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Casinos, Cards

Taking Bets on the Future of the Foxwoods Casino License…

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Even after this week’s House vote the fate of Pennsylvania’s only revoked casino license is still up in the air.  HB 65 would remove the restrictions that tie the license to Philadelphia and open it up to a statewide auction.  “By doing this the state stands to increase its revenue,” says State Rep. Curt Schroder (R-Chester), the bill’s prime sponsor and chairman of the Gaming Oversight Committee.  His bill passed with a bipartisan vote of 140 – 48. 

But it’s no sure bet in the Senate.  A spokesman says the Republican leader is among those wondering if the gaming market is already saturated and whether the license should be eliminated altogether. 

The state Treasurer released a study last year, which indicated market maturation and even saturation on the opposite ends of the state.  He suggested that central PA may be the place to maximize revenues. 

Governor Tom Corbett notes that plans have always called for the license to be awarded.  “I always think that we need to look at property tax relief,” Corbett says.  He acknowledges there have been discussions about the license within the administration, but did not offer many details while speaking with the media this week.  

Pennsylvania is home to 11-operating casinos, where slot machines raked in more than $214-million in gross revenue last month.  That translates into $116-million worth of tax revenue, according to the Gaming Control Board.  The lion’s share of slot machine tax revenue is used for property tax relief.  Table games tax revenue currently ends up in the General Fund. 

The Gaming Board rolled the dice on the Foxwoods casino project in 2006.  After four years of delays and financing woes, the license was revoked in late 2010.  It’s been in limbo ever since.

Five Years of Casino Gaming in PA

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The slot machines first started chiming, whizzing and whirling at Mohegan Sun at Pocono Downs on November 14th, 2006.  Back then it was Pennsylvania’s first slots casino.  Today Mohegan Sun is one of ten casinos operating in the Keystone State, which are all offering a full complement of table games too. 

Casinos, Cards

PA casinos started rolling out table games in July 2010.

The first five years of casino gambling have been an economic success, according to state Sen. Tommy Tomlinson (R-Bucks).  “Many of my detractors said you’ll never raise a billion dollars out of this, but we’ve gone over $4-billion dollars in tax revenues to the state,” Tomlinson says.  Slot machines have actually raked in $4.6-billion dollars in tax revenue through last fiscal year, and table games added another $81.4-million dollars in tax revenue during their first year. 

Regardless of the statistics, state Rep. Curt Schroder (R-Chester) tells us casino gambling has failed to deliver on its promise of property tax relief.  “Maybe a couple hundred dollars in some places, in some parts of the state much less than that,” says Schroder, who chairs the House Gaming Oversight Committee.  “When you’re talking property tax bills of three, four, five thousand dollar and above in some areas, it doesn’t make a dent.” 

Last year, Pennsylvania homeowners shared in $776-million dollars of slots-funded property tax relief, which broke down to a statewide average of $200 bucks.  The amount varies by school district, though, and Sen. Tomlinson tells us poorer areas and senior citizens are especially benefitting.      

PA casinos employ 15,000 people, but there are concerns about potentially thousands of families being negatively impacted.  Five years ago, the Council on Compulsive Gambling in Pennsylvania averaged around 300 calls per month to its helpline.  “Since the first casino opened in November of 2006, our monthly helpline activity has increased,” says Council on Compulsive Gambling President Jim Pappas.  “We now average over 1,800 calls a month from within the state.”  3,025 people have also signed up for the Pennsylvania Gaming Control Board’s self-exclusion list.

Several more casinos could potentially come online in 2012, but the Gaming Board’s focus is shifting.  “It really is coming to the point where we’re becoming more of a regulator than an opening-type agency,” says PGCB spokesman Richard McGarvey.  While the gaming competition from surrounding states will be intense in the next five years, McGarvey says PA casinos are already responding with increased amenities.  “You’re now starting to see these casinos starting to add hotels, shopping centers, bowling alleys… That’s the direction they’re heading.”

Casinos, Cards

Gaming Reforms Scheduled for Committee Action

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The 21-recommendations contained in May’s gaming grand jury report have been turned into bill form, and the House Gaming Oversight Committee is scheduled to take up three of them on Monday.  One of them is HB 2009, which encompasses grand jury recommendation number 12.  It would require the Pennsylvania Gaming Control Board (PGCB) to post online a description of all Right-to-Know Law requests it has received, including the number of denied requests and the status of any appeals. 

The other bills would require the PGCB to include an agenda from each of its executive sessions in its annual report, and to post a salary matrix for members and employees of the board online.  Those two initiatives correspond with grand jury recommendations numbers 12 and 21. 

Grand Jury Report

The scathing grand jury report probed Pennsylvania Gaming Control Board activities from 2004 - 2007.

The May grand jury report blasted the Gaming Board for overseeing a political process that neglected or ignored its policy objectives, avoided transparency and failed to protect the public from unlawful gaming practices.  The grand jury probed PGCB activities from 2004 – 2007. 

Bill Ryan, the new chairman of the Pennsylvania Gaming Control Board, was actually serving as acting Attorney General last spring when his office released that scathing grand jury report.  Earlier this month, Ryan told the Gaming Oversight Committee that he will do everything in his power to ensure the public perception of the Gaming Board is changed.  “None of the members of the board were on the board during the time that is covered by the grand jury report,” Ryan testified.  “I see nothing but seriousness of purpose among every other member of the board.” 

An unrelated bill that’s expected to come before the Gaming Oversight Committee, on Monday, would prohibit so-called Internet sweepstakes cafes in the Keystone State.  Neighboring Ohio has recently been cracking down on these unlicensed establishments that offer electronic games that look like slot machines, mislead players and exasperate law enforcement.

PA Treasurer Analyzes Gaming Markets

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Ten casinos are already operating in the Keystone State.  Two resort casinos are pending, and two casino licenses are currently unallocated.  One of those remaining two licenses was originally awarded to Foxwoods project in Philadelphia, and eventually revoked by the Gaming Control Board.  The other is earmarked for a yet-to-be-built racetrack in Lawrence County. 

Both licenses are subject to possible legislative intervention and relocation, and a key Senate committee got the first look at Treasurer Rob McCord’s analysis of alternative locations at a hearing this week.  “When you take a look at eastern Pennsylvania, supply and demand seem to be meeting each other… when you move to western Pennsylvania you move from maturation to potential saturation,” explained McCord, who by way of his office is a non-voting member of the Gaming Board and legal custodian of gaming funds.

McCord commissioned a study with the Innovation Group, and found that the numbers drive regulators and policymakers to look at central Pennsylvania.  Ranking alternative casino locations based on the net gain to PA gaming revenues, South York tops the list with a $154-million dollar impact.  “This is a net revenue number.  So you might see in Philadelphia the highest gross number but then you have to ask yourself, how much of that is cannibalization of Pennsylvania facilities?   You really don’t care if you’re cannibalizing out-of-state facilities,” McCord says.  Reading, PA came in at number two among the ranked alternatives. 

Rob McCord Gaming Presentation

McCord's presentation focused on the net gain for Pennsylvanians.

State Senator Jane Earll (R-Erie) who chairs the Senate Community, Economic and Recreational Development Committee recognizes there is some legislative interest in moving either of the aforementioned licenses.  “I think to have concrete information about what the potential impacts on our incumbent investments might be is helpful,” Earll said after the hearing.  McCord made no recommendations, rather calling the study a tool for analysis. 

The study also found that a potential casino in Youngstown, Ohio would have a significant impact on future profits from the would-be Valley View casino in Lawrence County.  The Ohio project would have a near 33% impact, dropping net revenues from $122-million to $83-million under that scenario.

PA Gaming

Report Provides New Table Games Data

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August 2010 was the first full month for table games at Pennsylvania casinos, so the August 2011 revenue report includes the first year-to-year glimpse at table games revenue in the Keystone State.  For instance, the nine casinos operating in August 2010 raked in $34.6-million in gross revenue.  Those same nine casinos collected $48.6-million in gross revenue last month, according to the Pennsylvania Gaming Control Board’s figures. 

Philadelphia’s SugarHouse Casino opened up in September 2010, so year-over-year numbers aren’t yet available for it. 

Much of the increase in revenues can be attributed to the growth of table games on the casino floor.  There were 636 tables operating at nine casinos in August 2010.  Those same nine casinos were operating 871 tables last month. 

Parx Casino in Bensalem has the most table games operating (172).  Sands Casino Resort in Bethlehem had the most gross table games revenue last month ($10.8-million).  July 2011 still stands as the biggest gross revenue month for table games, with $56.2-million collected across all ten casinos.  That number was $54.7-million last month. 

Pennsylvania’s table games law taxes gross revenue at a rate of 16%.  14% is funneled into the state’s General Fund.  2% is tacked on as a local share.

Gaming Board, Parx Discuss ‘Kids in Cars’ Problem

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Nine incidents were reported last year; three more have already been documented in 2011.  At issue are adults who go inside Parx Casino to gamble, while leaving children unattended in the parking lot.  Appearing before the Pennsylvania Gaming Control Board, Tuesday, Parx officials said all offenders are subject to arrest by Bensalem Police.  “Anyone who has left children unattended are permanently evicted by us… and that permanent eviction then makes them subject to criminal trespass if they are to appear again at our property,” added Parx General Counsel Thomas Bonner.  Offenders also have their players club accounts canceled and are removed from any marketing lists. 

Those are just the patron sanctions.  Bonner went on to explain how the casino has ramped up enforcement.  “Before these incidents began to occur with greater frequency last year, we had about 16-cameras in our parking lots.  We’ve just about doubled that number to 29-cameras in our parking lot areas,” Bonner says.  Parx has also installed signage at the casino doors, warning patrons of the problem and penalties, and increased the number of security vehicles conducting roving parking lot patrols.  “The last several incidents that we’ve had, response times were 6-minutes, 17-minutes, 15-minutes.  They were very short response times,” Bonner says.

Greg Fajt

Greg Fajt

Members of the Gaming Control Board appeared pleased with the response times, but concerned with how to prevent such actions and the penalties for them.  “This segment of the population just doesn’t appear to get it, and these folks need to be given a message,” says Gaming Board chairman Greg Fajt.  The board took no enforcement action, but some members suggested that lawmakers could help them create tougher penalties.

Grand Jury Report

Grand Jury Report Will Not Gather Dust

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A statewide investigating grand jury released its 102-page report on the Pennsylvania Gaming Control Board on Tuesday.  Chairman of the State House Gaming Oversight Committee Curt Schroder (R-Chester) calls the report a “stinging indictment” on the operation of the Gaming Control Board since its inception.  Schroder says it is lawmakers’ duty to follow-up.  “I intend to hold some hearings on the report after we get the budget out of the way… and then develop legislation accordingly.”

One piece of legislation that’s already passed the House would move the Bureau of Investigations and Enforcement to an independent agency.  That move happens to be recommendation #3 of 21 in the grand jury report.  “I don’t know how many grand jury reports it’s going to take before the Gaming Control Board, chairman Fajt… as well as the State Senate accepts the verdict out there,” Schroder says, pointing to an earlier Dauphin County grand jury that reached the same conclusion. 

In a statement, Gaming Control Board chairman Greg Fajt called it a rehash of “old news.”  He defended their successes, and pointed out that after two years of investigation there were no arrests, no presentments and no indictments.  “They found no criminal activity because there was, in fact, no criminal activity to be found,” Fajt stated. 

But Rep. Schroder says the response gives him no confidence that the PGCB understands the problem, or even accepts that there was or is a problem.  “Chairman Fajt can crow all he wants about the fact that there were no indictments.  Nonetheless the report found many violations of the law, and many instances of just outright corruption.”  Schroder tells us one of the problems is that violations of the gaming law “unfortunately” don’t carry criminal penalties.

PA Gaming

Grand Jury Report Criticizes Gaming Control Board

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The 102-page document compiled by the 31st Statewide Investigating Grand Jury paints an unflattering picture of the state’s gaming regulators.  It cites a political process that neglected or ignored its policy objectives, failed to protect the public from unlawful gaming practices, and avoided transparency.  The report includes 21-recommendations ranging from a new venue for the Bureau of Investigations and Enforcement, to a significant overhaul of the current employees of the board, and annual audits. 

Gaming Control Board chairman Greg Fajt released a statement calling the report simply a rehash of “old news” at a significant cost to taxpayers.  Fajt says the grand jury met for two years and found no criminal activity, because there was none to be found.  Fajt recognizes there were “minor missteps along the way,” but notes that the PGCB was the first newly created state agency in 30-years.  He maintains the Gaming Board has been a success. 

Copies of the report have been delivered to Governor Tom Corbett, all four legislative caucuses, the PA Supreme Court, Auditor General, Treasurer and others.