Mohegan Pennsylvania is off the hook to pay Luzerne County more than $1 million in taxes for complimentary hotel rooms offered to patrons in the casino’s Momentum royalty program.
The Pennsylvania Commonwealth Court, in an 18-page opinion, upheld a ruling by Luzerne County Court of Common Pleas Judge Lesa S. Gelb that Mohegan does not have to collect a 5% tax on each hotel room offered as a “gift” to attract patrons to the casino in Plains Township.
Gelb in November 2024, cited the language in the county’s adopted 1996 Hotel Room Rental Tax that compelled hotels in Luzerne County to collect 5% tax on paid leased hotel rooms in her ruling that favored Mohegan, as the casino does not charge patrons hotel room fees.
Gelb called Luzerne County’s legal analysis of the Hotel Room Rental Tax “a square peg in a round hole by advancing an unconvincing argument.”
The issue dates back to 2018, when the county informed the casino it owed $1.36 million in delinquent hotel taxes on complimentary rooms from January 2016 through August 2018. Mohegan objected to the hotel room tax assessment by the county, which resulted in legal arguments before Gelb and the county’s appeal to the state Commonwealth Court.
Mohegan paid the hotel room tax on complimentary rooms but ended payments in 2016.
Luzerne County, in its appeal, claimed a hotel tax is owed on complimentary rooms offered to casino loyalty members qualified as a “consideration” due to the 1996 Hotel Room Rental Tax, which involved receipts, fees, charges, rentals, leases, cash, credits, and property of any kind or nature, or other payment. The county highlighted “property of any kind” in its appeal, requiring Mohegan to collect a 5% tax on each complimentary room.
Gelb and the Commonwealth Court noted in their opinions that “consideration does not need to take the form of a cash exchange.”
In its response, Mohegan said it offers complimentary rooms to loyalty members in hopes of attracting patrons to visit and spend money on the casino floor, restaurants, and other entertainment venues at its facility, where taxes are collected and paid.
“As Mohegan points out, it already pays substantial taxes on gaming revenue, and guests pay tax on meals purchased on the premises, and shops collect and remit sales tax on eligible items,” the Commonwealth Court ruled, noting, “we find that (Gelb) correctly held the (county’s 1996 Hotel Room Tax) is not applicable to complimentary rooms because Mohegan does not receive any payment in exchange for the rooms.”
Rosenn, Jenkins & Greenwald, LLP, represented Mohegan Pennsylvania.