The opinion of the court was delivered by: Johnny J. Butler, Judge
Argued: September 13, 2011
BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE JOHNNY J. BUTLER, Judge HONORABLE KEITH B. QUIGLEY, Senior Judge
Greenwood Gaming and Entertainment, Inc. (Greenwood) petitions for review of the October 23, 2009 order of the Board of Finance and Revenue denying its Petition for Review of Refund for Slots Gross Terminal Revenue. The issue before this Court is whether the value of cash and non-cash prizes distributed by Greenwood to patrons with Players Cards may be excluded from gross terminal revenue (GTR) because they are dispersed "as a result of playing a slot machine." For the reasons listed below, we affirm the order of the Board of Finance and Revenue.
Greenwood operates the Philadelphia Park Casino and Racetrack (Philadelphia Park). In casinos operated in the Commonwealth of Pennsylvania, including Philadelphia Park, the Department of Revenue (Department) has installed a central control computer system (CCS) that provides information to the Department about various financial events that occur during the operation of slot machines. According to the Department's regulations, the determination of GTR and the
calculation of taxes and other assessments due to the Department based upon slot machine play are determined based on the actual calculations made by the CCS.*fn1 The Pennsylvania Race Horse Development and Gaming Act (Gaming Act)*fn2 provides for several deductions from GTR, i.e., for awards such as cash or cash equivalents paid out to patrons, cash paid to purchase annuities to fund prizes, and any personal property, all of which are measured by the CCS. The CCS, however, only measures for the deduction of those payments made to patrons which are made within the algorithm of the slot machine, which results from a patron's physical operation of the slot machine.*fn3 Greenwood has requested that cash and non-cash prizes that it distributed to casino patrons in 2007 and 2008, but that were not recorded by the CCS, such as promotional items it distributes to patrons who hold Players Cards,*fn4 be included as allowable deductions.
Only Greenwood's patrons with a Players Card were eligible to receive the specific prizes at issue in this case. The eligibility criteria for some of the prizes required that a patron have his/her card inserted in a slot machine at the time the prize was awarded, or during other specified times. The eligibility criteria for other prizes were based on a patrons' prior gaming activity. In either event, the patrons were required to be on the casino premises at the time of the award or have been there during a specified period of time. All of the prizes were designed to improve the relationship between Greenwood and its patrons, with the ultimate goal of encouraging patrons to frequent the casino more often, to increase his/her gaming activity, and to promote the casino positively to others.
The prizes Greenwood seeks to deduct from GTR were distributed to patrons who are said to have won the prizes at issue in one of the following ways: 1)
by having their Players Card inserted into a slot machine during a designated period or at a designated time; 2) by having entries deposited in and selected from a drawing drum by a computer using a random number generator; 3) by bringing to a specific place at the casino, usually the Players' Services Desk, a postcard or other mailer the casino had sent to a patron; or 4) by being a specific patron receiving them as part of what the casino would refer to as player development. Greenwood sought a refund of slot machine tax and local assessment fees under the Gaming Act, and filed a petition for review with the Department's Board of Appeals. The Board of Appeals denied Greenwood's petition on July 13, 2009, finding that the refund sought was not the direct result of a metered win from playing a slot machine. Greenwood timely appealed to the Board of Finance and Revenue (Board) which denied its appeal in an order mailed on October 23, 2009. Greenwood timely appealed the order of the Board to this Court.*fn5 The parties have filed a Stipulation of Facts to create the record in this matter. Greenwood filed a short supplement to the Stipulation.
Greenwood argues that the Board wrongly disallows cash and non-cash awards made to patrons who hold Players Cards because the Board determined that the prizes are won outside of the payout algorithms of the slot machines. It further argues that the statutory language does not include a limitation based on the algorithm of the game and the Department has no authority to impose one. In addition, Greenwood contends that it is unlikely that the legislature authorized an all- but-never-available deduction (i.e., an award of personal property made as a result of the algorithm of the game). Finally, Greenwood argues that the personal property exclusion to GTR explicitly excludes "comps" such as travel expenses, food, refreshments, lodging or services, and thus the statutory language confirms that all other awards of personal property made "as a result of playing a slot machine" are within the exclusion from GTR, and there is no basis to treat the prizes at issue any differently. We disagree.
The Gaming Act defines GTR as: The total of:
(1) cash or cash equivalent wagers received by a slot machine minus the total of:
(i) Cash or cash equivalents paid out to players as a result of playing a slot machine, whether paid manually or paid out by the slot machine.
(ii) Cash or cash equivalents paid to purchase annuities to fund prizes payable to players over a period of time as a ...