Saturday, September 12, 2009

Pennsylvania's Dance To Add Table Games To Its Slot Parlors Gains Momentum As Item In State Budget Projection

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This installment of The Tribes In The Media is a Philadelphia Inquirer article on the possibility of adding table games to the slot parlors in Pennsylvania. Should the state allow table games, a key question is: At what rate will revenues derived from table games be taxed? Two proposals, one asking for a 12 percent tax on table games and the other proposal almost double that rate at 21 percent, are currently floating around Harrisburgh. Table games are more expensive than slot machines to operate because of the added staff needed.

Odds improving for Pa. table games
By Suzette Parmley
The Philadelphia Inquirer
September 12, 2009

For those who are not fans of slot machines, Pennsylvania's casinos might soon beckon your business with the addition of blackjack, poker, or craps.
After months of opposition to adding table games at the state's slots-only casinos, leading lawmakers in Harrisburg have gotten on board and are proposing to legalize them.

Senate Majority Leader Dominic Pileggi (R., Delaware), a onetime foe, said the state's protracted budget impasse was partly the reason for the change.

A $28 billion budget accord unveiled yesterday in Harrisburg includes $200 million in the next fiscal year that would come from the addition of table games, such as those found in Atlantic City and Las Vegas.

Legislation would need to be passed in the next few weeks to provide budget help, but already, proponents say just having tables in the plan was recognition that they were moving closer to reality.

"The bold reality of the moment is a dire need for additional state revenue," said Rep. Bill DeWeese (D., Greene). He sponsored a plan to allow table games that stalled in committee in July.

He said he expected the final table-games legislation to be a hybrid between that bill and one backed by Sen. Tommy Tomlinson (R., Bucks).

Both bills require casino operators to each pay a $10 million licensing fee, but differ in tax rates on gross gambling revenue - the amount to go to the state. DeWeese's bill would tax table games 21 percent; Tomlinson's taxes them 12 percent.

A spokesman for Gov. Rendell, Gary Tuma, said last night: "Conceptually the governor is not opposed to legalizing table games."

He added: "The problem he saw in today's plan was ... lawmakers overestimated the revenues derived from table games in the current fiscal year."

If legislation allowing table games is signed into law, the state Gaming Control Board said it would take six to nine months to implement them. So far, nine of the 14 licensed venues have opened. Five more need to be built, including two on Philadelphia's waterfront.

At least one Pennsylvania casino operator says it would be ready. "If the tax rate is reasonable, table games will be a great addition for the Rivers Casino" in Pittsburgh, said its president and chief operating officer, Ed Fasulo.

But gambling opponent Paul Clymer (R., Bucks), a member of the House Gaming Oversight Committee, said table games would mean more social problems for the state.

"Tables games will just create more gambling addiction," he said. "Table games create a whole new venue for people who would not consider slot machines but like the competitiveness of table games."

Senate Majority Leader Pileggi said any effort to add table games should include certain gaming reforms.

He wants a lifetime ban on applicants with a felony conviction who seek a principal or key casino employee license.

"We said all along that table games could happen as long as it was done in an open and accessible process, and that reforms to the existing [gambling] law were enacted first," he said.

For Atlantic City's 11 casinos, which have lost a substantial amount of slots business to Pennsylvania, table games spell more trouble. About 30 percent of their gambling revenue comes from table games.

"Quantitatively, it means Atlantic City will face a continued decline in their gambling revenues, and now more so from tables than slots," said analyst Andrew Zarnett of Deutsche Bank. "By Pennsylvania offering table games, it takes away one of Atlantic City's competitive advantages."