Making the News

Pittsburgh Post Gazette

Originally Published:Saturday, September 12, 2009
http://www.post-gazette.com/pg/09255/997504-454.stm

Table games at casinos on the table

By Mark Belko
Pittsburgh Post Gazette

Thanks to Pennsylvania's financial crisis, table games are looking more and more like a sure bet to be arriving in the state's nine casinos far earlier than anyone expected.

A spending plan proposed yesterday by state legislative leaders includes $200 million from table games for the fiscal year that started July 1. Virtually all the money would come from one-time table game licenses sold to the six racetrack /casinos and three stand-alone casinos.

And while Gov. Ed Rendell refused to embrace the $27.9 billion budget crafted by Senate Republican and Democratic leaders and House Democrats, he said he would support the legalization of table games as another means of generating revenue.

That amounts to a concession for the governor, who initially wanted to wait until all 14 casinos permitted under the state's 2004 gambling law were up and running before adding table games.

Now blackjack, poker, roulette and other table games could be arriving even before construction starts on the two Philadelphia stand-alone casinos, which have been mired in litigation.

House Democratic Whip Bill DeWeese of Waynesburg, who has introduced legislation to legalize table games, said he sees increasing support to include them as part of the revenue mix needed to erase budget shortfalls.

Mr. DeWeese said he is willing to amend his bill to allow table game revenue to be diverted into the state's general fund for three years rather than being used to cut property taxes.

He said he is flexible on other proposed provisions as well, including a $10 million licensing fee and a 21 percent tax rate on daily gross revenue, which some casino operators believe is too high for labor-intensive table games.

"In the name and spirit of compromise, nothing should be off the table," Mr. DeWeese said in a statement.

He is one of many legislators who in recent weeks have expressed support for adding table games to casinos because the idea is relatively painless, politically speaking.

Some critics have said such an expansion is too soon, since the first casino in Pennsylvania opened less than three years ago. But legislators say they'll get far less criticism from constituents by expanding gambling and taxing the proceeds than if they raise the personal income tax or the sales tax. Some religious groups have criticized adding forms of gambling, saying it will hurt gamblers who already suffer from addictions.

Still uncertain is exactly how much casinos would pay for the licensing fee and how much the tax rate would be. The leaders' $27.9 billion budget did not include specifics relating to either but did list $200 million in table game revenue, mostly from fees.

That would put the one-time fee at more than $20 million for each racetrack and stand-alone venue, an amount Rivers Casino President Ed Fasulo described as "disappointing."

He said there are upfront costs in equipment, security, surveillance and training that must be taken into account in adding table games.

"To pay [a $20 million fee] without any revenue stream at all yet is a challenge for us," he said.

Mr. Fasulo would not say what a more reasonable fee would be. But he added the Rivers would like to see a tax rate of no more than 12 percent, far lower than the 55 percent rate on slot machines.

"We felt that would be a win-win for both the state and the casino," he said. "It would give us enough of a margin to make economic and financial sense."

One proposed tax rate that has been tossed around 18 percent would be "a little disappointing for us," he noted. "Hopefully there will be an opportunity for that to be cut further."

Likewise, David La Torre, spokesman for The Meadows Racetrack and Casino in Washington County, said the fee and tax rate must be "affordable."

Table games are "incredibly labor intensive and certainly are not as revenue positive as slot machines. So the tax rate is going to have to be much lower and the fees would have to be commensurate with the benefit," he said. He added the tax rate has to be "a lot lower" than Mr. DeWeese's proposed 21 percent.

With action by the Legislature, The Meadows plans to add 25 to 40 table games like blackjack, roulette and craps, as well as 25 tables in a new poker room to supplement 3,700 slot machines.

"We would just need the go-ahead to begin," he said.

Mr. La Torre said The Meadows expects to hire 700 to 750 employees to man the tables and to provide security, surveillance and serving help. He estimated it would take about six months from the time the casino got authorization to get table games up and running, most of that due to the training required.

The Rivers Casino is planning to add 40 to 60 table games, including poker, blackjack, craps and roulette, to supplement 3,000 slot machines, Mr. Fasulo said. If the games are legalized, it expects to hire 325 to 350 employees to staff the tables. He said it would take six to eight months realistically to get table games up and running and generating revenue once the state gives its consent.

If Pennsylvania does legalize table games, it can expect to see its annual gross gaming revenue increase by 25 percent, depending on the tax rate, said Joseph Weinert, senior vice president of Spectrum Gaming Group, an industry consultant.

A study done for the casino industry estimated that once all the state's casinos had table games, at least $165 million in new revenue would be generated yearly. The state, Mr. Weinert said, would be able to capture a "substantial amount of table game dollars" that currently are going elsewhere.

"From an economic standpoint, Pennsylvania would be able to tap a whole other customer segment that right now is choosing to play in Atlantic City, West Virginia, upstate New York or Las Vegas. There are a lot of people who think playing slot machines is boring, monotonous and not a whole lot of fun," he said.

Mr. La Torre said a lot of Pennsylvania residents are visiting casinos in West Virginia to play table games. "Those are dollars driving right past Pennsylvania casinos and into nearby West Virginia. That is a clear disadvantage," he said.

Harrisburg Bureau Chief Tom Barnes and staff writer Torsten Ove contributed. Mark Belko can be reached at [email protected] or 412-263-1262.

 

Spectrum OSO Asia SPECTRUMETRIX  Spectrum-i 
© Copyright 2007-2017 - Spectrum Gaming Group. All Rights Reserved.

Spectrum Gaming Group • 1201 New Road, Suite 308 • Linwood, NJ 08221 • USA
Phone: 609.926.5100 • Fax: 609.926.5121 • [email protected]


Site Development and Hosting provided by
MasseyMedia