Sands invested $1 billion in Bethlehem, while paying over $1.5 billion in state and local taxes since the casino’s opening.

The LVS spokesman said Morganelli and other officials should review the Sands’ full contributions in Lehigh Valley over the past decade before accusing them of “not being dutiful”. Ron Reese added that the Sands has not moved away from its commitment to be a good corporate citizen, and those who say so are being “disingenuous”. He mentioned that Bethlehem Sands opened during the middle of the Great Recession and they created over 2,500 local jobs, which were a boon for the community at the time.

Sands spokesman Ron Reese ended by saying 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.

Subsequent Northampton County Troubles

Since the letter sent to the Sands Bethlehem, John Morganelli has had to focus on a number of other, more pressing issues. Morganelli had to investigate the shooting of Scott MacIntosh, 35, of Forks Township. MacIntosh was wielding a machete when police used lethal force to stop his seeming rampage.

John Morganelli exonerated the police, though he said Scott MacIntosh was troubled and not in full control of his sense. Morganelli said MacIntosh was not “a bad person”, but instead was “tormented by a 10-year history of mental illness.

The Northampton County district attorney also weighed in on events leading up to the death of 15-year old adoptee, Grace Parker, who was raped and murdered by her adopted mother’s boyfriend while her adopted mother watched. Locals called for a state investigation of the case which would span several counties, because Sara Parker (the mother in the case) was fired from her position as a supervisor in the Northampton County Children, Youth and Families Division in 2010 when her ex-husband was accused of child abuse.

Northampton County Controller Stephen Barron Jr. came under intense criticism, because a woman with such close ties to a child abuse case had been allowed to adopt. John Morganelli was charged to investigate NorthCo officials’ conduct and oversight, but found that Controller Barron followed the proper policies.

With such weighty issues on the docket, John Morganelli’s dispute with Sands Bethlehem seems to have reached a lull period.

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