Making the News

Pittsburgh Post Gazette

Originally Published:Thursday, September 24, 2009
http://www.post-gazette.com/pg/09267/1000415-454.stm

Lawmakers mull fees to put on table games

By Tom Barnes
Pittsburgh Post Gazette

HARRISBURG State lawmakers are moving closer to legalizing poker, blackjack and roulette at Pennsylvania casinos and setting the fees they may have to pay: a one-time, upfront licensing fee of $15 million and a tax rate of 18 percent on gross table revenue.

Those figures which are higher than a 12 percent tax rate and $10 million license fee proposed in an existing bill were outlined yesterday at a meeting of the Senate's Committee on Community, Economic and Recreational Development, which oversees gambling issues. But those figures apparently won't stop casino operators from offering table games.

Sen. Wayne Fontana of Brookline, the ranking Democrat on the panel, asked top officials of five casinos what they thought of the higher tax and license fee.

The casino magnates, who included Bill Paulos, a principal of Cannery Casinos, which owns the Meadows racetrack/casino in Washington County, said they clearly preferred the lower fee and tax rate, because that would let them add more tables for poker and other games, including dice and baccarat.

Mr. Paulos said table games would put The Meadows "on a level playing field" with casinos in West Virginia, which are only 30 minutes away.

The casino officials talked of adding anywhere from 40 to 100 table games each, depending on the tax rate and license fee, and hiring 700 or more additional workers per casino. Table games are much more labor intensive than slots and thus costlier to operate because dealers, floor supervisors, security people and others must be hired. That raises a casino's costs and makes it more difficult to pay higher taxes, the executives said.

When all 12 large casinos authorized by a 2004 law each with up to 5,000 slots are ultimately open in Pennsylvania, adding table games could mean 10,000 or more additional casino jobs, the officials said. So far nine casinos are operating, with another, SugarHouse in Philadelphia, forecasting an opening next summer.

Joseph Weinert of Spectrum Gaming, a New Jersey-based gaming analyst, said a tax of 18 percent "should be palatable from an operator's standpoint, and would allow Pennsylvania tables to compete effectively with those in Atlantic City, West Virginia and Delaware.''

However, a license fee of $15 million, he added, "will be difficult to swallow and may cause some operators to pass on tables, or at least delay implementation."

Casinos already have complained about the state's 55 percent tax rate on slots, but all are still making money for themselves and for the state. Slots revenue is cutting property taxes moderately, helping the horse racing industry and providing economic development, including construction of the new hockey arena in Pittsburgh. The table-games tax revenue would, however, go into the state's general fund.

Robert Soper of the Mohegan Sun casino near Wilkes-Barre and Robert DeSalvio, president of the Sands casino near Bethlehem, said they would add table games even if the license fee is $15 million and the tax rate is 18 percent. But they warned they might not add as many table games, as they would with a lower tax rate and fee.

Erik Arneson, a Senate Republican spokesman, said the $15 million fee and 18 percent tax rate "have been discussed, but are far from settled. The discussions about the appropriate license fee and tax rate are ongoing."

The five casinos all said they could have their table games ready for play by next April 1, which would mean three months of new tax revenue before the fiscal year ends June 30. The Meadows said it could be open by March 1.

One bill already on the table, Senate Bill 1033, sets the upfront licensing fee at $10 million and the tax rate at 12 percent. It's sponsored by Sen. Robert Tomlinson, R-Bucks, whose district includes the Philadelphia Park racetrack/casino.

Another bill, House Bill 21 by Rep. Bill DeWeese, D-Waynesburg, would set a 21 percent tax rate on table game revenue, but most legislators seem to think that's too high.

The tentative state budget of $27.9 billion that the Legislature may vote on next week projects generating $200 million in table games revenue in fiscal 2009-10, which began July 1.

Harrisburg Bureau Chief Tom Barnes can be reached at [email protected] or 717-787-4254.

 

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