Pa. poised for big gambling expansion

AP
Gambling chips sit on table game inside a casino.

AP Gambling chips sit on table game inside a casino.

HARRISBURG, Pa. — Cash already is rolling into Pennsylvania’s coffers as a result of a sprawling gambling expansion law passed late last month.

The Pennsylvania Gaming Control Board said Valley Forge Casino Resort has paid a $1 million fee to allow gambling by people who aren’t taking part in other amenities there.

The provision allowed the payment by the state’s two licensed resort casinos to be relieved of requirements in the original 2004 casino law that gamblers also must take part in other amenities at an establishment or be guests there.

Lawmakers in Pennsylvania, which is second only to Nevada in commercial casino revenues, voted late last month to approve the biggest expansion of gambling in the state since casinos were legalized more than a decade ago.

Desperate to find ways to help plug a giant budget hole, the Republican-controlled House of Representatives approved and sent to Democratic Gov. Tom Wolf a bill to extend casino-style gambling to truck stops, online portals and airports, and to allow 10 new mini-casinos to open in a state that already has a dozen casinos operating. The vote was 109-72, with support from both GOP and Democratic leaders.

Wolf has expressed support for expanding gambling to patch up the state budget. The measure made Pennsylvania the fourth state with internet gambling, and the first to allow both casino and lottery games to be offered online, as Pennsylvania looks to make money off new and younger players. It also paves the way for the struggling Pennsylvania Lottery — which funds programs for the elderly — to begin offering keno.

Only Nevada and Puerto Rico currently allow airport gambling.

“It’s one of the most aggressive gambling expansion bills I’ve seen in any state that already had casinos,” said Joe Weinert, the executive vice president of Spectrum Gaming Group, an Atlantic City, New Jersey-based consultancy.

The bill, a couple years in the making, won passage within 18 hours in both chambers of the Legislature despite opponents’ protests that they barely had a chance to read it, warnings that it carried unforeseen consequences and complaints that it was packed with sweetheart deals.

The plan will result in higher overall gambling revenues in Pennsylvania, Weinert said. But the question of which casinos get hurt will depend on where the state’s existing casinos build the 10 additional smaller casinos that the bill allows, he said.

Pennsylvania casinos rake in more gross revenue than any other state except Nevada. But it is No. 1 in gambling revenue, netting $1.4 billion in taxes from the industry in the most recent fiscal year.

New Jersey, which has the nation-leading internet gambling market, would welcome the expansion of player pools and prizes, if it reaches a reciprocal agreement with Pennsylvania gambling regulators. But New Jersey fears the expansion of sites throughout Pennsylvania could further damage Atlantic City, which has lost five of its 12 casinos since Pennsylvania’s casinos began opening in 2006.

The gambling bill was part of a broader package designed to break a four-month budget stalemate over how to overcome a projected $2.2 billion deficit. The compromise came together after House leaders dropped their long-standing demand that a gambling expansion favor bars and other liquor licensees, not casino owners.

Lawmakers hope to squeeze an additional $200 million a year or more from casino license fees and taxes on higher gambling losses. New gambling cash would also flow to decade-old property tax rebates and local government treasuries, institutions and development projects, often controlled by lawmakers.

Rep. Margo Davidson, another suburban Philadelphia Democrat, called it “corporate welfare for casinos and special carve outs for special people.”

For instance, a provision that would repeal a long-standing limit on casino ownership in Pennsylvania could make moot a lawsuit that has held up construction of the Live! Hotel & Casino in Philadelphia for nearly three years.

A provision allowing truck stops to operate up to five slot-machine-style machines, called video gaming terminals, caught the attention of House Gaming Oversight Committee Chairman Scott Petri, a Republican from suburban Philadelphia.

The legislation also would effectively force higher-earning casinos to bail out lower-performing casinos,

Pennsylvania-headquartered Penn National said it will consider suing over the gambling package, if it becomes law, because of the “uniquely punitive impact” on the Hollywood Casino it owns in suburban Harrisburg.

Penn National also owns the Hollywood Gaming at Mahoning Valley Race Course in Austintown.

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