Wednesday, February 25, 2009

The Tribe In The Media: Pennsylvania Gaming Conference Highlights

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This installment of The Tribe In The Media is an article in the Times Leader newspaper of Pennsylvania discussing highlights of a conference held on gaming in that state.

Table games tabled -- for now
Law to allow casinos to run live games would have big impact for Mohegan Sun

By Andrew M. Seder
Times Leader Staff Writer
February 25, 2009

HARRISBURG – Legislation allowing casinos across Pennsylvania to host live table games is likely years away, but its impact on Mohegan Sun at Pocono Downs in Plains Township would be profound.

James Naylor, a slots supervisor at Mohegan Sun at Pocono Downs, demonstrates the electronic three-card poker game. Casino executives say true table games would mean 400-500 new jobs.

Mohegan Sun’s Vice President of Marketing Jim Wise said that if approved, at the proper tax rate, table games would lead to the creation of 400 to 500 new jobs, expansion of the current building to accommodate the needed floor space and perhaps a new hotel.

“It would spark a casino expansion and would put us one very large hurdle closer to the hotel we’ve always planned on,” Wise said.

But panel members attending Tuesday’s session of the annual Pennsylvania Gaming Congress made it clear table games aren’t going to be legalized any time soon.

“Right at this moment, it’s not on our front burner,” said state Sen. Wayne Fontana, D-Pittsburgh. State Reps. Dante Santoni, D-Temple, and Timothy Solobay, D-Washington, also said the matter, while being discussed, isn’t an immediate piece of legislation.

The question, according to Joel Simkins, a gaming analyst for Macquarie Bank, isn’t if table games are coming, but when.

Simkins and other gaming industry observers said that all signs point toward Pennsylvania joining neighboring states, including West Virginia and New Jersey, by offering live able games such as blackjack, roulette and craps. Pennsylvania already competes with Delaware, New York, New Jersey, West Virginia and soon Maryland in the slots world.

The idea of legalizing table games was first discussed before the ink was dry on Act 71, the 2004 law that legalized slot machines. Gov. Ed Rendell has made it clear that he didn’t see table games being approved until all 14 slot parlors the act allows were up and running. To date, only seven slot parlors are open, with two more on the way this year, including the Sands Bethlehem, which is aiming for a May opening.

It’s likely Rendell’s successor will be the one signing off on any law legalizing table games. That didn’t stop table games from taking center stage Tuesday during multiple panel discussions.

State Rep. Curt Schroder, R-Exton, a member of the House Gaming Oversight Committee, said he’s opposed to further legalization of gaming and feels even stronger about it after the slots legislation and oversight process has made “misstep after misstep.”

He cited the issuance of a slot license to Dunmore businessman Louis DeNaples for Mount Airy Casino Resort as one example. DeNaples has been removed from day-to-day operations at Mount Airy after being charged by the Dauphin County district attorney with perjury for allegedly lying to the state gaming board about alleged ties to organized crime figures.

Wise said there is a table game market out there that is avoiding state casinos because slots don’t interest them. He said electronic table games, technically considered slots under Act 71, don’t attract the serious table game players who frequent Atlantic City, Las Vegas and other gambling destinations. But Wise and others said casinos would only offer them if it was cost effective, meaning the current tax levied on slot revenue, between 55 percent and 59 percent, depending on the market size, would need to be greatly reduced for table games. He said a tax rate about half of the slot tax rate would be the feasible maximum.

“Table games have a lower return and more overhead for employers,” said Adam Steinberg, head of the gaming and leisure division of the Morgan Joseph Investment Banking Group.

Wise said additional costs would be needed for surveillance, security, gaming personnel, equipment, all of which comes out of the bottom line.