HARRISBURG – According to a unanimous Supreme Court of Pennsylvania ruling, concert tickets which were given to players at a Bensalem casino as a perk in 2014 are ineligible from being taxed as a portion of the casino’s operating revenue, which concurred with an earlier ruling from the state’s Commonwealth Court.
A Nov. 17 opinion from state Supreme Court Justice Debra Todd, joined by all of her colleagues, found that the tickets were not services and the casino had the right to exclude their value from its operating revenues for that given year.
“During 2014, as part of its efforts to encourage slot machine and table game play, Greenwood distributed to patrons of Parx who played its slot machines and table games various ‘promotions, giveaways and direct player development,” Todd said.
“The items given away included cash, department store gift cards, and items of personal property, such as iPads, Michael Kors designer handbags, and Nutribullet food processors. Parx also gave away tickets to attend live concerts and entertainment performances by artists such as Jay-Z, Beyoncé, Justin Timberlake, and Lady Gaga.”
In 2016, Greenwood filed a refund petition with the state Department of Revenue’s Board of Appeals for $28,770 in the calendar year 2014, arguing that it was entitled under Section 1103 of the Gaming Act to exclude from the taxable revenue connected to its table games and slot machines, the value of all cash and personal property it distributed to the players of those games.
Specifically, Section 1103 defines the gross revenue derived from table games and slot machines, which is subject to state taxation, and the casino argued that the concert tickets, which ranged from $200 to$300 each, counted as “personal property” and thus, was ineligible to be taxed.
“The Board of Appeals denied Greenwood’s refund petition, and Greenwood sought review of that decision from the Board of Finance and Revenue. The Board of Finance granted Greenwood’s requested relief in part, and denied it in part. Relevant to the instant matter, the Board of Finance ruled that Greenwood was not entitled to an exclusion for the concert tickets, concluding that ‘the tickets claimed by [Greenwood] are for admission to concerts, and…are services for purposes of Section 1103.”
However, Greenwood filed a petition for review with the Commonwealth Court, whose judges reversed the Board of Finance in a split decision, “characterizing the concert tickets as intangible personal property, and, thus, neither a good nor a service.”
This led the state government to appeal to the Supreme Court of Pennsylvania.
Todd opined that personal property is defined as “an estate or property consisting of movable articles both corporeal, as furniture or jewelry or incorporeal, as stocks or bonds (distinguished from real property),” – while services are defined as “the performance of any duties or work for another or the action of helping or doing work for someone.”
“We conclude that the concert tickets at issue here fit comfortably within the definition of personal property, but not within the definition of services. Specifically, the tickets are unquestionably property of a corporeal or tangible character which is not real estate. The physical tickets themselves can be moved freely or transferred by their owner to another and have an inherent value, as evidenced by the fact they are often resold by the holder of the ticket for an amount well in excess of their printed price,” Todd said.
“Moreover, even after a concert performance has transpired, the physical tickets to the event often retain substantial value as memorabilia which can command significant sums of money by their owners when sold to collectors. Thus, we have little difficulty concluding that concert tickets qualify as personal property as the term appears in the definitions of gross terminal revenue and gross table game revenue.”
Todd and her colleagues likewise found that the tickets themselves as physical objects “do not constitute services, as they do not perform any duties or work for their holder” and while the tickets “confer an intangible right on their holder – the right to see a concert performance by an entertainment performer – we likewise conclude they do not qualify as ‘services’ as that term is used in the definitions of gross terminal revenue and gross table game revenue.”
“For all of these aforementioned reasons, we conclude that the concert tickets Greenwood gave to its patrons in 2014 constituted personal property within the definition of gross table game revenue and gross terminal revenue, and were not services. Hence, Greenwood was entitled to exclude their value from its revenues for that year. We therefore affirm the order of the Commonwealth Court,” Todd said.
Justices Thomas G. Saylor and David N. Wecht each filed concurring opinions to that same effect.
Supreme Court of Pennsylvania case 19 MAP 2020
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com