Friday, January 8, 2010

Pa. Governor Signs Table Games Bill, Mohegans Receive Contingent Approval For Developing 9-Story Hotel

By Ken Davison
Feather News
Updated 2

Pennsylvania Governor Ed Rendell, as expected, signed into law yesterday a 230-page bill that, among other things, permits the state´s slot parlors to offer table games.

The president for the Mohegan Tribe´s slot parlor-racetrack in Pennsylvania, Robert Soper, said yesterday in a Scranton Times Tribune article that they intend to add 60 table games not including tables in a planned poker room, all of which would require 400 more employees. Today´s edition of The Day newspaper wrote that Mr. Soper said that ¨the state´s larger casinos, of which Pocono Downs is one, will probably introduce about 100 table games.¨

The Mohegan´s slot parlor in Pennsylvania had 2,466 machines in operation at the end of 2009, roughly double the number of machines prior to the opening of the July 2008 expansion. The additional money spent by customers on table games at the Mohegan facility could help stem the accumulated losses generated by the Tribe´s Pennsylvania facility since it opened in 2006, losses largely attributable to the interest expense burden resulting from debt incurred to buy and expand the property.

The Mohegans also received conditional approval yesterday in a Plains Township Planning meeting to continue with its development plans for a 9-story, 300-room hotel-conference center at the site of its Pennsylvania slot parlor, coningent on the issuance of a new highway occupancy permit by the state Department of Transportation and on the implications of a traffic impact study.

Operators of slot parlors had been planning on the likely legalization of table games for the past year. In response to yesterday´s news, a spokesperson for the closest competitor to the Mohegan´s Pocono Downs slot parlor, Mount Airy Casino Resort, said they plan to install 73 table games, including 15 tables for poker. Mount Airy plans to hire between 250 and 350 employees, according to various reports over the past few days. Officials at Mohegan´s second closest competitor at 70 miles away, Sands Bethlehem, said they will probably start off with 80-100 table games.

Mount Airy Casino and Resort reported 2,501 machines in operation at the end of December 2008 and Sands Bethlehem reported 3,252 machines. Mount Airy Resort, about 15 miles away as the crow flies from the Tribe´s slot parlor, also owns a 188-room hotel.

A multitude of steps need to be taken before the slot parlors can open table games to the public. First and foremost is the establishment of a regulatory process that implements the new table games law, a process which Pennsylvania Gaming Control Board (PGCB) Chairman Gregory C. Fajt said will take six to nine months.

Among the steps needed to be taken by the PGCB, charged with overseeing the slot parlors, are the drafting of regulations for each type of table game to be offered, background checks on the additional vendors and prospective employees needed by the slot parlors in order to add table games, inspect and approve the various floor plans submitted by the slot parlors and ensure that adequate surveillance systems are in place so the various facilities can monitor table game play.

The PGCB will also have a public comment period and hold hearings for each applicant´s table game plan in the municipality in which the casino is located.

Table games will be taxed at 16 percent, much lower than the existing taxes and fees that amount to about 60 percent of slot revenues at the Mohegan´s Pocono Downs´operation. The Mohegans will also have to pay a table games license fee to the state in the amount of $16.5 million.

The disagreemnents over what rate to tax the table games were an obstacle that had earlier held up the passage of the bill. Some lawmakers proposed a tax rate of about 30 percent but slot parlor operators lobbied heavily for a lower rate. One study presented to the Pennsylvania legislature last year said that an average of between 7 and 8 employees are needed for each table game, justifying a much lower tax rate because of the intensive labor needed to run table games as opposed to the lower labor cost associated with operating slot machines.

Based on yesterday´s hiring projection of between 250 and 350 employees made by a Mount Airy Casino and Resort spokesperson, the facility would hire about 4 to 5 new employees for each of the 73 planned table games.

Slot parlors were legalized in Pennsylvania in 2004. Since then, nine slot parlors have opened and more are on the horizon. The city of Philadelphia is the location for two more slot parlors that have yet to open. A development arm of the Mashantucket Pequot Tribe is a partner in a group that is to develop one of the Philadelphia slot parlors. The project has been plagued by delays in the face of neighborhood opposition over the various proposed locations and by city officials but when it eventually opens, it will be in a lucrative location and it will likely be a full-fledged casino. The delays and extensions have upset some lawmakers anxious to collect the additional taxes but yesterday´s bill extends the Mashantucket group deadline to open a temporary facility to December 2012. The other slot parlor, Sugar House Casino, is expected to open this year.

In other business at yesterday´s meeting of the Plains Township Planning Board, board members approved a subdivision of the Mohegan property in Pennsylvania that will allow the Mohegans to donate a piece of its land to the Luzerne County SPCA for the expansion of its pet cemetary.