Court Opinion

ID: 9346505
Source: CourtListenerOpinion
Date Created: 2022-12-19 17:07:45.290214+00
Date Added: 2024-06-11T16:31:08.772721
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Downs Racing, L.P.,                             :
                 Petitioner                     :
                                                :
                v.                              :
                                                :
Commonwealth of Pennsylvania,                   :    No. 802 F.R. 2016
                Respondent                      :    Argued: May 12, 2021

BEFORE:         HONORABLE RENÉE COHN JUBELIRER, Judge1
                HONORABLE MARY HANNAH LEAVITT, Judge2
                HONORABLE PATRICIA A. McCULLOUGH, Judge
                HONORABLE MICHAEL H. WOJCIK, Judge
                HONORABLE CHRISTINE FIZZANO CANNON, Judge3
                HONORABLE ELLEN CEISLER, Judge
                HONORABLE STACY WALLACE, Judge4

OPINION
BY JUDGE FIZZANO CANNON                              FILED: December 19, 2022

                At issue in this case is whether and to what extent Momentum Dollars,
also known as Players’ Club Points (PC Points), may be excluded from a casino’s
gross income under the Pennsylvania Race Horse Development and Gaming Act

       1
        This case was assigned to the panel before January 7, 2022, when Judge Cohn Jubelirer
became President Judge.
       2
         This matter was assigned to the panel before January 3, 2022, when President Judge
Emerita Leavitt became a senior judge on the Court.
       3
           This matter was reassigned to the author on September 13, 2022.
       4
         This case was argued before a panel of the Court that included President Judge Emeritus
Brobson. President Judge Emeritus Brobson’s service with this Court ended on January 2, 2022,
before the Court reached a decision in this matter. Accordingly, Judge Stacy Wallace was
substituted for President Judge Emeritus Brobson as a panel member in this matter and considered
the matter as submitted on briefs.
(Gaming Act).5 Because we agree with the Board of Finance and Revenue (Board)
that only the casino’s actual costs are excludable, we affirm the Board’s decision in
part, vacate in part, and remand for recalculation of the excludable amounts in
accordance with this opinion.

                                       I. Background

               Petitioner, Downs Racing, L.P. (Downs Racing), operates Mohegan
Sun, a casino and resort in Wilkes-Barre, Luzerne County.           Board Decision,
September 9, 2016 (Bd. Dec.) at 1. Downs Racing seeks a refund of state taxes paid
for the period from June 1, 2012, through December 31, 2013 (Tax Period). Id.
Downs Racing contends that it was entitled to deductions from its gross revenue for
PC Points it distributed to players as credits entered on member cards at slot
machines and game tables. Id. at 1-2. PC Points are not redeemable for cash, but
they can be used in lieu of cash with various vendors at the resort. Id. at 2 & 6.
Downs Racing reimburses the vendors at a discounted rate. Id. at 3. PC Points can
also be redeemed directly with Downs Racing for certain items such as gas cards,
gift cards, and iPads. See id. at 7.
               Rather than attempting to calculate its cost for each individual item,
Downs Racing made an overall calculation based on the total value of PC Points
distributed during the Tax Period. Stipulations of Fact, December 20, 2019 (Stips.)
at 8-9, ¶ 32; see also id. at 10-12, ¶ 33. Downs Racing applied what it asserted to be
a “historical redemption rate” that assumed 93.569% of distributed PC Points would
be redeemed by players. Id. at 8-9, ¶ 32. It then further reduced that figure by
applying a “cost factor” of 67.3% based on the discounts it received in reimbursing
vendors for PC Points redeemed in their shops. Id. However, during its appeal to

      5
          4 Pa.C.S. §§ 1101-1194.
                                            2
the Board, Downs Racing submitted spread sheets that documented the actual cost
to Downs Racing for each item purchased with PC Points. Bd. Dec. at 3
              Notably, Downs Racing also did not track whether PC Points were
awarded for slot machine play or table game play, but simply calculated the
percentage amounts of revenue attributable to each category of play. Stips. at 12, ¶ 35.
Thus, Downs Racing was not in a position to determine whether specific PC Points
being redeemed were awarded for table game play or slot machine play.
              Downs Racing filed a petition with the Department of Revenue’s Board
of Appeals (BOA) seeking a total refund of $6,640,891.29 plus interest for the Tax
Period. Bd. Dec. at 1. Downs Racing asserted that PC Points are “cash equivalents”
and therefore deductible under Section 1103 of the Gaming Act, which defines them
as follows:
              “Cash equivalent.” An asset that is readily convertible to
              cash, including, but not limited to, any of the following:
              (1) Chips or tokens.
              (2) Travelers checks.
              (3) Foreign currency and coin.
              (4) Certified checks, cashier’s checks and money orders.
              (5) Personal checks or drafts.
              (6) A negotiable instrument applied against credit
              extended by a certificate holder, an interactive gaming
              certificate holder, an interactive gaming operator or a
              financial institution.
              (6.1) A prepaid access instrument.[6]

      6
              “Prepaid access instrument.” A card, code, electronic serial number,
              mobile identification number, personal identification number or
              similar device that:

                                               3
              (7) Any other instrument or representation of value that
              the Pennsylvania Gaming Control Board deems a cash
              equivalent.

4 Pa. C.S. § 1103.
              During its review of the refund petition, the BOA requested that Downs
Racing provide additional documentation concerning the redemption of PC Points
and purchases made with the PC Points. BOA Decision, January 4, 2016 (BOA
Dec.) at 3. The BOA subsequently denied the refund petition in its entirety, finding
that Downs Racing did not provide enough information to allow a determination of
whether PC Points were deductible from either gross table gaming revenue (GTGR)
or gross terminal revenue (GTR). Id.
              Downs Racing appealed the BOA’s determination to the Board. The
Board reasoned that Downs Racing was entitled to deductions for the PC Points, but
only for its actual costs, i.e., the amounts it actually paid to vendors as
reimbursement for players’ redemptions of the PC Points. Bd. Dec. at 6-7. Further,
no deductions could be taken for reimbursement of PC Points spent on “travel

              (1) Allows patron access to funds that have been paid in advance
              and can be retrieved or transferred through the use of the device.
              (2) Qualifies as an access device for purposes of Regulation E
              issued by the Board of Governors of the Federal Reserve System
              under 12 CFR Pt. 205 (relating to electronic fund transfers
              (Regulation E));
              (3) Must be distributed by a slot machine licensee or its affiliates in
              order to be considered a cash equivalent at the slot machine
              licensee’s licensed facility or the location of the slot machine
              licensee's affiliates.
              (4) Must be used in conjunction with an approved cashless
              wagering system or electronic credit system in order to transfer
              funds for gaming purposes.
4 Pa. C.S. § 1103.
                                                4
expenses, food, refreshments, lodging or services,” all of which are non-deductible
under Section 1103. Id. at 7. The documentation submitted by Downs Racing did
not break down the reimbursements by category for each item. See id. at 2 & 6. The
Board found the evidence showed that most of the PC Points were redeemed for
excluded categories of items. Id. at 6. Thus, the Board’s finding essentially reflected
that Downs Racing failed to sustain its burden of proof regarding specific items
purchased with PC Points from most of the vendors, which sell both deductible and
non-deductible items.
               Nonetheless, the Board allowed Downs Racing to deduct its costs for
items it provided to players by directly redeeming their PC Points, as well as its costs
for reimbursements to specific listed vendors from whom it would have been impossible
to purchase non-deductible items. The Board awarded a total of $185, 856.93 (GTR
of $177,840.91 and GTGR of $8,016.02), plus interest.7
               Downs Racing then sought review in this Court.

                                           II. Issues
               Downs Racing raises two arguments on review to this Court:8

       7
         The Board also issued a second decision on virtually identical refund claims for the tax
period from January 1, 2014 through June 30, 2015. Downs Racing asserted the same arguments,
and the Board applied the same analysis. Downs Racing sought a total refund of $7,790, 915.16,
of which the Board awarded $1,314,587.30 plus interest. That decision is not at issue here.
       8
           This Court reviews decisions of the Board based on stipulated facts or a record created
before this Court. Pa. R.A.P. 1571(h). In the instant case, the record consists of stipulated facts
and stipulated documents, which we adopt as our own findings of fact. The stipulation is binding
on the parties and the Court, but the Court may draw its own legal conclusions. Kelleher v.
Commonwealth, 704 A.2d 729, 731 (Pa. Cmwlth. 1997). In reviewing the Board’s decisions, this
Court exercises the “broadest scope of review.” Southern Pines Trucking v. Commonwealth, 42
A.3d 1222, 1227 n.5 (Pa. Cmwlth. 2012). Our standard of review is de novo because “we function
as a trial court even though such cases are heard in our appellate jurisdiction.” Id. Further, a

                                                5
                       A. Whether the personal property[9] that is actually
                distributed to patrons as a result of gaming play should be
                excluded from the calculation of GTR and GTGR under
                [Section] 1103 of the Gaming Act.
                       B. Alternatively, even if [the Board] properly
                applied the Gaming Act’s definitions of GTR and GTGR,
                does [the Board’s] Order fail to provide relief for all
                eligible, non-excepted redemption locations and redeemed
                items[?]

Pet’r Br. at 4.

                                         III. Discussion
                The overarching issue in this case is when and how PC Points are to be
valued for purposes of their subtraction from gross revenue. This determination
requires examination of the Gaming Act’s definitions of GTGR and GTR.
                The Gaming Act defines GTGR as “[t]he total of ”:

question will be heard if it was raised “at any stage of the proceedings below and thereafter
preserved.” Pa. R.A.P. 1571(h).
       9
           The Board concluded:
                Notwithstanding this Board’s conclusion that the Momentum
                Dollars and Choice Credits do not constitute cash equivalents, the
                Board finds they qualify as personal property distributed to patrons
                as a result of playing a slot machine or table game. Petitioner has
                provided evidence of value by showing the Momentum Dollars and
                Choice Credits redeemed each month by its patrons. These
                spreadsheets also include the location, store, or restaurant at which
                the property was redeemed.
Bd. Dec. at 6, Conclusion ¶ 2. In this Court, the Commonwealth raises the question of whether
PC Points are personal property “when awarded.” Com. Br. at 8. We do not reach that specific
issue, because we conclude that PC Points can be valued only at the time they are redeemed. As
the Commonwealth stated in its brief, “regardless of whether [the] Points are property at the time
of award or at the time of redemption, the limit on the subtraction for distributions of personal
property under the [gross terminal revenue] [t]ax and [gross table game revenue] [t]ax is clearly
‘actual cost paid[.]’” Commonwealth Brief at 22.
                                                 6
              (1) Cash or cash equivalents received in the playing of a
              table game minus the total of:
                     (i) Cash or cash equivalents paid to players as
                     a result of playing a table game.
                     (ii) Cash or cash equivalents paid to purchase
                     annuities to fund prizes payable to players
                     over a period of time as a result of playing a
                     table game.
                     (iii) The actual cost paid by the certificate
                     holder for any personal property distributed
                     to a player as a result of playing a table game.
                     This does not include travel expenses, food,
                     refreshments, lodging or services.
              ....

4 Pa.C.S. § 1103 (emphasis added).
              By contrast, regarding slot machines, the Gaming Act defines GTR
slightly differently 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 result of playing a
                     slot machine.
                     (iii) Any personal property distributed to a
                     player as a result of playing a slot machine.
                     This does not include travel expenses, food,
                     refreshments, lodging or services.
              ....

                                            7
Id.10 (emphasis added).
               Notably, both definitions provide separately for the deduction of cash
or cash equivalents and other kinds of personal property. This distinction makes
sense because, unlike PC Points, cash and cash equivalents (such as checks, for
example) have both a known and present cost and a known and present value at the
time of their distribution.
               By using different language regarding GTGR and GTR in paragraph
(iii) of each definition, the legislature apparently contemplated some further
distinction for certain kinds of personal property. See Fonner v. Shandon, Inc., 724
A.2d 903, 907 (Pa. 1999) (“[W]here the legislature includes specific language in one
section of the statute and excludes it from another, the language should not be
implied where excluded.”). Under principles of statutory construction, “[p]rovisos
shall be construed to limit rather than to extend the operation of the clauses to which
they refer.” 1 Pa.C.S. § 1924. “The purpose of a proviso is to ‘qualify, restrain or
otherwise modify the general language of the enabling provision.’” Commonwealth
v. Bigelow, 399 A.2d 392, 395 (Pa. 1979) (quoting Commonwealth ex rel. Margiotti
v. Lawrence, 193 A. 46, 48 (Pa. 1937)).11 A proviso need not be expressly labeled
as such. See Donnelly v. York Cnty. Bd. of Assessment Appeals, 976 A.2d 1226,

       10
          In addition to defining how GTGR and GTR are calculated, the Gaming Act also defines
the calculation of “gross interactive airport gaming revenue” and “gross interactive gaming
revenue.” 4 Pa.C.S. § 1103. For both of these types of gaming, as for GTGR, gross revenue is
reduced by “the actual cost paid” by the gaming certificate holders for personal property distributed
to players as a result of play. Id. Only the definition of GTR lacks an express reference to the
“actual cost paid by the certificate holder.” Id.
       11
          Similarly, under the principle of inclusio unius est exclusio alterius, “the expression or
inclusion of one thing in a statute implies the exclusion of an alternative.” Cornerstone Land Dev.
Co. of Pittsburgh LLC v. Wadwell Grp., 959 A.2d 1264, 1270 (Pa. Super. 2008) (first citing
Commonwealth v. Ostrosky, 909 A.2d 1224, 1229 n.7 (Pa. 2006); and then citing Black’s Law
Dictionary 265 (2d Pocket ed. 2001)).
                                                 8
1229 n.5 (Pa. Cmwlth. 2009). Here, therefore, the limitation of deductions from
GTGR to the “actual cost paid” by the taxpayer, 4 Pa.C.S. § 1103, operates as a
proviso in the definition of GTGR that is not present in the definition of GTR. Thus,
the deduction from GTR must be construed as not necessarily limited to the actual
cost paid.
             However, although the legislature made clear that the only way to value
points as a reduction of GTGR is to use the “actual cost paid” for the personal
property distributed to the player, it does not follow that the absence of that limiting
language from the statute’s GTR provision means that personal property cannot be
valued as the actual cost paid, but merely that other means of valuation may also be
appropriate, depending on the type of personal property at issue. For example, we
observe that in Greenwood Gaming & Entertainment, Inc. v. Commonwealth, 263
A.3d 611, 620 n.5 (Pa. 2021) (Greenwood II), our Supreme Court deemed the
distinction in the statutory definitions “inconsequential” as those definitions related
to distributions of event tickets to patrons.
             Under the facts in this case, the face value of PC Points appears on a
patron’s player card as the PC Points are earned by the patron’s gaming play,
whether at tables or slot machines. However, the patron holding the PC Points
decides whether, when, and how to redeem them.             That decision necessarily
determines the amount, if any, that Downs Racing may subtract from gross revenues.
Until redemption occurs, the PC Points constitute merely an inchoate right, both the
value and cost of which are indeterminate.
             In this regard, PC Points are analogous to airline miles awarded by a
credit card issuer in connection with cardholders’ purchases using the card. A
federal court of appeals considering deduction of the costs of airline miles held that

                                           9
the credit card issuer could not deduct the estimated cost of the miles from income,
for federal income tax purposes, before the cardholders actually redeemed the miles
and the issuer actually had to purchase airline tickets for the cardholders. Capital
One Fin. Corp. v. Comm’r, 659 F.3d 316, 327-28 (4th Cir. 2011). The court
reasoned:

                    By limiting deductions until “the obligation to pay,
            has become final and definite in amount,” Sec. Flour Mills
            Co. v. Comm[’]r, 321 U.S. 281, 287 . . . (1944), . . .
            [a]ccuracy is enhanced because a “taxpayer may not
            accrue an expense the amount of which is unsettled or the
            liability for which is contingent.” Baltimore & Ohio R.R.
            Co. v. Magruder, 174 F.2d 896, 898 (4th Cir. 1949)
            (quoting Sec. Flour Mills Co., 321 U.S. at 284 . . . ).
            Distortions in taxable income are also minimized because
            costs and revenue are treated alike. See Lucas v. Am. Code
            Co., 280 U.S. 445, 449 . . . (1930) (“Generally speaking,
            the income[ ]tax law is concerned only with realized
            losses, as with realized gains.”).
                   ....
                   Capital One would be permitted to deduct airline
            ticket redemption costs only when credit card holders
            redeemed their accumulated miles and Capital One was
            thereby obligated to purchase airline tickets on their behalf
            . . . . When a single mile is awarded for each dollar
            charged on the card, it remains unknown when the
            cardholder will earn the 18,000 miles necessary to qualify
            for an airline ticket. It also remains uncertain when, if
            ever, the cardholders will redeem their outstanding
            accumulated miles. Therefore, the amount and timing of
            Capital One’s liabilities with respect to airline tickets for
            MilesOne cardholders are not fixed until customers
            redeem their miles.

Id.

                                         10
              The federal court’s reasoning is persuasive here. Like airline miles
rewarded for credit card use, some PC Points are never redeemed; in those instances,
Downs Racing has incurred no costs. Therefore, any subtraction allowed from gross
revenues in such instances would constitute a windfall. Moreover, if a patron uses
his PC Points to purchase goods at a participating store, Downs Racing reimburses
the vendor at a predetermined rate that is less than the dollar amount charged to the
patron. Allowing Downs Racing to subtract from its gross revenue the dollar value
of the PC Points to the patron would create a windfall by allowing Downs Racing to
subtract more than it spent. In addition, PC Points may be used for purchases that
are not eligible for deduction from gross revenue by Downs Racing, but that,
obviously, cannot be determined until redemption of the PC Points.12
              Importantly, this same reasoning applies equally to all PC Points,
whether they are earned for table gaming or terminal gaming. Accordingly, we
conclude that PC Points must be treated the same way as to both GTGR and GTR.
PC Points can be subtracted from gross revenue only to the extent of (1) their cost
to Downs Racing and (2) their redemption for purchases that are not excluded from
permissible deductions from gross revenues. We agree with the Board, therefore,
that the amount that may be subtracted in relation to each PC Point can be determined
only at the time, if any, that the patron redeems that PC Point.
              The Board did not err in concluding that Downs Racing must
demonstrate the actual cost paid by it for each item for which a deduction was taken,
as well as demonstrating that each item did not constitute travel expenses, food,
refreshments, lodging or services. For vendors selling both eligible and ineligible

       12
          As the Board correctly observed, “travel expenses, food, refreshments, lodging or
services” are not subject to subtraction from gross revenue, so Downs Racing likewise cannot
deduct from gross revenue the amounts it spends to reimburse vendors for those purchases. See 4
Pa.C.S. § 1103; Bd. Dec. at 6.
                                              11
items, this means Downs Racing must provide a breakout distinguishing eligible
purchases from ineligible ones. However, Downs Racing did not provide individual
records of what items were purchased with PC Points. The Commonwealth agrees
that even though Downs Racing did not track what specific items were distributed
at redemption, a deduction should still be allowed for the costs of items purchased
at locations where no prohibited items are sold.                Resp’t Br. at 42.         The
Commonwealth appropriately requests that this Court remand this case to the Board
for calculation of the proper deductions and corresponding refunds. Id.

                                      IV. Conclusion
              For the foregoing reasons, we vacate the Board’s calculation of the tax
refund due for the Tax Period to Downs Racing, affirm the Board’s decision in all
other respects, and remand for a calculation of the refunds due, consistent with that
decision and this opinion.13

                                           __________________________________
                                           CHRISTINE FIZZANO CANNON, Judge

       13
         We note that on July 23, 2020, Downs Racing filed an application to strike exhibits to
the Commonwealth’s brief. As we have not considered those exhibits in reaching our decision,
we deny the application as moot.
                                              12
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Downs Racing, L.P.,                         :
                 Petitioner                 :
                                            :
            v.                              :
                                            :
Commonwealth of Pennsylvania,               :   No. 802 F.R. 2016
                Respondent                  :

                                    ORDER

            AND NOW, this 19th day of December, 2022, the calculation by the
Board of Finance and Revenue (Board) of the tax refund due to Downs Racing, L.P.
(Downs Racing) for the tax period from June 1, 2012, through December 31, 2013
(Tax Period) is VACATED. The Board’s decision is AFFIRMED in all other
respects. This matter is REMANDED to the Board for recalculation of the refunds
due Downs Racing for the Tax Period, consistent with the foregoing opinion.
            Jurisdiction is relinquished.

                                       __________________________________
                                       CHRISTINE FIZZANO CANNON, Judge
             IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Downs Racing, L.P.,                      :
                 Petitioner              :
                                         :   No. 802 F.R. 2016
            v.                           :
                                         :   Argued: May 12, 2021
Commonwealth of Pennsylvania,            :
                Respondent               :

BEFORE:     HONORABLE RENÉE COHN JUBELIRER, Judge
            HONORABLE MARY HANNAH LEAVITT, Judge
            HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE MICHAEL H. WOJCIK, Judge
            HONORABLE CHRISTINE FIZZANO CANNON, Judge
            HONORABLE ELLEN CEISLER, Judge
            HONORABLE STACY WALLACE, Judge

DISSENTING OPINION
BY JUDGE McCULLOUGH                                 FILED: December 19, 2022

            Section 1103 of the Pennsylvania Race Horse Development and
Gaming Act (Gaming Act) excludes from gross table game revenue and gross
terminal revenue “personal property” distributed to gaming patrons as a result of
their playing a table game or slot machine, respectively. 4 Pa. C.S. § 1103. Because
I would conclude that Player’s Club Points (PC Points) are not the “personal
property” of Downs Racing, L.P. (Downs Racing) when they are distributed to
gaming patrons and therefore may not be excluded from Downs Racing’s gross
revenues under the Gaming Act, I must respectfully dissent.
       I.      The Commonwealth Has Raised, and We Must Address First, The
               Dispositive Question of Whether PC Points are “Personal
               Property” When Distributed

               The Majority summarily bypasses, without analysis, the fundamental
question of whether PC Points are Downs Racing’s “personal property” when
distributed, which is the only time relevant to the tax exclusions at issue in this case.
Downs Racing, L.P. v. Commonwealth (Pa. Cmwlth. No. 802 F.R. 2016, filed
December 19, 2022), slip op. at 6 n.9 (Majority Opinion). The Majority concludes
that PC Points can be valued only when redeemed, and therefore their status when
awarded is irrelevant. But, the Majority’s conclusion necessarily begs (and tacitly
answers in the negative) the question of whether PC Points are Downs Racing’s
excludable “personal property” at all under the Gaming Act. That question has been
at issue from the beginning, and the Commonwealth Department of Revenue
(Commonwealth) properly has raised it for our consideration.1

       1
          “This Court reviews de novo the determinations of the [Board of Finance and Revenue]
(Board),” and “[a]lthough cases from the Board are addressed to our appellate jurisdiction, we
function as a trial court.” Allegheny County Department of Public Works v. Commonwealth, 222
A.3d 450, 452 n.3 (Pa. Cmwlth. 2019) (citations omitted). The parties therefore develop in this
Court an independent record from which we review de novo the issues presented in the petition
for review. See Pa. R.A.P. 1571(f), (h)(2); Southern Pines Trucking v. Commonwealth, 42 A.3d
1222, 1227 n.5 (Pa. Cmwlth. 2012) (this Court exercises the “broadest scope of review” of Board
determinations). The parties may establish the record and identify any disputed questions of fact
by filing stipulations. Pa. R.A.P. 1571(f). Although we are bound by the stipulations of fact filed
in this Court, see Northbrook Life Ins. Co. v. Commonwealth, 949 A.2d 333, 336-37 (Pa. 2008),
we are not bound by stipulations, whether of law or fact, submitted to the Board.
        Regarding the issues we may review in an appeal from the Board’s decision, “[a] question
will be heard and considered by the court if it was raised at any stage of the proceedings below
and thereafter preserved.” Pa. R.A.P. 1571(h)(1). See also Pa. R.A.P. 1551(a). As the
Respondent, the Commonwealth “may raise any question on review, even if no cross-petition for
review has been filed by it, and may introduce any facts in support of its position” so long as it
provides the taxpayer petitioner with 20 days’ notice of its intention to do so. Pa. R.A.P. 1571(e).
See also Allegheny County Department of Public Works, 222 A.3d at 452 n.6 (“The
Commonwealth could not file an answer to the petition but is allowed to raise any question for our
review pursuant to Pennsylvania Rule of Appellate Procedure 1571(e).”).
                                             PAM- 2
               As the Majority acknowledges, the legal question of whether PC Points
are “personal property” squarely was before the Board. Downs Racing asserts in its
petition for review that the Board erroneously applied the personal property
exclusion to Downs Racing’s distribution of PC Points based upon patrons’
subsequent purchases. See Petition, ¶¶ 17-18. We cannot conduct any meaningful,
de novo review of that issue without first determining the more foundational
questions of whether, to what extent, and at what point in time, PC Points are or
become Downs Racing’s “personal property.” Because those questions were before
the Board, have not been resolved by stipulation of the parties in this Court, and
adequately have been identified and preserved by the Commonwealth, we must
address them. The Majority’s failure to consider this predicate and dispositive issue
is, I believe, error.2
       II.     PC Points are not Excludable “Personal Property” of Downs
               Racing
               A.        Background and Applicable Law
               The issue before us concerns Downs Racing’s payment of GTR tax and
GTGR tax.
               1.        Section 1103 of the Gaming Act
               For gaming tables, “gross table game revenue” or GTGR is defined, in
relevant part, as the total of:

       2
          Although the Commonwealth at oral argument focused on the method and timing of
valuation of PC Points, it at no time abandoned the argument that PC Points are not personal
property at all. It clearly made the argument in its brief, which is the controlling factor. See Pa.
R.A.P. 2116(a), 2119(a). Oral argument is not the record. And, most importantly, we may address
controlling legal questions on our own. I agree with Judge Wallace’s Dissenting Opinion to the
extent that it concludes that PC Points are not Downs Racing’s personal property when distributed
and, therefore, are not excludable from income.

                                             PAM- 3
               (1) Cash or cash equivalents received in the playing of
               a table game minus the total of:

                       (i) Cash or cash equivalents paid to players as
                       a result of playing a table game.

                       (ii) Cash or cash equivalents paid to purchase
                       annuities to fund prizes payable to players
                       over a period of time as a result of playing a
                       table game.

                       (iii) The actual cost paid by the certificate
                       holder[3] for any personal property
                       distributed to a player as a result of playing
                       a table game. This does not include travel
                       expenses, food, refreshments, lodging or
                       services.
4 Pa. C.S. §1103. (emphasis added). For slot machines, “gross terminal revenue”
or GTR is defined, in relevant part, 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 result of playing a
                       slot machine.

       3
         Section 1103 defines a “certificate holder” as “[a] slot machine licensee that holds a table
game operation certificate awarded by the Pennsylvania Gaming Control Board in accordance with
Chapter 13A (relating to table games).” 4 Pa. C.S. § 1103. The parties stipulated that Downs
Racing is a certificate holder of table game operation.
                                             PAM- 4
                   (iii) Any personal property distributed to a
                   player as a result of playing a slot machine.
                   This does not include travel expenses,
                   food, refreshments, lodging or services.
Id. (emphasis added).

             2.    Player’s Club Points
             During the period of June 1, 2012, through December 31, 2013 (Tax
Period), Downs Racing awarded PC Points to players who used slot machines or
played at table games. (Stip. ¶ 15.) A player who signs up for the reward program
is issued a Status Card, which he inserts into a card reader when playing slot
machines or table games. Id., ¶ 16. Once a player has a Status Card, he may begin
earning PC Points through playing slot machines and table games. Id., ¶ 19. Every
time a player inserts his Status Card into a machine, he is rewarded in real time with
PC Points. Id., ¶ 20.
             Each PC Point has the value of one dollar of “buying power” under
Downs Racing’s redemption program but is not redeemable for cash. Players can
use the PC Points alone, or combine them with cash, credit cards, or other forms of
payment, to make purchases at over 100 shopping, nightlife, entertainment, and
dining locations, including locations owned and operated by Downs Racing and
related entities, as well as those owned and operated by independent third-party
businesses. Id., ¶ 22. Players determine where and how to spend the PC Points. Id.,
¶ 23.
             Downs Racing has the ability to track the establishments where the PC
Points have been used to make purchases but does not have the ability to track the
specific items purchased. Id., ¶ 43. Downs Racing reimburses the vendor accepting
the PC Points at amounts between 5 to 15% below the retail price. In the case of

                                      PAM- 5
redemption for an item at a Downs Racing-operated establishment, Downs Racing
purchases the items wholesale and charges the player a retail price.
              During the Tax Period, for financial accounting and reporting purposes,
Downs Racing recorded a liability for outstanding (or unredeemed) PC Points
awarded to players consistent with the “incremental cost approach.”4 Id., ¶ 29.
Downs Racing maintained a liability account to record the liability associated with
outstanding (or unredeemed) PC Points earned by and awarded to players. A
monthly journal entry was prepared to record the change to point liability from
month-to-month along with the related expense.5 Id., ¶ 30.
              During the Tax Period, Downs Racing awarded a total of 13,594,198.03
PC Points. Id., ¶ 33. Downs Racing did not specifically track whether the PC Points
were awarded based on slot machine play or table game play. Id., ¶ 35. Instead,
Downs Racing estimated the amount of PC Points awarded for slot machine play
and table game play based on the percentage of its gaming revenue attributable to
each type of gaming play. Id. Downs Racing estimated that during the Tax Period,
the value attributable to slot machine play was $11,548,459.77. Id., ¶ 37. The value
of the total PC Points attributable to table game play were estimated to be
$2,045,738.26. Id., ¶ 39.

       4
         Under the incremental cost approach, a company immediately recognizes revenue at the
time of the qualifying purchase. At the same time, the company records a liability for the cost
associated with the company’s future obligation to its customers. (Commonwealth’s Br.,
Appendix C, at 3.)

       5
         Effective October 1, 2018, as required by an amendment to the Financial Accounting
Standards Board Accounting Standards Codification 606, Revenue from Contracts with
Customers, Downs Racing changed its financial accounting reporting for PC Points to the deferred
revenue approach. (Stip. ¶ 32.)

                                           PAM- 6
             3.     Issues on Appeal
             In this Court, Downs Racing argues that PC Points are personal
property, with each Point having the value of one dollar. Downs Racing asserts it is
entitled to a tax deduction for the PC Points distributed to players in an amount based
upon (1) the total PC Points awarded for GTR; and (2) the cost to Downs Racing for
the PC Points awarded for GTGR. Alternatively, Downs Racing argues that even if
we adopt the Board’s redemption-based approach, it is still entitled to $988,912.65
in tax relief because the Board failed to provide relief for numerous PC Points
redemptions that were not within the specifically enumerated exclusions (travel,
expenses, food, refreshments, lodging or services).
             In   response    to   Downs     Racing’s    alternative   argument,    the
Commonwealth first argues that PC Points do not become “personal property” until
they are redeemed, and therefore their value, however calculated, cannot be
excluded. In the alternative, the Commonwealth argues that, if PC Points may be
excluded, Downs Racing should be allowed a refund only for redemptions that took
place at an establishment where items such as travel expenses, food, refreshments,
and lodging could not be purchased.
             Although the Majority fails to address it, the Commonwealth’s first
argument is meritorious and dispositive.
             B.     Discussion
             The issue before this Court is one of statutory interpretation. “The
object of all interpretation and construction of statutes is to ascertain and effectuate
the intention of the General Assembly. Every statute shall be construed, if possible,
to give effect to all its provisions.” 1 Pa. C.S. § 1921(a). “When the words of a
statute are clear and free from all ambiguity, the letter of it is not to be disregarded

                                       PAM- 7
under the pretext of pursuing its spirit.” 1 Pa. C.S. § 1921(b). Only when the words
are ambiguous may we look to the general purposes of the statute, legislative history,
and other sources in an attempt to determine the legislative intent. 1 Pa. C.S. §
1921(c). “In construing a statute, the courts must attempt to give meaning to every
word in a statute as we cannot assume that the legislature intended any words to be
mere surplusage.” Holland v. Marcy, 883 A.2d 449, 455-56 (Pa. 2005). Further, we
should avoid construing a statute in such a way as would lead to an absurd result. 1
Pa. C.S. § 1922(1).
             Applying these principles of statutory construction, it is clear that the
legislature did not intend for PC Points distributed to customers by Downs Racing
to be deducted from GTR or GTGR as “personal property” under section 1103 of
the Gaming Act. The Gaming Act is clear. GTR and GTGR are calculated by taking
the total of wagers received from slot cash and gaming tables and subtracting the
cash and personal property distributed or paid out to customers. For gaming tables,
“gross table game revenue” or GTR is defined, in relevant part, as the total of:

             (1) Cash or cash equivalents received in the playing of
             a table game minus the total of:

                      (i) Cash or cash equivalents paid to players
                      as a result of playing a table game.

                      (ii) Cash or cash equivalents paid to purchase
                      annuities to fund prizes payable to players
                      over a period of time as a result of playing a
                      table game.

                      (iii) The actual cost paid by the certificate
                      holder for any personal property
                      distributed to a player as a result of playing
                      a table game. This does not include travel

                                        PAM- 8
                     expenses, food, refreshments, lodging or
                     services.
4 Pa. C.S. § 1103 (emphasis added).
              For slot machines, “gross terminal revenue” or GTR is defined, in
relevant part, 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 result of playing a
                     slot machine.

                  (iii) Any personal property distributed to a
                  player as a result of playing a slot machine.
                  This does not include travel expenses, food,
                  refreshments, lodging or services.
Id. (emphasis added).
              This adjusted amount is what the gaming table and slot machine taxes
are based upon. The personal property obviously is a reference to the casino’s
personal property distributed to customers (e.g., cars, jewelry, gift cards, and concert
and event tickets) – i.e., which are deductible from wagers received to arrive at
taxable revenue. The Majority, however, looks at PC Points chiefly from the
standpoint of the gaming patron. Although the Majority appears to assume that PC
Points are “personal property” when distributed, it then goes on to conclude that
redemption by the patron, or lack thereof, determines whether the PC Points are
excludable:

                                       PAM- 9
               [T]he patron holding the PC Points decides whether,
               when, and how to redeem them. That decision necessarily
               determines the amount, if any, that Downs Racing may
               subtract from gross revenues. Until redemption occurs,
               the PC Points constitute merely an inchoate right, both the
               value and cost of which are indeterminate.

(Majority Opinion, at 9.) The contradiction in the Majority’s analysis is patent. PC
Points cannot be both “personal property” and “an inchoate right” when they are
distributed to patrons. The Majority thus necessarily concludes, without saying so,
that PC Points are not personal property at all until they are redeemed. Redemption
apparently then converts the Points into the “personal property” of the patron, the
characterization and value of which determines whether and how much Downs
Racing may exclude PC Points from gaming revenue. I believe that this is a
misreading of section 1103 that contradicts legislative intent. 6
               Clearly, under the statute, to calculate gross revenue, it is the casino’s
cash and personal property (“[a]ny personal property distributed to a player”) paid
out to players that is subtracted from the wagers the casino receives from slot
machines and gaming tables to determine the revenue that should be taxed – not the
player’s personal property. See 4 Pa. C.S. §1103. Thus, whether or not PC Points
are later redeemed for an item which upon redemption becomes the player’s personal
property is irrelevant under section 1103, which sets forth how to calculate the
gaming revenue, i.e., the casino’s profit, for purposes of determining the amount or
revenue that is taxable. PC Points are a contractual liability of the casino, i.e., a
performance obligation.
               As the Majority acknowledges, PC Points when distributed have
absolutely no value that would render them “personal property.” Rather, they are

       6
         In construing a statute, the courts must avoid interpreting the language in a way that would
lead to an absurd result. See 1 Pa. C.S. § 1922(1).
                                            PAM- 10
an abstract promise that Downs Racing will, in the future, allow them to be
exchanged for something of value. The term “personal property” is defined as “any
moveable or intangible thing that is subject to ownership and not classified as real
property.” Black’s Law Dictionary 1337 (9th ed. 2009). PC Points are not owned
by Downs Racing. According to Downs Racing’s admissions, it maintains a liability
account associated with awarded PC Points that it adjusts monthly to record the
change in liability from the previous month. Downs Racing’s actual cost for the PC
Points is recorded as a liability in its financial accounting books. This liability takes
into account factors such as breakage (i.e., PC Points awarded but not redeemed).
The formula for determining Downs Racing’s liability for PC Points is as follows:
recorded liability equals the aged liability times the cost factor. (Downs Racing’s
Br. at 28.) Thus, a PC Point - a promise to transfer a good or service to the player is
a performance obligation, i.e., is a liability, not “personal property.” See “New
Revenue Recognition Rules: How will they affect loyalty programs?” authored by
PricewaterhouseCoopers LLP (PWC), at 2.
             Accordingly, because PC Points are not the “personal property” of
either the player or Downs Racing, Downs Racing is not entitled to any refund for
Points distributed to players under section 1103. This is not to say that casinos are
not entitled to claim loyalty points elsewhere on their corporate income tax returns
as a cost of doing business to reduce their income tax liability. I do not reach that
question here because it is beyond the scope of this appeal. I merely would hold that
PC Points are not deductible as Downs Racing’s “personal property” to reduce GTR
or GTGR under section 1103. This Court cannot create statutory content out of
words that are not there. Danganan v. Guardian Protection Services, 179 A.3d 9,
17 (Pa. 2018) (“the Court may not supply additional terms to, or alter, the language

                                       PAM- 11
that the Legislature has chosen”).7 The Majority in its holding does just that.
Because, on these grounds, I would reverse the Board’s determination, I respectfully
dissent.
                                                   ________________________________
                                                   PATRICIA A. McCULLOUGH, Judge

Judge Ceisler joins this Dissenting Opinion.

     7
        The distinction between personal property in section 1103 and contractual liabilities of a
casino has been and remains clear. The term personal property cannot conceivably be interpreted
to include contractual liabilities of the casino. The very case cited by the Majority, Capital One
Financial Corp. v. Commissioner, 659 F.3d 316, 327-28 (4th Cir. 2011), fully supports treating
PC Points as liabilities, which if and when they are redeemed, are deductible as business expenses
on federal income tax returns.
         In Capital One, the court dealt with whether Capital One Financial Corporation could claim
a deduction on its federal corporate income tax return for estimated future costs related to its
“MilesOne program.” The court explained that the Internal Revenue Code allows a deduction for
“all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on
any trade or business.” 26 U.S.C. § 162(a). The court in Capital One recognized that reward
points were expenses that are deductible from income as liabilities. However, the court in Capital
One never treated the miles as personal property, which is what is required under the Pennsylvania
Gaming Act.
         Similarly, in Gold Coast Hotel & Casino v. United States, 158 F.3d 484, 490 (9th Cir.
1998), the federal court applying the federal tax code, held that slot club member points were a
“liability” that the casino could properly deduct at the end of its fiscal year under section 162(a)
of the Internal Revenue Code as an ordinary and necessary expense “paid or incurred during the
taxable year in carrying on any trade or business.” In Giant Eagle, Inc. v. Commissioner, 822 F.3d
666, 669 (3d Cir. 2016), the court described fuelperks! rewards as contractual liabilities that Giant
Eagle was entitled to claim as deductions on its federal income tax return during the tax years at
issue. These cases, like Capital One, demonstrate that reward points, like the PC Points at issue,
are a contractual liability (deductible as an expense for federal and state corporate income tax
purposes), and not personal property.
         Downs Racing did not prepare and file federal or state income tax returns because it is not
subject to federal or Pennsylvania income tax. See Uniband, Inc. v. Commissioner, 140 T.C. 230,
245 (2013); Stip. ¶¶ 7, 28. Thus, it cannot take advantage of such “deductions” for redeemed PC
Points on federal or state corporate income tax returns. Instead, Downs Racing seeks to engraft
such exemption onto section 1103 of the Gaming Act and subtract these liabilities from gaming
revenue, contrary to the express language of the General Assembly in enacting the Gaming Act.
Quite simply, Downs Racing is not entitled to claim a deduction that the legislature did not provide
in section 1103 of the Gaming Act.
                                            PAM- 12
           IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Downs Racing, L.P.,                             :
                              Petitioner        :
                                                :
                v.                              : No. 802 F.R. 2016
                                                : Argued: May 12, 2021
Commonwealth of Pennsylvania,                   :
                     Respondent                 :

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
        HONORABLE MARY HANNAH LEAVITT, Judge
        HONORABLE PATRICIA A. McCULLOUGH, Judge
        HONORABLE MICHAEL H. WOJCIK, Judge
        HONORABLE CHRISTINE FIZZANO CANNON, Judge
        HONORABLE ELLEN CEISLER, Judge
        HONORABLE STACY WALLACE, Judge

DISSENTING OPINION
BY JUDGE WALLACE                                             FILED: December 19, 2022

       Although I appreciate the Majority’s astute analysis in this challenging case,
I agree with Judge McCullough that Downs Racing, L.P. (Downs Racing) is not
entitled to a tax refund based on the Player’s Club Points (PC Points) it distributed
to its players. I write separately to raise two additional points.1

1
  I respectfully disagree with Judge McCullough’s interpretation that the Commonwealth first
argues the deduction should not occur at all. See Downs Racing, L.P. v. Commonwealth, ___
A.3d ___, ___ (Pa. Cmwlth., No. 802 F.R. 2016, filed Dec. 19, 2022) (McCullough, J., dissenting),
slip op. at 7. Having been assigned to this case after argument, I reviewed the argument after the
fact. During argument, it became undoubtedly clear that the Commonwealth repeatedly advances
only one position: the Commonwealth looks to the time of redemption of the PC Points to calculate
the deduction. However, even though the Commonwealth takes the position that costs at the time
of redemption can be excluded from revenue, the broader issue before the Court is the deduction
(Footnote continued on next page…)
                                      Personal Property
       In analyzing whether PC Points are “personal property” distributed to players,
I respectfully suggest that our focus should be on whether players have a right to PC
Points they receive, rather than on who owns the PC Points. See Downs Racing,
L.P. v. Commonwealth, ___ A.3d ___, ___ (Pa. Cmwlth., No. 802 F.R. 2016, filed
Dec. 19, 2022) (McCullough, J., dissenting), slip op. at 9-11. Exhibit D to the current
stipulations of fact is a letter from Downs Racing’s Chief Financial Officer (CFO)
to the Department of Revenue regarding the applicability of sales tax to transactions
paid for in PC Points. The letter includes the following discussion, which describes
terms and conditions underlying Downs Racing’s award of PC Points to its players:

       First, the [PC P]oints a customer accumulates on his Player’s Club card
       are non-transferable, nonnegotiable and cannot be redeemed for cash.
       Second, a patron’s [PC P]oints will expire if his account is inactive for
       a period of [12] months. Third, and most importantly, a patron who
       enrolls in the Player’s Club card program has no enforceable rights of
       any kind. Specifically, the terms and conditions of the program
       expressly provide that[] (a) [Downs Racing] may, at any[]time, revise
       or cancel the program without prior notice and without liability, (b)
       [Downs Racing] has the unfettered right to deny or revoke membership
       in the Player’s Club card program to any individual or refuse to fulfill
       any Player’s Club card point redemption request for any reason, and (c)
       all rewards and benefits under the Player’s Club card program are
       offered at the sole discretion of [Downs Racing], which may alter or
       amend any program feature or benefit at any time including, without
       limitation, adjusting point accrual or redemption criteria, establishing

from gross revenue pertaining to PC Points. The Commonwealth focuses on when not whether the
deduction should occur, but this Court is not bound by the parties’ interpretation on a legal issue.
In other words, Downs Racing would like to exclude from revenue the value of the points at the
time of distribution and the Commonwealth focuses on the time of redemption, but neither party
can determine the legal issue of whether the PC Points fall within the § 1103 meaning of personal
property. See 4 Pa.C.S. § 1103. This Court is duty bound to apply its “independent judgment” on
the legal issue even if it is contrary to the position of both parties. See Commonwealth v. Spruill,
80 A.3d 453, 460 (Pa. 2013) (explaining “[T]he parties’ agreement on a legal issue does not control
[the appellate court’s] independent judgment.”).

                                             SW - 2
       conditions of expiration for inactive accounts, or canceling or
       suspending the Player’s Club card program at any time. Simply stated,
       a patron gives no consideration of any kind for the privilege of enrolling
       in the program and, consistent therewith, receives no promises,
       guarantees or rights in return.
Stipulations of Fact, December 20, 2019 (Stips.) Ex. D (emphasis added).2
       As this discussion demonstrates, PC Points are non-transferable and have no
cash value. A player who receives PC Points also has no right to their use, as they
expire, and Downs Racing may cancel them, or simply refuse to honor them, at any
time and for any (or no) reason. In his letter, the CFO characterizes PC Points as
“worthless because they are cancelled at the time of redemption.” Id. Our case law
provides that, although the word “property” often describes “a physical object that
is the subject of ownership,” property in a precise legal sense “denotes the aggregate
of rights or legal relations that an owner has in or with respect to the physical
object.” Petition of Borough of Boyertown, 466 A.2d 239, 245 (Pa. Cmwlth. 1983)
(citation omitted and emphasis added); see also Black’s Law Dictionary 1470 (11th
ed. 2019) (defining “property” as, in relevant part, “the rights in a valued resource”
and “[a]ny external thing over which the rights of possession, use, and enjoyment
are exercised”) (emphasis added). As players have no rights to the PC Points they
receive, Downs Racing has not truly awarded them property of any kind.
                                 Legislative Considerations
       Unlike the Majority, I do not find persuasive the decision by the United States
Court of Appeals for the Fourth Circuit in Capital One Financial Corp. v.

2
  Further, the current stipulations include a brochure detailing the rules of the Player’s Club card
program. Stips. Ex. B. The rules include provisions stating, “[Downs Racing] reserves the right
to approve, deny or revoke membership in the Player’s Club program to any individual or refuse
to fulfill any . . . [PC P]oint redemption request for any reason,” and, similarly, “[a]ll rewards and
benefits under the Player’s Club program are offered at the sole discretion of [Downs Racing].”
Id.

                                              SW - 3
Commissioner, 659 F.3d 316 (4th Cir. 2011). Capital One dealt with federal income
tax law in a completely different industry, which does not share the underlying
policy considerations at issue here. The Majority quotes Capital One, including its
assertion that, “[g]enerally speaking, the income[]tax law is concerned only with
realized losses, as well as realized gains.” Downs Racing, ___ A.3d at ___, slip op.
at 10 (quoting Capital One, 659 F.3d at 328). The same cannot be said, however, of
the Pennsylvania Race Horse Development and Gaming Act (Gaming Act).3 Section
1102 of the Gaming Act, entitled “Legislative intent” lists numerous policy
considerations specific to the gaming industry, including protecting the public
through the regulation of gaming. 4 Pa.C.S. § 1102. Another concern the Gaming
Act addresses, as our Supreme Court has explained, is a casino’s ability to induce
players to wager at its facilities. Greenwood II, 263 A.3d at 622. This concern is
serious enough that our General Assembly has decided not to allow casinos to
exclude from gross revenue certain costs used as part of the inducement process. Id.4

3
  4 Pa.C.S. §§ 1101-1904.
4
  Section 1103 contains the “comp exclusion,” which prohibits a taxpayer from subtracting “travel
expenses, food, refreshments, lodging or services,” referred to as “comps,” from gross revenue.
Greenwood Gaming & Ent., Inc. v. Dep’t of Revenue, 90 A.3d 699, 707 (Pa. 2014) (Greenwood I)
(quoting 4 Pa.C.S. § 1103). Because PC Points are not personal property, Downs Racing may not
subtract them from its gross revenue, and we need not consider whether the PC Points fall within
the comp exclusion.
        Nonetheless, as our Supreme Court has explained, “the General Assembly has made a
policy judgment that whenever a casino provides [comps] for the patron’s personal use, and
assumes the cost of such things for the patron as an inducement to wagering at its facilities, it
cannot exclude the value of such things from its taxable revenues.” Greenwood Gaming & Ent.,
Inc. v. Commonwealth, 263 A.3d 611, 622 (Pa. 2021) (Greenwood II) (emphasis added).
Importantly, PC Points can be utilized for the very things that our General Assembly has excluded
from the deduction. Respectfully, the Commonwealth’s position that costs expended on items not
falling within the comp exclusion may ultimately be deducted from revenue completely overlooks
that the PC Point system is an inducement. This is clear because the system includes the ability to
receive the tempting items that the General Assembly has identified as those likely to induce future
gambling. Whether the players ultimately use their PC Points on something that was not within
the comp exclusion is of no consequence because the players were nonetheless induced, tempted,
(Footnote continued on next page…)

                                             SW - 4
For this reason, I do not think the federal court’s decision in Capital One should
guide us.
       In sum, setting aside the broad picture of legislative considerations, the PC
Points simply are not personal property. Therefore, costs Downs Racing incurred
upon the redemption of the PC Points are not deductible from revenue – regardless
of whether the player redeems a teddy bear or a steak.
       For the reasons expressed above, I dissent.

                                                               ________________________
                                                               STACY WALLACE, Judge

drawn-in by being able to get the “free” items of their longing. In other words, a teddy bear that
is a giveaway distributed to a player as a result of game play is not the same as a teddy bear
redeemed with a PC Point because the PC Point was used to get the player to return in the future
and presumably gamble more. The wide variety of what can be redeemed with PC Points is sure
to tickle the fancy of each player; the future promise of a collectible teddy bear may attract one
person while the future promise of a steak may lure in another. To be more accurate, the “promise,”
is only perceived to be a guarantee because, after all, the players do not have rights in the future
redemption of the PC Points.
        Presently, Downs Racing provides comps to players indirectly using PC Points. Indeed,
the letter from Downs Racing’s CFO explains that it provides “comps,” including “meals and
merchandise . . . as a means of promoting the [casino], encouraging the customers to come to the
[casino], play longer after they arrive, and return again in the future. The principal mechanism
[Downs Racing] employs for dispensing comps to patrons is the Player’s Club card program.”
Stip. Ex. D (emphasis added).

                                             SW - 5