PAVGA
photo-1457369804613-52c61a468e7d.jpg

News

PAVGA News, Announcements & Industry Updates

 

PAVGA is making progress – and headlines – and we continue to advocate for the legalization of video gaming terminals in Pennsylvania. Please check back often as we continue to add announcements and news stories to this growing list.

 
 
Pennsylvania's state budget talks continue, with an apparent break in gambling impasse

Source: www.pennlive.com

Elements of a hard-fought compromise package on expanded gambling in Pennsylvania took shape Saturday as lawmakers scrambled to complete a plan to pay for a $32 billion state budget.

Legislative leaders, along with Gov. Tom Wolf, are said to be seeking about $700 million in recurring revenues to close out the budget, and all sides have committed to doing that without an increase in the state's 3.07 percent income tax, or 6 percent sales tax.

Gambling expansion has significantly slowed the effort to date, as warring factions have clashed for weeks over how deep to plunge in this next wave of legalization.

And that's were the most-evident progress was made Saturday.

Top Senate leaders formally ruled the authorization of slots-style video gaming terminals at bars and restaurants across the state out of the still-emerging gambling expansion framework.

"That is no longer part of the conversation here," said Senate Appropriations Chairman Pat Browne, R-Lehigh County.

What was in, Browne confirmed, was an effort to craft language authorizing the licensing and development of up to 10 additional "satellite" casinos, secondary sites that would be operated, one apiece, by the existing commercial casino operators.

The intent is to create a set of smaller casinos serving secondary markets across the state in attempt to ramp up gambling tax revenue while sparking new capital investment and job creation.

No formal proposal was made public Saturday, so it was not clear exactly how the sites will be selected, what kind of market protection will be granted to the existing casinos, or what say local communities will have in accepting or rejecting them.

But the intent is to make the new licenses available through several rounds of auctions, with a minimum price of $7.5 million for slots-only facilities, or $10 million for slots plus table games.

Sources familiar with the discussion said the size would range from 300 to 700 slot machines, and up to 100 table games. At the upper end, that would be about the size of the two so-called "resort casinos" now operating in Fayette County and Valley Forge.

The plan - which would likely push casino gambling into smaller cities like Williamsport, Altoona/Johnstown, Reading or Gettysburg, to name a few - has been endorsed by many current Pennsylvania casino operators as an alternative to VGTs, which they see as more damaging to their already maturing markets.

Pennsylvania slots play dropped off by 2.2 percent in 2016-17, with nine of the 12 casinos seeing drops from the prior year.

There are concerns, however, including how this new market would be squeezed into the Pennsylvania map without cannibalizing existing casinos that already provide 18,000 jobs.

Browne mentioned a 25-mile buffer zone around the existing casinos to protect their markets, but some casino companies - especially those serving less densely-populated areas of the state - said that was too small for them.

"Given the size of the expansion under consideration and the fact that more than 50 percent of our customers come from beyond a 25-mile radius, this could have a devastating impact on our business," said Eric Schippers, senior vice president for public affairs at Penn National Gaming, which operates Hollywood Casino in Grantville.

Other sources noted questions like that will continue to receive more refinement over the next two days as lawmakers race to meet a Monday deadline for action on the spending bill by Wolf.

Wolf has not said what he would do if he doesn't have a revenue package on his desk by then that would fully fund the budget.

Few new details emerged Saturday on the rest of the revenue package as legislative leaders shuttled back and forth between Wolf's Capitol office and their own leadership suites.

Aside from a large, planned bond issue against future national tobacco settlement payments due Pennsylvania to cover a 2016-17 deficit, no one was willing to rule anything as definitively in or out Saturday evening.

But there was a palpable hopefulness that things were coming together.

"I feel confident we can get a lot of this accomplished by Monday," said Senate Majority Leader Jake Corman, R-Centre County. "We're just going to keep working at it... but things are progressing nicely."

Simply setting a course on gambling - which still will have to clear final passage votes in both the Senate and the state House of Representatives - was big.

For the last three weeks, an intense battle has raged at the Capitol over whether the gambling expansion package should include House-passed language to include language permitting slots-style video gaming terminals in Pennsylvania's bar, taverns and private clubs.

The argument for the machines is that it opens a now 10-year-old legal gambling market in Pennsylvania to potentially thousands of bars, restaurants and private clubs that now must compete for leisure dollars with casinos and an expanded array of alcohol-to-go providers.

Proponents argued that with 34,000 machines at 8,000 facilities, it could generate $500 million dollars in taxes for the state, and local governments could also benefit from a cut of the proceeds in any given municipality. 

But that irresistible force met an immovable object in rank-and-file members of the state Senate, many with established casinos in their own districts, who worried that the creation of thousands of new gambling sites would eat into the market share of a valued tax-raising partner.

Combined with gambling opponents, and city Democrats concerned about the social costs of flooding low-income neighborhoods with machines, the pro-VGT forces appeared to be stuck at about 20 votes in the 50-seat chamber.

By Saturday night, even staunch VGT supporters conceded they won't be part of this year's budget mix, but they vowed to re-try their case in the near-term future.

The emerging bill may guarantee them that chance.

Revamped language governing casino payments to host municipalities required by a recent court decision is set to be effective for one year to 18 months. That means gaming issues would have to be revisited at that time, essentially guaranteeing VGT supporters a fresh chance to make their case.

The gambling bill will also include:

Internet Gambling/Online Lottery sales.

This plan would make Pennsylvania the fourth state to permit in-state bets on on-line games run through licenses awarded to the existing commercial casinos.

Proponents of Internet-based games have argued that this will help the casinos tap a new market among younger adults who generally are not regular patrons at the existing casinos now.

New revenue would be taxed at 26 percent for slots-style games, with 24 percent earmarked for the state's general fund, and 20 percent for table-style games like poker or blackjack, with 18 percent going to the state.

The other 2 percent share would be steered back to the casino's host municipality, according to current drafts.

This comes with a provision to permit the Lottery to sell tickets via the Internet.

Supporters, including the Wolf Administration, have sought this move to help the Lottery - Pennsylvania's original public gambling franchise - stay on an even competitive footing as the market jumps into cyberspace.

Sports betting.

In what could prove to be a prescient move, the bill would authorize gambling on major league sports games if and when that under-the-table national pastime gets a formal green light from the federal government.

The U.S. Supreme Court last month announced it would hear a case on New Jersey's long-stalled attempt to break into that market - currently banned by federal law - later this year.

The draft bill would also authorize the Pennsylvania Gaming Control Board to regulate daily fantasy sports games and authorizes games on tablets at Pennsylvania's major airport terminals.

Sources familiar with the discussions said the hope was that combination of new games and venues would net $200 million for fiscal 2017-18, mostly through new licenses; and $100 million in annual recurring revenue by 2018-19.

As for the rest of the revenue package, discussions were ongoing on a variety of fronts ranging from a re-direction of tax flows that go into certain special funds at present, to a tax on certain energy transactions to further liberalization of Pennsylvania's alcohol sales laws.

PAVGA