Making the News

Express-Times, Easton PA

Originally Published:Thursday, January 25, 2007

Pennsylvania gets 55 percent of most casino profits. That tax rate, versus rates of 9.25 percent in New Jersey and about 25 percent in Connecticut, is one of the factors weighing down individual winnings, casino analyst Joseph Weinert said.

"Pennsylvania is never going to be one of the leaders in slot payouts because of the high tax rate," said Weinert, vice president of New Jersey-based Spectrum Gaming Group.

New slots figures are in
Revenue exceeding expectations, but average payouts are lower than in other states' casinos.

By KURT BRESSWEIN
Express-Times, Easton PA

Pennsylvania slots are paying out a little less than more-established casinos in nearby states, according to an analysis released this week about the growing gambling industry.

But casino operators in Pennsylvania, including the one licensed for Bethlehem, say average payouts are a misleading indicator of how often gamblers win or how popular the attractions will be.  

The payouts haven't affected business thus far. State regulators say casino revenue has for the most part exceeded expectations.

Casino's early numbers encouraging, official says

Mohegan Sun at Pocono Downs, the state's first casino to open with licenses awarded last year, has pulled in profits it shares with the state of $31.5 million since opening last November, according to state figures through Sunday.

That's after paying out more than $283 million in winnings on $314.5 million wagered on some 1,100 machines. And that's just in Pennsylvania's first 69 days of gambling.

"Obviously, the early returns are extremely encouraging in regard to producing revenues that will be turned into tax dollars for the citizens," Pennsylvania Gaming Control Board spokesman Doug Harbach said Wednesday. He was referring to property tax breaks to be subsidized with casino revenue.

Pennsylvania gets 55 percent of most casino profits. That tax rate, versus rates of 9.25 percent in New Jersey and about 25 percent in Connecticut, is one of the factors weighing down individual winnings, casino analyst Joseph Weinert said.

"Pennsylvania is never going to be one of the leaders in slot payouts because of the high tax rate," said Weinert, vice president of New Jersey-based Spectrum Gaming Group. "When casinos are paying somewhere around 55 percent of every revenue dollar in some form of tax or obligation, the slots are going to have to be tighter."

Spectrum Gaming on Tuesday released its 2006 "East Coast Slot Report" published in its Gaming Industry Observer newsletter.

The amount wagered in nine eastern states with gambling, excluding 12 American Indian casinos in three states, totaled nearly $86.2 billion, a 4.7 percent increase over 2005. Winnings surpassed $8 billion, or 7.1 percent more than in 2005, according to the report.

Pennsylvania payouts at the Mohegan Sun near Wilkes-Barre and Philadelphia Park in Bensalem averaged payouts of 90.44 percent on every dollar wagered, the report found. Maine led the lot with a 93.35 percent payout rate and Connecticut, Delaware and New Jersey all averaged higher than 91 percent.

Weinert noted a true picture of Pennsylvania payouts won't emerge for three to six months, until the machines go through their programmed win cycles.

Jim Wise, vice president of marketing for the Mohegan Sun at Pocono Downs, said the types of slot machines have more to do with Pennsylvania payouts trailing Spectrum Gaming's East Coast average of 91.18 percent. About half the Luzerne County casino slots are penny, two-penny and five-cent machines with none over $25, Wise said.

"How it's different is, in general terms, the lower the denomination the higher the hold," or amount the casino keeps, Wise said. "It's misleading to take that number and assume that that's an indication that that's what all our games hold."

Mohegan Sun, Sands plan more slots in expansions

Mohegan Sun plans to boost payouts by adding 32 video poker machines Feb. 1 to its stable of 1,101 games. A larger casino space with more games is slated to open in summer 2008.

Las Vegas Sands Corp. is shooting for a July 2008 opening for its 3,000-machine casino in South Side Bethlehem, with an expansion to 5,000 slots and video poker games by early 2009. Spokesman Ron Reese said Wednesday he doubts a percent or so difference in payout will keep most gamblers away from the casino-based retail and entertainment complex.

"One of the best things about the Bethlehem project is it's so multifaceted," he said. "It's a sum of all of its parts, so people are going to be driven there for a variety of reasons."

Reporter Kurt Bresswein can be reached at 610-867-5000 or by e-mail at kbresswein@express-times.com.

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