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Pennsylvania Legislators Evaluates Approval of Casino Games

State legislators are moving closer to approving casino games like blackjack at casino facilities in Pennsylvania and setting the licesing fees that they may have to pay: a one-time licensing cost of $15 million and a tax rate of eighteen percent on gross casino table revenue.

Those figures-which are bigger than a twelve percent tax rate and $10 million licensing fee proposed in an existing proposal-were outlined on September 24th, 2009 at a meeting of the Senate's Committee on Community, Economic and Recreational Development, which handles gaming issue. But those results apparently would not stop gaming operators from offering casino table games.

Senator Wayne Fontana of Brooklyn, the leading Democrat on the panel, asked officials of 5 casinos in the state what they thought of the bigger tax and licensing cost. The casino officials, which included Bill Paulos of Cannery Casinos, which owns the Meadows racingtrack/casino in Washington, County, stated that they preferred the lower licensing fee and tax rate because that would permit them to add more tables for poker and baccarat.

Paulos said that the casino table games would put the Meadows Casino on a level field with gaming facilities in West Virginia, which are only thirty minutes away. The casino officials talked about offering from forty to one hundred casino table games each, depending on the tax and licensing cost and employing 700 or more additional employees per casino facility.

Casino table games are more labor intensive compared with slot machines because casinos needed to hire casino dealers, supervisors, security personnels and others to handle the game so it is more expensive to offer casino games.

It raises the casino's expenses and makes it difficult to pay bigger taxes. Officials said that when all twelve big casinos permitted by a 2004 law-each with up to five thousand slot machines-are open in Pennsylvania-adding casino table games could mean ten thousand more additional jobs.

So far, nine casino facilities are operating in the state, with another casino in Philadelphia, SugarHouse, opening next summer. New Jersey-based Spectrum Gaming analyst Joseph Weinert said that a tax of 18% should be acceptable from a gaming operator's point of view and would allow Pennsylvania casino tables to compete effectively with casino tables in Atlantic City, Delaware and West Virginia.

But he said that a license cost of $15 million will be difficult to accept and may cause some gaming operators to pass on casino table games or delay offering it.

Casino facilities have already complained about Pennsylvania's fifty-five percent tax rate on slot machines but are still earning revenue for themselves and the state. Slots revenue is slashing property taxes moderately, helping the racing industry and providing vital economic development including the construction of a new hockey stadium in Pittsburgh.

But tax revenues from casino table games would go to the general fund of the state. Mohegan Sun Casino's Robert Soper and Sands Casino Bethlehem president Robert DeSalvio said that they would offer casino table games even if the licensing cost is $15 million and the tax rate is eighteen percent.

But they warned that they might not offer a lot of table games as they would with a smaller tax fee and rate. A Senate Republican spokesperson, Erik Arneson, said that the $15 million licensing fee and 18% tax rate have been discussed but are far from finished.

The talks about the acceptable licesing cost and tax rate are still ongoing. The five casino facilities all stated that they could have their casino table games ready by April 1st, 2010, which would mean 3 months of new tax revenue before the fiscal year ends on June 30th, 2010.

The Meadows racetrack said that it could offer the games by March 1st, 2010. One bill already on the discussion table, Senate Bill 1033, sets the upfront licensing fee at $10 million and the tax rate at 12%.

The bill is sponsored by Senator Robert Tomlinson (R-Bucks), whose district includes the Philadephia racetrack and casino. Another bill, House Bill 21, which is sponsored by Rep. Bill DeWeese (D-waynesburg) would set a twenty-one percent tax rate on casino table games revenue but most legislators seem to think that it is too high.

The tentative Pennsylvania budget of $27.9 billion that the legislature may be decided on next week projects producing $200 million in casino table game revenues in fiscal year 2009-2010, which started on July 1st, 2009.

 

Sunday, October 04 , 2009
Victor Sanchez