Taxes; Gaming Act; Deduction of Event Tickets from Revenues

Greenwood Gaming & Entertainment, Inc. v. Commonwealth, 2019 WL 7820434 (Pa. Cmwlth. 2019) (unreported), appeal docket 19 MAP 2020 (direct appeal)

Greenwood, which operates Parx Casino, distributes complimentary event tickets to patrons as a result of their table game and slot machine play, and sought a refund of taxes paid to reflect deduction of the costs of event tickets from its gross table and slot revenues. The Board of Finance and Revenue denied the refund request. On appeal the Commonwealth Court reversed, directing a refund. The Supreme Court will hear the Commonwealth’s direct appeal.

The Gaming Act excludes from gross revenue deductions the cost of what are commonly referred to as “comps” – travel expenses, food, refreshments, lodging or services. The issue is whether complimentary tickets to events that Greenwood distributes are “services.” If they are, their cost is not deductible; if they are not, their cost is deductible.

The Commonwealth Court majority reasoned that tickets to events are not services, relying in part on the Commonwealth’s own argument that events tickets are intangible property, and in part, to the extent the statute is ambiguous, on the rule of construction that taxing statutes are construed in favor of the taxpayer.

Judge Simpson, in dissent, reasoned that the performances to which the tickets pertain are themselves services, such that the tickets should be treated as services and their cost not be deductible:

 Since the direct provision of “services” is removed by the “comp exclusion” from the personal property distribution deduction, and the performance at the ticketed events qualifies as a skilled “service” under the common and approved usage of that term, I would hold that the cost of the event tickets here are not deductible from taxable GTR and GTGR. Accordingly, I would affirm the order of F&R, thereby denying Greenwood’s 2014 tax year refund request pertaining to the cost of event tickets.

RES at -6.

For more information, contact Kevin McKeon or Dennis Whitaker.