Greenwood Gaming & Entertainment, Inc. v. Commonwealth
625 Pa. 55
| Pa. | 2014Background
- Greenwood Gaming operated Parx Casino slot machines and claimed ~$1.1M in promotional cash and non‑cash awards (2007–2008) should reduce gross terminal revenue (GTR) for slot‑tax purposes, seeking a refund/credit (~$600,000).
- GTR (pre‑2010 definition) = wagers received by a slot machine minus: (1) cash/cash equivalents paid out as a result of playing a slot machine; (2) cash paid to buy annuities to fund prizes as a result of playing a slot machine; (3) personal property distributed as a result of playing a slot machine (excluding comps).
- Greenwood’s promotions were awarded via player‑tracking (Players Cards), drawings, mailed entry postcards, and targeted player‑development — not as metered payouts by a specific machine or automatically recorded by the Department’s central control computer system (CCS).
- Department of Revenue/Boards denied the refund because the awards were not direct, metered wins tied to a specific machine or recorded by the CCS; Commonwealth Court affirmed.
- Supreme Court majority reversed Commonwealth Court: plain language does not limit deductions to machine‑algorithm “wins” or require CCS tracking; but the promotional awards must still be shown to be “a result of playing a slot machine,” so factual development remanded.
Issues
| Issue | Greenwood's Argument | Commonwealth's Argument | Held |
|---|---|---|---|
| Whether promotional awards not paid through a slot machine’s payout algorithm may be subtracted from wagers in calculating GTR | Awards are "as a result of playing a slot machine" because Players Card activity or insertion proxied play; statute allows subtraction of cash or personal property so long as awards result from play | Deductions limited to awards directly resulting from playing a specific slot machine (metered wins) and recorded by CCS; promotions are business marketing expenses, not slot machine payouts | Court: Plain language does not require a metered machine win nor CCS tracking; awards may be deductible if they result from slot machine play, but factual record is inadequate — remand for factfinding |
| Whether CCS tracking is required for GTR subtractions | CCS is not referenced in GTR definition; other accounting records suffice and refunds can be audited with supporting documentation | Department’s regulation bases daily tax calculations on CCS; CCS is essential to integrity and is the practical mechanism for GTR determinations | Court: Statute and regulations do not mandate exclusive CCS tracking; CCS calculations do not foreclose alternative proofs for deductions |
| Proper rule of construction for ambiguous tax language | Ambiguity should be resolved for taxpayer under 1 Pa.C.S. § 1928(b)(3) because GTR subsections define what is taxable (exclusions) | The taxpayer bears burden to prove refund; some tax rules favor the Commonwealth for exemptions and procedural burdens apply | Court: GTR subtractions are exclusions (defining taxable base) and ambiguities construed in favor of taxpayer; Greenwood bears burden to prove each award resulted from play |
| Interpretation effect of the comp exclusion (items excluded from personal property deduction) | Comp exclusion (travel/food/lodging/services) implies subsection (3) covers non‑metered personal property and supports deductions for promotions not tied to a specific machine | Comp exclusion does not expand deductions; central question remains whether awards are "a result of playing a slot machine" | Court: Comp exclusion supports allowing deductions not tied to a specific machine; it reinforces that awards tied generally to play can qualify |
Key Cases Cited
- Mercury Trucking, Inc. v. Pa. Pub. Util. Comm’n, 618 Pa. 175, 55 A.3d 1056 (Pa. 2012) (standard of review; de novo statutory interpretation)
- Crawford Cent. Sch. Dist. v. Commonwealth, 585 Pa. 131, 888 A.2d 616 (Pa. 2005) (distinguishing exclusions vs. exemptions in tax construction)
- BFC Hardwoods, Inc. v. Bd. of Assessment Appeals of Crawford Co., 565 Pa. 65, 771 A.2d 759 (Pa. 2001) (resolving doubts in favor of taxpayer when defining taxable reach)
- Tool Sales & Serv. Co., Inc. v. Commonwealth, 536 Pa. 10, 637 A.2d 607 (Pa. 1993) (procedural allocation of burden in tax refund/reassessment matters)
- Bundy v. Belin, 501 Pa. 255, 461 A.2d 197 (Pa. 1983) (rule that taxing provisions construed in favor of taxpayer when ambiguous)
- Triumph Hosiery Mills, Inc. v. Commonwealth, 469 Pa. 92, 364 A.2d 919 (Pa. 1976) (legislative intent presumed not to produce absurd results)