Table games in Pa. are all but assured

HARRISBURG - The last piece of the budget that Gov. Rendell finally signed Friday night has not quite clicked into place.

But everyone in the middle of the 101-day budget marathon considers this final item a fait accompli. Legislators expect to get it done this week. The budget won't balance without it.

In fact, the people with the most to gain are so confident of its passage that they have already cleared thousands of square feet of space on the floors of their casinos.

Thanks to the budget crisis, legalized gambling in Pennsylvania is about to expand dramatically.

"It's not a matter of if," Brett Marcy, spokesman for House Majority Leader Todd Eachus (D., Luzerne), said Friday. "It's a matter of how."

Casino operators hope to have poker, roulette, and other table games running by spring. New "resort casinos" are gearing up to install hundreds of slot machines and gaming tables at sites in Valley Forge and elsewhere.

On the plus side: Table games promise thousands of jobs as dealers, croupiers, and other casino workers in regions all too accustomed to layoffs and plant closings. The resort casinos hope to draw tourism. Pennsylvania bettors will be able to be here instead of West Virginia, Delaware, or Atlantic City.

"Now, I won't have to drive 70 miles to play poker," said Don Maurer, 75, a retiree from Philadelphia's Overbrook section, who plays four times a week at the Trump Taj Mahal and the Borgata.

On the minus side: Anti-casino forces foresee more gambling addiction and other social ills, and point to legislative language that would let customers cash checks and get lines of credit at casinos.

And one expert questions the wisdom of states' balancing their budgets with projected gaming revenue - $200 million in Pennsylvania's case - at a time when some existing casinos are struggling. Lucy Dadayan, who studies the economy's impact on state and municipal funding, at the State University of New York, says, "The gambling windfalls may be short-lived."

But even Rendell, who has often warned against rushing too quickly to add more games, said the budget impasse changed his mind.

"I think that table games is slightly premature for Pennsylvania," he said Friday after signing the main budget bills. "But given the financial exigencies, and given the reluctance of the legislature to do any broad-base tax, table games were almost a necessity here."

For months, Rendell had said the state should get all its slot casinos up and running before adding table games. In June, he began amending that.

During the grand opening June 9 of the Sands Casino Resort in Bethlehem, a reporter pressed him about the possibility of the state adding table games. Rendell replied with a huge grin: "Maybe."

By midsummer, legislators were holding hearings on table-game proposals. State Rep. Paul Clymer (R., Bucks) noticed the presence of an army of well-tailored visitors. "Fifth Avenue people," he called them - lobbyists for the casino operators.

"They were very polished and distinguished," Clymer, a longtime foe of expanded gaming, recalled yesterday. "They had on nice suits. You could tell they were lobbyists."

Since Pennsylvania opened its first slots parlor three years ago, its casino operators have made no bones about wanting to be more like Atlantic City and Las Vegas, where the clang of slot machines is accompanied by the shuffling of decks and the rattle of dice.

Those operators worked hard and spent hard over the years to convince Harrisburg of their positions. Between 2001 and 2008, investors in Pennsylvania's 14 licensed gaming facilities gave $4.4 million to political campaigns in the state, according to a study by the self-styled watchdog group Common Cause. Millions more came from lawyers and lobbyists representing those interests, the study found. (Campaign reports for any donations made during the 101-day budget stalemate aren't available yet.)

Now, their latest wish is about to come true. "There is a recognition amongst all parties that table games are coming to Pennsylvania," Marcy, Eachus' spokesman, said Friday after a table-games bill passed the Senate 29-20.

The legislation now goes to the House and may be voted on as soon as Tuesday. If it reaches Rendell's desk this week, table games could be running by spring. The state Gaming Control Board has said it would need six to nine months to be ready to regulate the new games.

An industry-funded study predicts that adding table games will create at least 10,000 jobs and speed future openings of casino hotels and conference centers. The new games will also "help to make us competitive with neighboring states like New Jersey and West Virginia, which are benefiting from revenue from table games," said State Sen. Tommy Tomlinson (R., Bucks), who cited the study when he sponsored the bill that passed Friday.

The bill would tax the games at a rate of 12 percent (plus an additional 2 percent to local municipalities) and charge the casinos an initial $15 million license fee; smaller "resort casinos" would pay half that amount. A Democratic-backed House bill would set the tax at 34 percent, but Democratic leaders signaled last week that they were willing to compromise on a figure in the high teens.

The bill also incorporates so-called slot-reform measures that Republicans had insisted on: transferring some enforcement of gaming laws to the state police from the state Gaming Control Board's much-criticized enforcement bureau; barring casino licenses for anyone with a felony conviction; and curbing campaign contributions from gaming interests. This last part revises an earlier measure that courts threw out.

Industry analysts predict a 25 percent jump in casino revenue. State officials figure on $200 million in taxes and license fees in the fiscal year ending in June.

That money - unlike slots revenue, which is earmarked for property-tax relief - is to go to the state's general fund.

Anti-casino groups say they have barely had a chance to be heard.

"Rushed through on Day 100-plus, largely at the behest of the casino industry" - that is how Helen Gym of Asian Americans United describes the legislation. Gym, who has led protests against the two planned Philadelphia casinos, said last week that, "because it was done in such a rush, there are a number of terrible ideas in the law."

She pointed to the provision allowing casinos to cash customers' checks and extend lines of credit to gamblers. Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware), said that provision had numerous safeguards requiring casinos to screen a customer's identification, solvency, and credit-worthiness before extending credit.

On the industry's side, there is another concern: Times are not the best for the state's nine existing casinos.

They have started poaching each other's clientele, and two of the biggest - Sands in Bethlehem and The Rivers in Pittsburgh - have been hurt by the recession's impact on would-be bettors' discretionary spending. On Sept. 28, Standard & Poor's cut The Rivers' credit rating from "B" to "B-," citing its "weak operating performance" and trouble making debt-service payments.

Dadayan, a senior policy analyst at SUNY's Rockefeller Institute of Government, said the outlook for the next few years wasn't much better.

"Nationwide trends indicate states cannot depend on gambling revenue in the long run," she said last week, "since it is not likely to keep pace with growing budgetary needs."

In addition, Dadayan said, "the proliferation of casinos and racinos regionally and nationally will create competitive pressure for the states."

Sands in Bethlehem had long believed the odds were good - good enough to set aside floor space equivalent to two-thirds of a football field for 80 to 100 gaming tables, said spokesman Ron Reese.

PhiladelphiaPark Casino & Racetrack in Bensalem, which will move into a bigger facility in two months, is also ready. "We will be able to offer what New Jersey offers in gaming," said Bob Green, chairman of Greenwood Racing Inc., which owns PhillyPark, the state's top-grossing slots parlor. He, too, has reserved space - 30,000 square feet for up to 150 gaming tables, plus 100 more inside the racetrack's grandstand.

Green, who said he has been lobbying lawmakers to add table games since PhillyPark opened with only slots in December 2006, said the new games would spur development of other amenities - hotel rooms and conference facilities, better entertainment, more restaurants.

"Obviously," he said, "the infusion of table games into our gaming mix is an impetus to the development of those other facilities."

Don Shiffer said his employer left nothing to chance in Harrisburg. A lawyer for the Mount Airy Casino Resort in the Poconos, Shiffer said the casino had lobbyists in the capital in recent months, monitoring every tweak in the table-games legislation to ensure it was favorable to the owners.

Now, Shiffer said Thursday, the hard work is the logistics: getting ready at the casinos, hiring and training dealers, waiters, and waitresses to handle the anticipated rise in customer volume. He said that, with the bill's anticipated final passage this week, the Mount Airy Casino was bracing to start table games as soon as possible.

"The passage of it starts the clock," Shiffer said. "This is big."

The 2009-10 spending plan approved by the House

and Senate and signed by Gov. Rendell:

EndTextStartText

The big picture

$27.8 billion in overall state spending, offset by taxes, fees, and federal stimulus money.

Cuts total spending 1.8 percent from last year's estimated figure of $28.32 billion.

Maintains current rates on personal income tax and sales tax.

Legalizes poker and other table games at slot-machine casinos to raise a projected $200 million in fees and taxes.

Expands leasing of state forest land for natural-gas drilling to raise an estimated $60 million.

Spending

Boosts spending on public-school operations and instruction nearly $299 million, or 5.7 percent.

Cuts Department of Community and Economic Development 11 percent, to $707.9 million.

Cuts Department of Environmental Protection nearly 27 percent, to $159 million.

Boosts prisons' budget 11 percent, to $1.8 billion.

Cuts Department of Public Welfare nearly 1 percent, to $10.5 billion.

Taxes

Increases taxes on cigarettes by 25 cents

a pack, to $1.60, to raise $97 million.

Taxes little cigars at the same rate as cigarettes

to raise $16 million.

Raises the capital-stock and franchise tax that some businesses pay, to 2.89 mills from 1.89,

to raise $374 million.

Imposes a new 5.9 percent gross-receipts tax on some managed- care organizations to raise $316 million, replacing an expiring assessment.

Redirects 2 percent of slot-machine revenue into the general fund for four years, instead of a fund

to benefit the state horse-racing industry.

Raises $171 million

by transferring some cigarette-tax revenue from a fund that helps doctors and hospitals buy medical malpractice insurance.

Surpluses

Transfers $755 million out of the Rainy Day Fund.

Transfers a total of more than $1 billion from medical malpractice insurance, oil and gas lease, tobacco endowment, and auto insurance funds.

One-time revenue items

Accelerates deadline for sales- and income-tax collections to raise $376 million in 2009-10.

Generates an estimated $190 million by allowing repayment of back taxes without penalties.

SOURCES: Rendell administration, Senate GOP

- AP
EndText

To see how area legislators voted on H.B. 1416, which authorizes state spending for fiscal 2009-10, go to http://go.philly.com/pahousevote and http://go.philly.com/pasenatevoteEndText