Mohegan Tribe Reconsiders Slot Casino

PENNSYLVANIA – As reported by the Pennsylvania Times-Leader: "The Mohegan Tribal Gaming Authority is likely to decide in the next several weeks whether to proceed with its Mohegan Sun at Pocono Downs slot machine casino project.

"Pulling the plug on the planned $505 million complex could allow the Mohegans to exercise a clause in their purchase agreement with Penn National Gaming that allows a giveback between July 1 and the date a gaming license is issued. The Mohegans paid $280 million for the 400-acre property in January 2005 and since have invested millions more in renovations to create a temporary casino.

"Downs President Robert Soper said Wednesday that the state Gaming Control Board has indicated the first conditional licenses would be issued Sept. 28 at the earliest.

"…The Mohegans are questioning their commitment after the state Department of Revenue ruled that each of the state's proposed 14 casinos must pay an annual $10 million tax to its host municipality, nearly $8 million more than they had anticipated.

"Legislation that allows slot machine gambling set the local tax share at 2 percent of gross revenue, up to an amount equal to half the host municipality's 2003-2004 budget, not to exceed $10 million. That amounts to about $2.2 million the casino would pay to Plains Township. But the law is written to make each operator pay $10 million, said Stephanie Weyant, a Revenue Department spokesperson.

"…Under the legislation, state and local taxes were to total 55 percent, Soper said, but with the $10 million flat charge, taxes could reach 63 percent for the Downs.

"He said the higher tax could jeopardize the casino's financial success. The tribal gaming authority board now must decide whether to proceed as planned, abandon the project, scale it back or challenge the tax rate in court…"