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Pennsylvania Legislators under Pressure to Approve Budget and Casino Table Games Proposal

Members of the Pennsylvania House are under immense pressure to put the state budget issue behind them and legalize casino table games at casino facilities when they return to session on November 9th, 2009. The casino games like blackjack are needed to provide $200 million to balance the $27.8 billion budget.

Governor Ed Rendell has said he will veto any casino table games legislation that does not set a $15 million license fee and levy at least a sixteen percent state tax rate because the revenue target would not be met otherwise. The Pennsylvania Senate will resume on November 16th, 2009. But there are different factors complicating a vote on legalizing casino games at the casino establishment including differing views from casino owners about what casino table games will mean to their businesses.

Industry officials said that the owners of the casino facilities will ultimately decide if Pennsylvania receives the needed $200 million in first-year revenue by adding casino table games. If a facility does not apply for a casino table games license and pay the licensing cost, then a part of the anticipated gaming revenue would not materialize.

Joe Weinert, the editor of Michael Pollock's Gaming Industry Observer, a trading publication based in New Jersey, said that Harrisburg is making the assumption that casino proprietors will apply for casino table games licenses no matter what conditions are made.

Weinert said that he does not think that any casino property in the state is keen for casino table games. He said that most casinos view casino games as a like-to-have and not a vital must-have. Pennsylvania gaming facilities are doing well with just slot machine revenues. Pennsylvania's casino facilities are spread out evenly all over the state; operate in different gaming markets and have different management structures and competitive goals.

The decision of Ohio voters last week to permit casino facilities in Columbus, Toledo, Cleveland and Cincinnati means new gaming competition for casino facilities in Pittsburgh and Erie. The decision on a state tax rate and licensing cost will influence determinations about how many casino table games to install and the mix of denominations from the low end $5 and $10 poker tables to casino table offering bigger wagers.

Officials at the two casino facilities in Northeast Pennsylvania-Mohegan Sun at the Pocono Downs in Plains Twp. And Mount Airy Casino Resort in Monroe County-say that the Pennsylvania tax rate is the determining factor to how much they will invest in the casino table games.

Mohegan Sun President and Chief Executive Officer Robert Soper said that in order to remain competitive and provide jobs, they have to have a reasonable casino table games tax rate. Soper is in favor with a twelve percent tax rate in a Senate-approved casino table games bill. A bigger tax rate means that Mohegan Sun would install fewer casino tables, names the ones in the $5 to $10 range.

Mount Airy general counsel Donald Schiffer said that Mount Airy will install between fifty to eighty casino table games if the final casino legislation set the tax rate in the 12% to 14% range. Gov. Ed Rendell wants a provision requiring casino facilities maintain the same amount of slot machines if they add casino table games so as not to reduce gaming revenues allocated for property tax relief.

Schiffer said that the same goal can be fulfilled by establishing slot machine revenue requirements for casino facilities while permitting them flexibility in how they will place the slot machines on the gaming floor. Mount Airy Casino has joined with the Rivers Casino in Pittsburgh and the soon-to-be open SugarHouse casino facility in Philadelphia to for a trade organization, the Pennsylvania Casino Association.

Association executive director Ken Smukler said that Pennsylvania wants casino facilities to be partners in balancing the budget. Smukler said that the other party in this set-up is the casinos, which have to file the casino table games application, pay the licensing fee and close the budget gap.

Smukler added that it does not make any sense to a set a casino table games license fee and tax structure that makes it highly unlikely for anyone to file a casino table games application.

Other have doubt that set-up will happen. Representative Jim Wansacz (Democrat-114, Old Forge) and a member of the House Gaming Oversight Committee said that he would expect every single casino operator to apply for a casino license if the tax rate is in the sixteen percent to eighteen percent range.

Gov. Rendell said that casino facilities will apply for a casino table games license if his parameter of a casino table games tax rate of 16% and $15 million license fee are in the state gaming law. Rendell said that there would be many that would not apply for a casino table games license if the tax rate is higher than that percentage.


Thursday, November 19 , 2009
Kim Watson