Rendell to push video poker for tuition aid

HARRISBURG - In a proposal that was met with instant criticism across the Capitol, the Rendell administration said yesterday it wanted to legalize video-poker machines at restaurants, private clubs and corner bars to help Pennsylvania students pay for college.

Rendell will ask the legislature to approve the video-poker legislation - the first expansion of gambling since the landmark 2004 bill legalizing slots casinos - in his otherwise somber, reduction-driven budget address today.

If the proposal becomes law, tuition relief will start this fall for incoming freshmen and reach nearly $550 million by the time the program is fully in place, according to administration officials, who estimate that 175,000 students could receive aid.

"In the plan, everyone pays something, but what they can afford," state Education Secretary Gerald H. Zahorchak said at a news conference yesterday. "We will eliminate the gap between what families can afford to pay and what they are forced to pay, often by borrowing tens of thousands of dollars."

The measure will surely generate a heated battle in the legislature, which for decades has resisted approving similar bills to regulate what is a well-known - yet illegal - practice in bars and private clubs across the state: backroom payouts from video-poker machines.

"It is not clear how he intends to win legislative support, especially since bills to legalize video poker have been introduced for at least a quarter-century without becoming law," said Senate Majority Leader Dominic Pileggi (R., Delaware), adding that his caucus had pushed for other ways to help college students pay tuition bills.

"Serious concerns will be raised about licensing, regulation and enforcement, the same kind of concerns that have been raised about the oversight of casinos in Pennsylvania," he said.

Under the proposal, the state Department of Revenue would regulate the industry - requiring establishments to apply for a license for the poker machines - and oversee the taxes on poker profits.

Pennsylvania State Police officials estimate there are roughly 17,000 video-poker machines now operating illegally, and stress that they would rather use their time to crack down on drugs and sex offenders than track illegal video-poker machines.

In 2008 alone, state police seized 537 illegal machines.

"It's like the Wild West," said State Police Commissioner Frank Pawlowski. "They're out there totally unmonitored."

The Rendell administration's plan is to use the proceeds from licensing and taxing the video-poker machines for tuition relief. That relief would be made available for families earning up to $100,000 a year who have students attending any of Pennsylvania's 14 community colleges or the 14 public universities in the Pennsylvania State System of Higher Education.

Supporters praised the move as a way to capture untold dollars being paid out annually in the vast underground economy of illegal video poker, while gambling opponents say they fear the social costs would be high.

"It's manna from heaven," said Rep. Tom Caltagirone (D., Berks), who sponsored a video-poker bill last year.

Nine states have legalized video poker, administration officials said. But they were unable to say whether those machines operated in establishments with liquor licenses, rather than casinos.

New Jersey, for instance, bans video-poker machines anywhere but in its casinos.

House Majority Leader Todd Eachus (D., Luzerne) said his caucus would review the proposal carefully to ensure that it did not cut into slots casinos' profits.

"You need to be deliberative about any decisions you make around gaming expansion," he said, "and make sure it doesn't interfere with the gains that we've already made."

Representatives of Philadelphia's casinos could not be reached for comment yesterday.

House Republicans were less charitable than Democrats in their response to the proposal.

"This is a blueprint for financial disaster - and a social one," said Rep. Paul Clymer (R., Bucks), a major critic of legalized gambling. "We know that in dealing with the casinos that somewhere between 45 to 50 percent of the poor people are the ones who go in and spend their money.

"Now we are going to make this accessible in their neighborhoods, and we're going to see even more problems," Clymer added.

Rendell administration officials insist the proposal does not amount to an expansion of gambling. They also maintain that despite decades of efforts to get similar legislation approved, the proposal stands a better chance this year.

"It's my opinion that when you talk to the legislature about supporting young people [getting] a college education, there's a new sense . . . that this is the right thing to do," Zahorchak said.

They have ready-made support from bars, taverns and private clubs, which have been pushing for years to legalize the machines.

"We're ecstatic," said Amy Christie, executive director of the Pennsylvania Tavern Association, which represents 1,500 bars. "It's something the association has been pushing since the '80s. With the economy, it will help licensees and kids getting a college education."

Ted Mowatt, executive director of the Pennsylvania Federation of Fraternal and Social Organizations, said his 400 members would likely support the bill, too. He said the groups, among them fire companies and VFW halls, do not make much money, if any, on the small games of chance that are legal and have been limited by the $5,000 cap they can pay out.