Pennsylvania Gambling Tax Revenue
Pennsylvania state taxes for gambling In addition to federal taxes payable to the IRS, Pennsylvania levies a 3.07% tax on gambling income. You should report your Pennsylvania taxable winnings on PA-40 Schedule T (PDF). Tax is deductible from both cash and non-cash returns, and the Internal Revenue service (IRS) is the organization saddled with this responsibility. So before you place that bet, you need to acquaint yourself with the gambling tax laws to avoid problems with the IRS. Some of the information you have to consider include the methods of taxing.
- Pennsylvania Gambling Tax Revenue Reporting
- Federal Gambling Tax Rate
- Pennsylvania Gambling Tax Revenues
- Gambling Tax Rates
- Pennsylvania Gambling Tax Revenue Statute Of Limitations
Figures collected by PlayPennsylvania.com show that the legalization of sports betting and online gambling has already generated more than $395.8 million for the state.
That money hasn’t come from extra gaming taxes — at least not yet.
So far, only three casinos have launched sports betting and none have launched online gaming.
PA casinos licensing and other revenues
It is the total of all the upfront fees paid by licensed casinos under the new laws. The casinos have paid fees for:
- Permission to operate new mini-casinos — up to $50 million for a single license, $128 million in total
- Licensing fees for online gaming — $4 million per license or $10 million for a package of three, $94 million in total
- Licensing fees for live and online Pennsylvania sports betting— at $10 million per license, six licenses granted, $60 million total
- Casino licensing — a total of $78 million
On top of these license fees, the PA online lottery has offered new games and daily fantasy sports (DFS) has generated new revenues:
- $23 million in revenue from online lotto games ($19.6 million), keno ($3.6 million), and virtual sports ($87,000) to the end of October
- $1.4 million from DFS
Jessica Welman, an analyst for PlayPennsylvania.com, commented:
“If the point of the expansion was to fill short-term gaps in the state’s budget, then the expansion would have to be considered a success so far.
Above all, she cautioned that this early revenue boost might not indicate long-term success:
“We believe that the gambling expansion will eventually prove to be a winner for the state’s budget, but the long-term picture is less certain. More casinos and sportsbooks must open before we get a clear picture of whether Pennsylvania’s relatively steep tax rates and license fees will produce the desired outcome.”
Early success, but cautious optimism for the future
Pennsylvania passed its new gaming laws at the end of October 2017. In May 2018, the USSupreme Courtoverturned the Professional and Amateur Sports Protection Actto allow state-regulated sports betting.
Pennsylvania immediately jumped in to add sports betting to its legal gambling regime.
Most noteworthy, the two things Pennsylvania needs to get a significant long-term tax revenue stream are:
- Existing bettors to switch from black market offshore sites
- New customers to start wagering at casinos and online sites
Therefore, the new gambling laws must create successful casino business that has the revenues to pay a lot of taxes.
Pennsylvania Gambling Tax Revenue Reporting
High tax rates are the biggest risk to this outcome. Pennsylvania charges 36 percent taxes on sports betting and 54 percent on online slots.
Such high rates might make the legal market non-competitive with the black market.
New Jersey is making better than expected revenues from its newly legalized sports betting market, but it has the benefit of much lower taxes.
New Jersey operators pay 9.75 percent on live sports betting revenues and 13 percent for online revenues.
Even more, at 17.5 percent, New Jersey online slots taxes are less than a third of Pennsylvania’s rates.
It is an open question as to whether Pennsylvania can match New Jersey’s success.
Dustin Gouker, the lead sports betting analyst for PlayPennsylvania, takes a positive view:
“The addition of retail sports betting should help buoy a slowing Pennsylvania casino industry. If New Jersey is any indication, though, the more significant revenue generator will be online sports betting. A successful rollout there should generate millions of dollars in tax revenue for the state.”
PlayPennsylvania produces detailed gaming revenue figures
PlayPennsylvania prepares revenue figures from a combination of official statistics and estimates based on iLottery, keno and virtual sports sales numbers.
The detailed numbers are available here.
PHILADELPHIA (CBS) — The advent of casino gambling in Pennsylvania was supposed to help homeowners in the form of lower property tax bills. Years later, however, some homeowners say they’ve seen little tax reduction as the casino revenue is actually going elsewhere — specifically, horse racing.
Pennsylvania lawmakers legalized casinos more than a decade ago, making a few promises along the way. First, legislators said slot machines would generate so much in tax revenue, people would see an average savings of $300 a year off their property tax bill.
Federal Gambling Tax Rate
But that promise has fallen short. This year, the average savings is just $182, according to the state Education Department.
It was even less for property owners in the Great Valley School District in Chester County: $126. In East Penn, Lehigh County, the average savings was $177.
In Cheltenham, Montgomery County, where Larry Angert lives, his property tax savings amounted to $55.
“It’s a joke! It’s a typical politician’s promise and it’s a joke,” he said.
But there was another promise Pennsylvania lawmakers made. They said taxes from casinos would help prop up horse racing. That was a promise kept.
CBS3 discovered $174 million in tax dollars, generated by the state’s slot machines, went to horse races. That cash is used to fund nearly all of the races’ prize money, called purses.
“The purses here are very attractive,” said Paul Trapani of Maryland.
Trapani won $35,000 at a recent race at Parx with his horse, Lord of Misrule. He says most of that will be spent out of state — either in Wilmington, Delaware, where the horse is trained, or Maryland, where he lives.
A 2017 state audit shows almost half of all horse race winnings in Pennsylvania — some $73.6 million — flowed to non-residents.
Pennsylvania Gambling Tax Revenues
While out of state horse owners are attracted to Pennsylvania’s tracks, the tax money has not been not enough to attract big crowds.
A benchmark report shows a drop in horse racing attendance statewide for the last three years.
“I’m just frustrated with the lack of results,” said Republican state Rep. Todd Stephens of Montgomery County.
Gambling Tax Rates
Stephens would rather reform the program or use the $174 million that went to purses last year to help plug the state’s deficit. He calls the money that goes to horse racing a hand out.
“There’s no question, this is corporate welfare,” he said.
“It employs 20,000 people,” countered Pete Peterson of the Pennsylvania Equine Coalition. “It helps reserve 100,000 acres of open space, so it’s a very good return on investment in my opinion.”
Peterson also believes the horse racing industry may soon be on the rebound, but he says it takes time.
Pennsylvania Gambling Tax Revenue Statute Of Limitations
“We have seen a very significant impact,” Peterson said. “We’re proud of the jobs it’s created throughout the Commonwealth.”