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By in Latest News Comments Off on Odds are, Pennsylvania’s going to see another gambling expansion debate this week

Odds are, Pennsylvania’s going to see another gambling expansion debate this week

By Charles Thompson | cthompson@pennlive.com
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on June 20, 2016 at 6:45 AM, updated June 20, 2016 at 9:43 AM

After a quick tease last year, the expansion of legalized gambling in Pennsylvania is getting a major push as a revenue source for the state budget this spring.

A bipartisan coalition of state House members are finding common cause in plunging even deeper in the legalized gaming pond in hopes of finding tens of millions of dollars for… “insert-your-favorite-spending-priority here.”

Why are we here? Several reasons.

Pennsylvania’s casino operators are anxious to corner new markets in the face of ever-expanding competition in other Mid-Atlantic states. Bar owners and social club operators are still seeking a piece of the legal gambling pie. And lawmakers in both parties badly want to balance this 2016-17 budget in the face of a $1 billion-plus hole without an increase in the state income tax. “Many of us are open to some level of expanded gambling as long as we know that it will be done in a responsible way,” House Speaker Mike Turzai, R-Allegheny County, said in a phone interview Thursday.

There are some scattered signs of hesitation, to be sure.

Some conservative Republicans say they would rather rein in state spending then expand gaming, and some city Democrats have voiced concerns about adding to a voluntary tax that can weigh disproportionately on the poor. But with most of the old social taboos over gambling apparently having been shattered by the success of the casinos over the past decade, as well as the surging popularity of new games like Internet poker and fantasy sports, this debate is most assuredly on.

The bigger question heading into the fiscal home stretch appears to be, can the stakeholders – in this case the casino operators, the racehorse industry, and liquor licensees seeking video gaming terminals – avoid forming a circular firing squad that kills any deal.

The big fight
The main event pits the established Pennsylvania casinos, most of whom are seeking licenses to roll out Internet-based gambling games and other business enhancers, versus bar and tavern owners seeking up to five video gaming terminals, known as VGTs to those in this debate, apiece.

Eleven of the state’s 12 casino operators, as of Friday, were bringing what looked like a scorched earth policy to this expansion debate, contending that if i-gaming is paired with VGTs in bars, they’d prefer no expansion at all.

(The exception? Penn National, which hedged its bets like a professional gambler last year with the acquisition of Prairie State Gaming, a firm that supplies and operates more than 1,100 VGTs in 270 bars and retail establishments in Illinois.)

Speaking for the rest of the casinos, however, lobbyist Steve Crawford said the VGT proposal has the potential to add the equivalent of 12 new casinos’ worth of slot machines into Pennsylvania, one taproom at a time.

That, the companies say, will cannibalize their player audience, and slowly erode the funding streams they provide for school property tax cuts, horse-race purses and economic development around the state.

“I understand the political desire to raise revenues without raising taxes, but at what cost?” asked Crawford, whose S.R. Wojdak & Associates firm represents casinos in Philadelphia, Pittsburgh and the Poconos.

The casinos point to a report outlining recent experience in Illinois, where commercial riverboat casinos were first to the market, and VGTs were introduced in bars and taverns later.

As the bars and taverns’ machines came on board in 2013-14, the state’s overall gaming tax revenues jumped 7.5 percent. But Illinois casino admissions fell off 10 percent, and their gross receipts trailed by 6.7 percent.

The all-in factor
Either way you slice it, the gambling expansion being considered in the House would take the legalized gambling market penetration in Pennsylvania to unprecedented levels.

It’s not just that the proposed Internet gambling would move us from 12 destinations scattered around the state to a place where literally every computer becomes a betting position.

Current iterations of House Gaming Oversight Committee Chair John Payne’s HB 649 includes provisions that would allow:

  • Racetrack casinos to operate slots at up to four off-track betting parlors that each must be at least 50 miles from a track. 
  • Video Gaming Terminals (VGTs) not just at bars and restaurants, but truck stops.

(This VGT language was inserted by amendment on a 96-93 vote last December,in a floor debate in the midst of the 2015-16 budget impasse.

Payne, for the record, has spoken against VGTs in the past, telling PennLive as recently as this month that they “would in my mind do great fiscal harm to the existing casinos in Pennsylvania which ultimately then would affect the property tax fund, which would ultimately affect the local county’s local share.”

Payne said he is also worried about cannibalization of the lottery.)

  • Installation of slot machines and new i-gaming tablets at Pennsylvania’s six international airports. These mini-casinos would be located in areas where ticketed passengers can while away between-flight layovers.
  • The state’s two existing resort casinos would be able to open their doors fully to the public, as opposed to guests there for other reasons, and by paying $3.5 million in one-time fees they would be allowed to grow their slots parlors from 600 to 850, and grow table games like blackjack or poker from 50 to 65.

Is this all-in approach wise?

Studies from other countries with more mature gambling markets have shown increases in problem gambling can surge as new types of gaming are introduced, and they then settle back down over time as the novelty wears off.

But gambling industry observers say in 21st-Century America – where one recent study identified 27 legal ways to place a bet – stopping gambling’s spread now is like trying to put toothpaste back in the tube.

Where legal gambling has expanded and contracted several times in America in the past, no one’s really expecting a retraction this time.

For now, Pennsylvanians can get their taste of keno just over the Maryland line
For now, Pennsylvanians can get their taste of keno just over the Maryland line

“The difference is, this is the first time that the state governments have been using it [gaming taxes] as life support,” said Lia Nower, director of the Center for Gambling Studies at Rutgers University.

The better approach, addiction specialists reached for this story said, is to try to balance the expansion with safeguards that can help to protect the most vulnerable, like a new system in Massachusetts that lets slots players set personal alarms alerting them when they are approaching time-of-play or loss limits.

“To be against gambling really isn’t helpful,” Pittsburgh-based counselor Jody Bechtold told PennLive in a telephone interview. “What’s more helpful is building in safety checkpoints into the legislation.”

Other countries like England, Australia and Canada are way ahead of America in this department, Bechtold noted, while “what Americans say is: ‘We’ve legalized it. Now police yourselves and I hope you don’t get in trouble.'”

Another major need, Bechtold added, is funding research on the best ways to prevent and treat American addicts. “Saying don’t do drugs didn’t work,” Bechtold said. “Saying ‘don’t gamble’ is not going to work either.”

Internet gaming proponents say, as pervasive as the games seem, they can actually be very tightly regulated through state-of-the-art age verification procedures and “geo-fencing” that requires bets to be placed from Pennsylvania.

That’s proven tougher when it comes to games in bars and clubs, gaming indutstry observers say, where regulation is sometimes be as tight as the bartender on duty.

Mustio said Friday he is still working on language to tighten controls on issues like underage play, but noted his proposal already has these safeguards:

  • Video surveillance of the machines going back to the game operators.
  • Cash play only, with winnings registered on credit slips that are redeeemd at separate cash machines.
  • Games must be in the line of sight of a bartender or manager who can watch for underage or visibly intoxicated players.

VGT supporters also argue that the game they offer is going to be far more policed and regulated than the illegal machines that are out there now.

“It’s here, and it’s already being done,” Mustio said. “We are in this tight bugdet situation, so let’s legalize it, and control it.”

How much is it worth?
No fiscal note exists, but gaming expansion proponents see several hundred million dollars on the table if and when these proposals are fully ramped-up.

Under Payne’s proposal, the existing casinos would have the ability to run internet-based games, with payment of a one-time $8 million internet gaming fee. Operators would run games like poker and other casino-style games through the licensee’s Web sites.

If 10 casinos opted in, that’s at least $80 million in licensing fees.

This new revenue would be taxed at 14 percent, a significantly lower share than the 54 percent tax share currently paid by the physical casinos opened over the last decade.

An independent 2014 study by the Philadelphia-based consulting firm Econsult Solutions suggested that if Pennsylvania opened this market – as New Jersey, Delaware and Nevada already have – it could generate $180 million in business in the first full year.

By year two, the market could grow to $307 million in bets. Based on the proposed tax rate in Payne’s bill, that would raise between $40 and $50 million per year.

Battling gambling addiction in America's second-largest casino market: How'd That Work Out?

VGT’s on the other hand, while seen as more problematic by addiction therapists, have the potential to bring much more revenue.

The Illinois report noted that a 30 percent tax on VGT revenue there netted $145.6 million in tax dollars in the year ending in 2014. At the program’s full build-out, the commission’s report said, it could approach $200 million.

That’s based on about 20,000 machines.

Hard projections for Pennsylvania were not available for this story.

But Pennsylvania proponents see a market for at least 26,500 machines. Coupled with a slightly higher tax rate, they maintain that VGTs could be worth more than $300 million annually here.

Mustio said Friday supporters are still trying to reconfigure the revenue split between bar owners, game operators and the state to give the state a higher share, and, possibly, create a small slice for host municipalities.

For comparison purposes, a one-tenth of a percentage point increase in the state’s 3.07 percent income tax is worth about $400 million to the state. 

 
By in Latest News Comments Off on Rolling the dice on video poker legalization in Pennsylvania

Rolling the dice on video poker legalization in Pennsylvania

Brian O’Neill: Rolling the dice on video poker legalization in Pennsylvania

June 5, 2016 12:00 AM
By Brian O’Neill / Pittsburgh Post-Gazette

When a Pennsylvania legislator says he’s confident a bill can pass, take that with as many grains of salt as Morton can provide. 

Still there are some who believe a 30-year effort to legalize what already happens regularly — video poker payoffs in thousands of our finest saloons — has a real chance this time.

Rep. Mark Mustio, R-Moon, is a leader of the bipartisan effort and he’s getting plenty of blowback from the state’s powerful casino industry. “What it comes down to is simply greed,” Mr. Mustio said of the casino operators. “They want everything but don’t want anybody else to have anything.”

Indeed, the 12 casinos emailed a collective letter to legislators a year ago decrying the potential “cannibalization of existing gaming revenue.” If the state cuts into their share of the suckers — excuse me, I meant gaming enthusiasts — local governments and the state itself will get less revenue. Harrah’s Philadelphia executives and employees will join local governmental allies at the casino in Chester on Monday “to highlight the dangers of adding thousands of video gaming terminals.” Scared yet?

Rep. Paul Costa, D-Wilkins, says, “The casinos, they hate me, which is fine,” but he likens this to the way the state took over the numbers racket by rolling out The Pennsylvania Lottery in 1972. “The casino already know is going on,” Mr. Costa said. “It already has an impact on their industry. It’s not going to change.” So why not regulate what’s already there and get some badly revenue in the bargain?

All 12 casinos — from Mount Airy to The Meadows to the Rivers, white with foam — see this entirely differently. The state’s already taking 54 cents of every dollar slipped into a slot machine, putting it into property tax relief (believe it or not) and other areas. The governments’ take is even higher when other fees are tallied. Yet now, from the casinos’ point of view, the state is preparing combat with their faithful partners of nearly 10 years and putting jobs at risk. The plums for the casino industry in the proposed legislation — 24-hour liquor licenses, the rights to Internet and airport gaming, off-track betting locations for the racetrack casinos — aren’t enough to offset the feared onslaught of VGTs. That’s industry shorthand for video gaming terminals, and they say “VGT” as if it were a communicable disease. They may already be out there, casino operators say, but they’re only going to spread if they’re legalized.

No tavern would be allowed have more than five under the proposal, but that could mean the number of illegal machines in taverns now — often estimated at 40,000 — could more than double, casino operators fear. “Hurting one-state operated industry for another is a dangerous precedent,” Sean Sullivan, vice president and general manager at Meadows Racetrack & Casino, said. The only thing that seems to be in agreement is that nobody agrees on anything. Illinois has essentially run a pilot program for Pennsylvania, legalizing video games a few years ago. They’re in more than 5,000 bars, clubs and truck stops there and they haven’t hurt established Illinois casinos, fans of legalizing Pennsylvania tavern games say. Oh, yes they have hurt Illinois casinos, say Pennsylvania casino operators, and then the two sides throw statistics back and forth with the enthusiasm of a good pie fight.

Amy Christie, executive director of the Pennsylvania Licensed Beverage and Tavern Association, said there won’t be any great expansion of gambling if machines are legalized and regulated. But these games are often crucial in small businesses where profit margins are thin. Why not legitimize longstanding tavern culture and get “a ton of money” for the state? Ms. Christie asks. That sure beats a tax hike. “It sounds to me they’re getting a whole lot,” she said of the expansion of casino options in the bill. ”We’re asking for one thing. That’s it.” Nothing in the 213-page House Bill 649 is a lock. Mr. Costa, for one, doesn’t favor 24-hour liquor licenses for casinos, and casinos don’t think anything in the bill is worth a VGT virus. Still, Ms. Christie said legalization is as close as it’s been in 30 years. When I started to say that less than 10 percent of the bills introduced in Harrisburg become law, she cut me off, saying: “You know who else understands that? My members.”

Brian O’Neill: boneill@post-gazette.com or 412-263-1947

By in Latest News Comments Off on Legislature to double down on gambling expansion

Legislature to double down on gambling expansion

Lawmakers in the state House will vote again on gambling expansion when the Legislature returns to session after the Memorial Day holiday break. (Emily Robson/The Morning Call)

Steve Esack – Contact Reporter
Call Harrisburg Bureau

May 26, 2016 1:20 PM

After the Memorial Day holiday, the state House will try again on passing a bill to drastically expand gambling options in Pennsylvania.

The House on Tuesday rejected two gambling amendments. Both amendments would have legalized online gambling and fantasy sports, provided the activities were run by the state’s licensed casinos. The only difference between the amendments was the locations of more slot machines. The first amendment would have allowed video game slot machines at taverns, bars, social clubs and volunteer fire halls. The second would have allowed slots at airport terminals and off-track horse betting sites.
The same issues are slated for the House’s June 6 calendar.

That vote will be influenced by special interests if Tuesday’s Capitol scene is an indication. Prior to Tuesday’s failed votes, lobbyists for the casino and tavern industries dueled for the attention of lawmakers or huddled with them outside the House chamber.

To score your lobbyists, here’s what you need to know: Taverns and Elks clubs want slots in their establishments. Casinos do not want more slots for fear they will cannibalize their business. Casinos, however, are split on legalizing online gambling.

So can the lobbyists for the state Licensed Beverage & Tavern Association win the day by securing enough votes from rural lawmakers wanting to make nice with the Elks? Or will casinos lobbyists unite to out maneuver the tavern association?

Either way, Republicans who control the House and Senate want something. They say gambling expansion is a better revenue option than Gov. Tom Wolf‘s proposed tax increases to help close the state deficit. And Wolf is OK with expanded gambling as long as it includes other revenue sources as well, his people say.

So place your bets on what the final bill may look like before the House, Senate and lobbyists are done with it.

By in Latest News Comments Off on Clock Ticking on Video Gaming: Final Push on Terminals Before June 30th Deadline

Clock Ticking on Video Gaming: Final Push on Terminals Before June 30th Deadline

Video-Gaming Terminal Update:
As you are aware, a main priority for the PA Licensed Beverage & Tavern Association for this legislative session remains the legalization of Video Gaming Terminals (VGT) in liquor-licensed establishments.

Our association has been representing the interests of liquor licensees in this quest and our grassroots efforts were critical in the December 9th House floor vote that amended VGTs in to HB 649. The amendment was introduced by Representative Mustio from Allegheny County and the vote count was YES to include VGTs, 96-93.

Timeline
Over the past months, we have been steadily working in Harrisburg on spread- ing our message as to the benefits to the taxpayers and the state budget of Video Gaming Terminals in order to see successful bill progression through both chambers and then to the Governor’s desk.

Revenue from the passage of Video Gaming Terminals will SAVE PA taxpayers from broad-based tax increases due to the deficit that needs to be covered in the up-coming budget!

The budget is due by June 30th so we need the VGT language to pass before or by June 30th.

Please stay tuned in to your emails as all members will be receiving alerts throughout June on the status and messaging for VGT support. We will be giving information for licensees to know and understand the political process and what will be required of licensees in order for you to prepare accordingly.

Facts for Licensees:
This legislation would include liquor and beer licensed businesses (except licensed grocery stores), private clubs, and licensed volunteer fire companies.

The licensee share is 33%. Terminal Operator share is 33%. The state receives 34%.

Each eligible establishment can receive 5 machines.

Video Gaming area may not be accessible by minors.

Provisional licenses are included for you and potential operators in legislation to expedite installation of machines in your establishments.

No inducements may be made by Terminal Operators to licensees, and licensees are prohibited for asking for any inducements from Terminal Operators.

Redemption machines will pay out winners so neither you nor your employees have to handle any cash! Just provide the space!

WHAT ALL LICENSEES NEED TO DO NOW:
If you want to see your license value increase and/or collect profit each week from the Video Gaming Terminals dollars then you need to contact your State Representative and State Senator ASAP.

MESSAGE TO LEGISLATORS:

Pass Video Gaming Terminals to avoid broad-based tax increases on PA voters. The state, the voters, and our small businesses who employ over 100,000 PA citizens a year will benefit. Do not pass more gaming for 12 out of state billionaires while continuing to ignore the small businesses of Pennsylvania businesses in all of your districts employing your constituents!

 

By in Latest News Comments Off on Video Gaming Terminal Update

Video Gaming Terminal Update

– VIDEO GAMING –
Our amendment, sponsored by Representative Mustio, PASSED on the House floor with a vote of 96-93.

OUR WORK IS NOT YET DONE!

The full bill which includes casino language will not be given 2nd or final consideration yet. There are other issues that they need to work out that does not involve us.

That being said, the biggest issue of getting into the bill is over! We are IN House Bill 649.

All members receive weekly updates and special reports for up-coming votes, deadlines, requirements, how to maximize profits, and what licensees in other states haves learned in making important video gaming business decisions.

Thanks so much to all of the members that have called and worked with their Representatives over the past few weeks. We will need your help when the bill is up for final! Stay alert and read your weekly or special reports!

Please contact the Pennsylvania Licensed Beverage & Tavern Association with ANY QUESTIONS by calling 1-800-543-7683. For more information, visit www.pataverns.com

By in Latest News Comments Off on Video Gaming Getting Serious

Video Gaming Getting Serious

Bar Owners Want Another Chance at Gambling
By: John Finnerty, The Daily Item

The state’s luck with games of chance isn’t stopping bar owners from asking for another try.

The Pennsylvania Tavern Association is lobbying to allow bars to offer video poker. Proponents say it would generate $500 million a year in revenues for the state and legalize a practice that is already happening in small clubs and bars, said Rep. Kurt Masser, R-Northumberland.

Now, law-abiding bars are losing customers, and the state isn’t getting a share of the money, said Masser, a member of the House Gaming Oversight Committee who also owns a bar in Northumberland County.

The Legislature tried to legalize video poker in 1990, but then-Gov. Bob Casey vetoed the bill, said Amy Christie, executive director of the tavern association.

Christie said video poker would be more successful than games of chance.

“It’s a different animal,” she said.

Games of chance require bar employees to collect cash from customers, then the bar owner must account for it. If the bar mishandles the money, state regulators can penalize the business, potentially revoking its liquor license.

Few bar owners have been willing to put their liquor licenses on the line, Christie said.

Video poker would be easier to regulate, she said, and bar owners wouldn’t have to worry about tracking cash.

Illinois legalized video poker in 2012. There are now 20,000 video poker machines in 4,700 bars in that state.