Lawmaker seeks to expand gaming

Although the idea has the support of some casino operators and some lawmakers, who note that expanding gambling ultimately would generate more money for the state, even some in the casino industry question whether adding table games would really rake in more dollars.

''We think it's too premature to expand,'' said Christopher Craig, spokesman for Sen. Vince Fumo, D-Philadelphia. ''We think we need to get used to casinos working here and get used to regulating the industry before we consider expanding card games.''

The proposal received an equally tepid response in the House, where DeWeese has said he intends to introduce a gaming expansion bill early next year.

''It took years to get slots in there, and it took two years to get that bill respectable,'' House Republican spokesman Steve Miskin said. ''Expanding table games will take a long time — if that's where the state wants to go.''

DeWeese supports expanding gambling to raise more revenue toward property tax relief, his spokesman Tom Andrews said. ''It's [just] a matter of starting the discussion,'' Andrews said of his boss' plan.

Casinos reap 70 percent to 85 percent of their gaming revenue from slots and the rest from table games, according to industry experts. Adding table games can help casinos increase their profits by drawing not only table game players, but also additional slots players.

By not having table games, Pennsylvania may lose slots players to other states, said Steve Rittvo, spokesman for The Innovation Group, a gambling consulting firm based in New Orleans.

''The biggest thing table games do is protect you against entertainment in competing environments,'' said Rittvo, who described expanding gambling as ''a defense mechanism.''

Legalizing table games, he said, would make casinos planned in Philadelphia ''definitively more competitive with Atlantic City.''

The reason: If one spouse plays table games and the other plays slots, the pair is more likely to travel to New Jersey or another location where both can gamble. ''It's not just table players that you lose, but those that travel with them,'' Rittvo said.

Table game players are attractive to casinos for other reasons: They tend to spend more money than slots players on lodging, food, alcohol and entertainment. Additionally, they tend to be younger and financially better off than slots players and help casinos woo another audience.

''All these kinds of games are very popular with the younger set … . These are another opportunity for the casinos to attract the gambler,'' said Rep. Paul Clymer, R-Berks, a staunch opponent of legalized gambling.

Clymer and other gambling foes worry that legalizing table games such as poker and blackjack, which have seen a boom in popularity among high school and college students in recent years, would increase gambling addictions among Pennsylvania's young people.

A study by the American Gaming Association found that adults aged 21 to 39 play poker more than any other age group and that poker participation has increased in each of the last three years. Consumer spending on poker in Nevada rose from $62.6 million in 2000 to $140.2 million in 2005. In New Jersey, poker spending increased from $35.6 million to $67 million during that same period.

''Table games really attract a lot of the younger people. Let's face it: Senior citizens are dying off. They want to have a new generation of people to fleece,'' said Dianne Berlin, spokeswoman for CasinoFreePA.

To date, no other state that has legalized slot machines has changed its law to add table games, although some states legalized both at the same time. Part of the reason states have been slow to expand gaming, said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts, is ''public opinion and political feasibility.''

It's one thing to convince constituents that it's not a bad idea to legalize gambling at racetracks, Barrow said. Convincing them that full-fledged casinos with table games are good for a state is tougher, he said. ''Pennsylvania is the first to start talking about it this quickly,'' he added.

Still, it's unclear whether legalizing table games would actually be a jackpot for Pennsylvania casinos, which face one of the highest taxes in the country. Pennsylvania levies a 55 percent tax on slots parlor revenues, of which 34 percent will go toward lowering property taxes.

''I've not seen an area implement table games with the tax rate that is in effect in Pennsylvania,'' said Rittvo, of the consulting firm.

Table games — because they require more employees — are more costly for casinos than slots. The lower profits generated from table games, coupled with a high tax, has led some casinos to shy away from pushing lawmakers to legalize table games.

''I think it is a very difficult place to make a profit,'' Rittvo said. ''I'm not sure that there's total unanimity among operators that they want it.''

Rendell, who supported legalizing slots parlors to generate money for property tax reductions, said it's premature to discuss gambling expansions. He prefers a two- to three-year test period after the state's casinos open.

Rendell signs law allowing unlimited drinks at casinos

He says state gambling regulators should have 'control mechanisms' in licensing agreements. Gov. Ed Rendell on Wednesday signed legislation to let Pennsylvania's slot-machine parlors serve unlimited free alcoholic drinks to gamblers — a measure that allows an exception to the state's current limit of one free drink per person.

Rendell, however, said he expects state gambling regulators to include ''control mechanisms'' in licensing agreements with the operators of gambling establishments, such as possibly limiting the per-person distribution of drinks to one per hour.

''Virtually every gaming operation around the world has this amenity, but there are rules and regulations that control it and limit it,'' Rendell said at a news conference on another topic. ''There is a tendency … to think that these gaming institutions or gaming businesses want people to get falling-down, sloppy drunk so that they'll lose more money. That isn't the case.''

The bill passed 27-22 in the Senate and 112-75 in the House on Nov. 21, before the Legislature adjourned for the year.

Proponents of the measure say it is necessary to allow Pennsylvania's gambling establishments to compete with those in other states where around-the-clock free drinks are customary.

Under current law, the state's horse racing tracks cannot serve any free drinks, and other licensed establishments, such as bars and restaurants, can serve up to one free drink per patron.

The bill will allow 14 slots parlors, including the ones at racetracks, to serve free drinks during the hours that licensed liquor establishments can serve them — from 7 a.m. to 2 a.m.

Lawmakers who opposed the bill called it both irresponsible and unfair to other establishments that serve alcohol.

PA approves houses slots bill

HARRISBURG - The state House of Representatives yesterday prolonged its squabble with the Senate over a bill intended to strengthen regulation and enforcement of Pennsylvania's slot-machine industry, approving changes and sending it back to the Senate.
The unanimous vote kept the bill from going to Gov. Rendell. It also continued a volley between chambers that has lasted for much of the last year over how to fix problems identified by critics of the state's two-year-old gambling law, with one chamber often dropping pet provisions written by the other.
House Majority Leader Sam Smith (R., Jefferson) said he sympathized with colleagues who were dissatisfied with the Senate's version, but warned that further revisions could scuttle passage of a final bill before the legislative session ends Nov. 30.
"There's a limit to how many times we can bounce this ball back and forth across this building," Smith said. "If we amend this bill, this bill then will be sitting in the Senate in the lame-duck session, and at that juncture, all bets are off... as to whether or not we will actually be able to get a very solid reform bill in front of this governor this session."
Senate leaders were reviewing their options and expected to announce a plan today, said Erik Arneson, chief of staff to Senate Majority Leader David J. Brightbill (R., Lebanon).
The Senate passed its version of the gambling-law revisions during a marathon session that stretched from Monday to early yesterday as members rushed to complete major business and adjourned until after the Nov. 7 election. With just two weeks remaining, legislators were eager to return to their districts to campaign in a volatile election year.
Both houses have agreed to changes that would require the state Attorney General's Office to form a gambling-crimes unit, wipe out a requirement that slot-machine manufacturers sell through an in-state distributor, and delete language in the current law that allows public officials to directly own up to 1 percent of a gambling interest.
The House did not change a provision of the Senate bill that would force casino developers to follow local zoning procedures, including in Philadelphia, and allow zoning appeals to go to the state Supreme Court. In a bill passed in March, the House had introduced a clause eliminating local zoning control for casinos in Philadelphia.
But the two chambers have disagreed over many other provisions. The version the House approved includes provisions not endorsed by the Senate, such as banning campaign contributions from applicants for horse racetrack licenses and requiring casinos to comply with local ordinances banning indoor smoking.
The House version also allows the legislature, rather than the state, to decide whether to transfer state-owned riverbed property rights to casinos.
The law, which was passed in July 2004, legalized up to 61,000 slot machines at 14 sites.

Zoning battles!

ZONING CONTROL FOR two local casinos has been a high-stakes game of political ping-pong paddled between Harrisburg powerhouses for more than two years.
As the game wears on, long and lofty serves are supplanted by short and vicious strokes.
Last month, the state Senate served up the issue again by passing a gambling reform bill and sending it to the state House.
House Speaker John Perzel last week returned that serve to the Senate with serious political backspin. State Sen. Vince Fumo quickly slapped back, leaving the ball in Perzel's court again today.
Here's a game breakdown:
PING - Fumo started the volley more than two years ago when his office crafted language for the original gambling law that took away local zoning control for 14 casino licenses statewide, including two in Philadelphia. Gov. Rendell was, and still is, concerned that local zoning boards could stall the opening of casinos.
PONG - That law was approved by the Senate and House and signed into law by Rendell in July 2004. But five months later, Rendell vetoed new legislation that would have allowed local appeals on casino zoning.
PING - The state Supreme Court swatted the original slots law back to the General Assembly in 2005, ruling that pre-emption of local zoning was unconstitutional.
PONG - "Gambling reform" quickly became a hot political issue as legislators in both houses crafted a myriad of bills to reshape the original law. Senate Bill 862 emerged last November as the leading candidate but did not address the zoning issue.
PING - Perzel in February had that legislation amended to put zoning control for Philadelphia's casinos in the hands of the state Gaming Control Board. Perzel said federal investigations of City Hall convinced him the city was too corrupt to handle the zoning. Sixteen state representatives from Philadelphia supported Perzel's measure while nine opposed it. Rendell said he wanted zoning pre-emption for casinos statewide, not just in Philadelphia.
PONG - Local community groups, including some that were initially slow to react to the possibility of casinos next door, seized the zoning issue as a rallying cry. They make that part of their protests, asking for e-mails to state representatives, calling for retention of zoning power. The bill has also been used as a political weapon. Allies of electricians union chief John Dougherty decried Fumo's role in the zoning pre-emption while not mentioning that it all started with Perzel.
PING- The Senate re-approved the reform bill in September, keeping the provision that takes zoning decisions away from Philadelphia, while adding several other measures, including a streamlining of how the state sells water rights. Four of the five applicants for two city casino licenses are located on the Delaware riverfront.
PONG - The House last week stripped out much of the language added by the Senate. One staffer jokingly said the bill had been "Fumo-gated." The Philadelphia delegation in the House, perhaps now aware of community opposition, voted 16-7 against the measure, which was sent back to the Senate.
PING - Fumo quickly responded, saying he had heard the cries of the community groups and would abandon the call to pre-empt local zoning when the Senate sends the bill back to the House today. Fumo plans to restore language making it easier to claim state water rights. This move puts the ball back into the House, where Perzel, a fan of pre-empting local zoning control, will make his next move with local community groups watching.
PONG?- Will the House change the wording of the bill yet again and return it to the Senate or pass it as currently written?

PA and gambling

For years, legalizing casino gambling in Pennsylvania was a whispered political discussion, the subject of rumors. For at least six years, it has been an active political debate. It started with the state horse racing industry arguing that slots were necessary to reinvigorate farms and horse tracks. It became part of the last gubernatorial election and a priority during Gov. Ed Rendell's first year in office. Last week, the rumors became reality.

Act 71 of 2004 created the Pennsylvania Gaming Control Board and gave it a mission: License up to 14 slots casinos. Whatever you think about the badly flawed law (see the editorial below) and whether the ''racinos'' should have waited until it was fixed, a law was in place and the board had a job to do.However, it would be a mistake to ignore political realities regarding what the board did on Wednesday. The slots law has been controversial from its inception and it was challenged in court. Gov. Rendell made it the centerpiece of his promise to deliver property tax relief, especially to senior citizens. Last week, Republican gubernatorial candidate Lynn Swann attacked this promise with television commercials. There has been just as much partisan effort to delay slots operations from coming to fruition as there has been to get it done.In this context, Gaming Board Chairman Tad Decker said, ''We did it as fast as we could.'' And Gov. Rendell was able to called it a ''milestone'' that ''is a clear sign to all homeowners that property tax relief is on the way.''

How much that relief will be remains to be seen. Pocono Downs in Luzerne County was awarded the first license and will probably have the first slots operation producing revenue as early as the end of November. In all, the gaming board awarded five licenses to tracks and these licensing fees alone will generate $250 million.And, the board showed it means business regarding enforcement by fining the Pocono Downs licensee for political gifts from two employees. Whenever this happens, however, the board must identify which officials or candidates benefited.

Gov. Rendell predicted slots would generate $3 billion in revenue and $1 billion for property tax relief. But board studies on revenue estimates were lower by tens of millions of dollars than the applicants predicted.Even before all the licenses have been awarded — and that won't happen until the end of December — there's talk of what's next. Slots applicants and board members expect the General Assembly to eventually approve table games and full casinos. Democratic House members have already proposed that. Time will tell if slots can deliver on all the promises.

PA Casinos - property tax relief

Pennsylvania's slot machines will bring in more -- not less -- than $1 billion a year for property tax relief, a state Revenue Department official said Thursday.
That contradicts the findings of a secret study commissioned by the state Gaming Control Board, which predicts casinos at six tracks will make $365 million a year less than applicants projected.
But that study looks at "worst-case" scenarios, said Revenue Department spokesman Steve Kniley. The regional market for casino gambling has gotten stronger since the department calculated its first projections in 2004, he said.
"If anything, the '$1 billion for property tax relief' estimate is even more viable today," Kniley wrote in an e-mail.
The state anticipates collecting at least $1.074 billion a year to offset property taxes, from slot machines that would raise $3.16 billion, Kniley said.
The state will get $610 million in one-time license fees from casino operators.
"Our estimate is based on a conservative estimate of the number of machines," Kniley said. "... It uses a gross terminal revenue estimate that was conservative at the time, and is more conservative today."
Kniley did not offer specific numbers regarding growth in the regional market for slots since 2004, but said averages were $265 per machine in August.
The gambling law -- passed on the promise of lowering property taxes -- sets aside 54 percent of the money from slot machines for the state. Thirty-four percent of the total would go toward property tax reduction, 10 percent to the horse-racing industry, 5 percent to a statewide development fund, and the rest would be divided among casino host communities.
It's "not realistic" to add up the results for individual casinos that were estimated by PricewaterhouseCoopers in the gambling board's study, because it factors in competition from every casino applicant -- and they won't all receive licenses, board Chairman Tad Decker said Wednesday.
That study predicts 15,750 slot machines at tracks will bring in an average of $189 a day, versus the $252 daily average projected by applicants.
"It's a bogus effort," Decker said. "Those reports were looking at individual applicants and taking competition for that applicant, potential competition."
To reach $1 billion a year in property tax reduction, the Revenue Department counted on 37,000 slot machines taking in an average of $230 a day, plus another 1,000 slot machines at resorts making an average of $150 daily. State law allows for up to 61,000 slot machines at 14 casinos.
"We don't have any reason to suspect (the Revenue Department's projections) aren't right," Decker said.
The state's assurances regarding property tax relief came as critics of the gambling law said they want to see more changes than those included in a reform bill unanimously approved by the Senate Wednesday.
The Senate version would subject the gambling board to the state's Right to Know Law, require it to submit budgets for legislative review and give the state Attorney General's Office power to investigate gambling-related crimes.
Lawmakers also should require casinos to send monthly statements to gamblers, abide by stiff self-exclusion rules to keep out problem gamblers and close for at least several hours daily, said Bruce Barron, president of No Dice, a Bethel Park-based anti-gambling group.
"For (legislators) to try to ram changes through, this will never be a good law," said Dianne Berlin, the coordinator of CasinoFree PA. "It may be made a little better, but it will never be a good law. There are just too many things wrong with it."
House members reviewed the Senate bill while preparing to make their own changes to the slots law, said Steve Miskin, spokesman for House Republicans. Members could vote on a reform bill as early as next week.

Bally is slot manufacturer of choice

When it comes to supplying the state's racetracks with casino-management systems, Las Vegas-based Bally Technologies Inc. is emerging as the vendor of choice.Today, the company announced an agreement with Mohegan Sun at Pocono Downs in Wilkes-Barre to provide the system that will run the racino's gambling floor, expected to open next month. It will also provide more than 200 slot machines.So far, Bally has been picked to provide casino-management systems by three of the six racetracks that will be among the first places to offer slots gambling in the state. Philadelphia Park in Bensalem and Harrah's Chester Casino & Racetrack have also chosen Bally.The Pennsylvania Gaming Control Board will decide at its meeting Wednesday on awarding conditional licenses permitting the addition of slot machines at six racetracks. Permanent licenses will be voted on for 14 slots parlors by the end of the year.The other racetracks seeking slot machines are the Meadows near Pittsburgh, Presque Isle Downs in Erie, and Penn National in Grantville, near Harrisburg.On Friday, Harrah's spokesman Jason Birney said the Chester racino was also selecting Bally for its slots technology and as a provider of some of its slot machines. The casino at the $400 million property is scheduled to open in January with 2,750 slot machines.On Aug. 16, Bally announced it had signed a contract with Greenwood Racing Inc. to provide the system to manage its casino at Philadelphia Park.In July 2004, Pennsylvania legalized slot-machine gambling for 14 locations across the state. Delays followed, including a court challenge that brought the licensing process to a standstill for half a year, and a nine-month stand-off over slot distributorships.Bally, founded in 1932, designs, manufactures, operates and distributes gaming devices, systems and technology worldwide. The biggest designer and maker of slot machines, International Game Technology, and number-two Aristocrat Leisure Ltd. are its main competitors.Mohegan Sun purchased the Pocono Downs Racetrack from Penn National Gaming Inc. in early 2005. The Mohegan Indian tribe has owned a successful casino resort in Uncasville, Conn., for nearly 10 years."We thought there would be some beneficial synergies by using the same system as our Mohegan property in Connecticut," said Robert Soper, president and general manager of Mohegan Sun at Pocono Downs.Soper said the first phase of the Pocono Downs racino would open next month with 1,081 slot machines in a renovated area. The tribe plans to construct a new building to accommodate up to 2,000 slots.

Building Casinos in PA

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