Sprague quizzed at Harrisburg hearing

HARRISBURG - For more than two hours yesterday, two dozen legislators grilled veteran Philadelphia lawyer Richard A. Sprague, wanting to know just what his group - the Pennsylvania Casino Association - was up to.

Was the PCA, as Sprague asserted, a trade association trying to educate the public about the gaming business?

Or was it, as some lawmakers suggested, a stealth lobbying group, flouting Pennsylvania's new disclosure law for lobbyists?

The actions of the PCA, coordinated by one of Philadelphia's most influential lawyers, present the first high-profile test of the state's Lobbying Disclosure Act of 2007.

That law says anyone who spends more than $2,500 or 20 hours in a calendar quarter trying to influence a state official's decision must register publicly with the state.

The casino group sent big names into yesterday's hearing: Sprague, whose career as a prosecutor and defense lawyer dates to the 1950s, and PCA's adviser, Stephen A. Zappala - a former chief justice of the state Supreme Court.

Sprague wears many casino hats these days: investor (in SugarHouse Casino in Philadelphia); lawyer (for SugarHouse, Rivers Casino in Pittsburgh, and Mount Airy Casino Resort in the Poconos); and chairman of the PCA.

By turns pugnacious and entertaining, Sprague, who is 84, testified before a packed house that he started the group in 2007 in an attempt to give one voice to Pennsylvania's fledgling gaming industry. Three casinos took him up on his offer, he said: SugarHouse, Rivers Casino, and the Mount Airy Casino Resort. Together, he said, the three put up $1.6 million to underwrite the group.

During the joint hearing of the House Gaming Oversight Committee and the Senate Committee on Community, Economic and Recreational Development, Sprague conceded that last fall, in the heat of the debate over changing the state's gaming law to allow poker and other table games, his trade group sent three e-mails to all legislators in an effort to budge them on two points of contention: proposed tax rates for table games, and adding more licenses for so-called resort casinos.

He said that was lobbying - but not to a degree that would trip the 2007 law's rules for registering publicly.

Sprague said last fall's e-mails took the group's executive director, Ken Smukler, little more than four hours to compose and send, at a cost of about $450. He also said the casino group was wide open about the e-mail, sending copies to the news media.

He said a radio ad PCA aired last October in Philadelphia, Pittsburgh, Harrisburg, Scranton, and Erie was not lobbying because it did not urge legislators to vote one way or another.

Instead, the ad, which PCA said cost $25,000 to produce and air, talked about the benefits of gaming to the state's economic health. "It doesn't ask the listener to do anything," Sprague said. "Its purpose is to educate."

"In no way can a notice that is for the purpose of educating the public be lobbying," Sprague said. To suggest otherwise, he added, is "flouting the Constitution of the United States."

The casino association also has drawn particular attention from lawmakers because of its staff. Sprague said he initially brought in Zappala, the former chief justice, as "chair of the association," while Michele Zappala Peck, his daughter, is its director of operations.

In addition, Lisa DeNaples, a principal and financial backer of the Mount Airy casino, is a director of PCA.

She is the daughter of Louis DeNaples, who was charged with lying to state investigators about his connections to criminals when he applied for a slots license. Prosecutors dropped the charges in a deal that had DeNaples turn over his stake in the casino to his family.

Zappala testified yesterday that his role was to be available "anywhere, anytime, anyhow" to provide advice and information to Sprague. Originally hired for $275,000 a year, his salary was reduced to $150,000 after the group hired Smukler as executive director. "If it wasn't worth it, he should've fired me," Zappala testified.

Sprague said Zappala brought stature to PCA. "The fact I have Chief Justice Zappala with me is what gives me a voice," he said.

Zappala said he did not lobby lawmakers.

Sprague said his own outreach to legislators was limited to personal visits in 2008 with eight senators and representatives, including House Majority Leader Todd Eachus (D., Luzerne) and Senate Majority Leader Dominic Pileggi (R., Delaware).

"When I went to each of them," Sprague said, "my opening statement was 'I am here, and I don't want you to do a thing for me. . . . I'm here to introduce myself.' "

The purpose of his calls? To see "who does what and who's on which side."

Several lawmakers at the hearing were visibly impatient with Sprague's answers.

Rep. Curt Schroder (R., Chester) noted Sprague's "legendary advocacy on display," but took exception to what he perceived as the lawyer's "scolding and mockery" of the spirit of the lobbying-disclosure law.

When Schroder asked why Sprague didn't consult lawyers at the State Ethics Commission on whether PCA had to register, Sprague said: "I think I'm a better lawyer than they are."

"That's an interesting statement that shows a certain disdain," Schroder responded.

"I don't need to go to someone else to ask their interpretation," Sprague said.

Sen. Jane Earll (R., Erie), who chairs the Senate Economic Development Committee, described Sprague as representative of "a very incestuous group of people" in the casino industry. She noted his overlapping roles as casino investor, casino lawyer, and casino trade-group chairman.

"And then, you bring in some high, powerful people like Chief Justice Zappala and you sit there and wonder why we are concerned whether you're following the law or not," Earll said. "Excuse some of us if we're very chagrined about your lack of disclosure. . . . But by not registering it looks like you're hiding something."

Sprague shot back by reminding legislators that embedded in the new gaming law was a provision - pushed by a lobbyist for Foxwoods Casino in private meetings with Gov. Rendell and legislative leaders - that gives Foxwoods an extension for building its casino.

"If I was in your position, I'd take a look at that rather than this Mickey Mouse thing," Sprague said.

An exasperated Rep. Michael O'Brien (D., Phila.) asked Sprague: "Why not? Why won't you register? I don't understand, for a lousy hundred bucks, why wouldn't you?"

Sprague said the casino association would register immediately "if it is understood that there is no suggestion that we did anything wrong by not being registered."

He added that the PCA may hire an outside lobbyist - and if that happens, the group will register.

The hearing yesterday has little if any bearing on decisions about whether the PCA or other groups acted within the bounds of the lobbying law. Such questions go to the state's Ethics Commission.

Rep. Paul Clymer (R., Bucks), who is on the House Gaming Oversight Committee, said that if PCA wasn't lobbying, it surely came close.

"They were the closest to that edge that you can get," Clymer said in an interview after the hearing. "When you have some high-powered people on your trade association, it raises a red flag. 'What are you folks about? If you're not lobbying, then what are you doing?' "

According to the state's disclosure law:

Those exempted from registering include: