Major gambling state Pennsylvania poised for big expansion
By MARC LEVY
Oct. 26, 2017
HARRISBURG, Pa. (AP) — Lawmakers in Pennsylvania, which is second only to Nevada in commercial casino revenues, voted Thursday 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. His office said he would decide in the next few days whether to sign the gambling legislation.
The measure would make 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 would pave 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, emerged Wednesday night and 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, if adopted, would definitely result in higher overall gambling revenues in Pennsylvania, Weinert said. But the question of which casinos get hurt — every neighboring state has a casino industry — 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 casino 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.
"We will become a gambling state without parallel," warned Rep. Steve McCarter, a Democrat from suburban Philadelphia.
But House Majority Leader Dave Reed, a Republican from southwest Pennsylvania, said the gambling that would be legalized by the bill already is going on, much of it unregulated, untaxed or illegal.
"It finally coming to fruition I think moves us closer to where reality is and is going to help out the taxpayers, as well," Reed said.
The bill drew complaints from lawmakers that they had had little opportunity to understand the implications of the complicated, 470-page bill and that it is packed with pet provisions for certain casinos or 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.
Another provision would protect much of northeastern Pennsylvania around Mount Airy Casino Resort — founded by billionaire Louis DeNaples — from the construction of a mini-casino that could potentially compete for gamblers.
The legislation also would effectively force higher-earning casinos to bail out lower-performing casinos, such as Mount Airy Casino.
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 bill's definition of truck stops is "so broad, anything you think of as a convenience store is a truck stop," he said. "You literally could drive a truck through the definition and its ability to be misused."
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.
The mini-casino licenses allowing up to 750 slot machines and 30 table games would be auctioned to Pennsylvania's existing casino owners. Bidding would start at $7.5 million, with a table games certificate costing an extra $2.5 million.
Associated Press reporter Wayne Parry in Atlantic City, New Jersey, contributed to this report.