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Pa. Senate shaping plan to allow bars, clubs to have slots-like video gaming terminals

Gambling expansion is always a heavy lift in a state that has about as much of it already as any jurisdiction in the United States.

  • By Charles Thompson/PennLive
In this Wednesday, Jan. 14, 2015 photo, a man plays a video lottery terminal at Saratoga Casino and Raceway in Saratoga Springs, N.Y. New York has nine horse tracks that feature rows of flashing lottery terminals that look like standard video slot machines. But these “racinos” can’t offer the table games with cards or dice that three or more upstate New York casinos will be offering in a few years. (AP Photo/Mike Groll)

In this Wednesday, Jan. 14, 2015 photo, a man plays a video lottery terminal at Saratoga Casino and Raceway in Saratoga Springs, N.Y. New York has nine horse tracks that feature rows of flashing lottery terminals that look like standard video slot machines. But these “racinos” can’t offer the table games with cards or dice that three or more upstate New York casinos will be offering in a few years. (AP Photo/Mike Groll)

Another proposal that could bring casino-style gambling to small-town Pennsylvania was given a test flight in the majority Senate Republican caucus Monday, billed as a way to clean up unregulated gambling at corner stores across the state while helping to save bars, taverns and private clubs that have been buffeted by this year’s COVID-19 closures.

The early prognosis? Let’s call it a work in progress.

No one was declaring victory or defeat after the first day of closed-door discussion on a plan that was first reported to be getting a significant pre-summer recess push from Senate leaders last week by Spotlight PA.

Gambling expansion is always a heavy lift in a state that has about as much of it already as any jurisdiction in the United States, in part because of the internal wars it always creates over market shares, and whether the new addition will grow the overall pie or simply cannibalize other players already in the market.

If the bill gets through the Senate, it would also face final passage in the House of Representatives before going to Gov. Tom Wolf’s desk.

The Republican leaders’ first sales job is within their own caucus, where they traditionally want to have the support of a majority of the 29-member majority, and in this case will likely need more than that for the bill to reach the magic number of 26 votes for passage in the 50-seat Senate chamber.

That’s because there appears to be little appetite – at the moment – for the another dramatic expansion of gambling among Senate Democrats.

But others still felt the bill has a fighting chance because it is being powered by Senate President Pro Tempore Joe Scarnati, R-Jefferson County, and Majority Leader Jake Corman, R-Centre County, and they have developed some major selling points designed to allow them to mine enough votes from their caucus over the week ahead.

Those points include:

* Trading currently unregulated gambling for more regulated gambling:

Corman said Monday while his plan will clearly open the door to licensed gambling at thousands of bars and taverns across the state – as many as 10,000, according to the latest state Liquor Control Board figures – it will also rid the state of so-called “skill games” and other unregulated machines that have proliferated in thousands of independent convenience stores and other businesses over the last three years.

Going forward, up to five of the video gaming terminals and / or skill games could be installed only at businesses holding liquor licenses – and by definition catering to persons 21 and older – and under state taxation and regulation by the state Gaming Control Board.

“We want to bring them out of the dark and into the light,” Corman said.

* Local control.

There is a municipal opt-out provision that, similar to the satellite casino development language written into the state’s last major gambling expansion bill in 2017, would allow townships board and borough councils across the state to bar the VGTs or skill games at licensed establishments within their boundaries if they think that’s what their communities want.

The proposed opt-out could also be imposed at the county level in counties that are already host to one of the state’s 17 operating or licensed-but-yet-to-be-built casinos, Corman said.

More than 1,000 municipalities shut the door on the satellite casinos in 2017, so it is a provision that the bill’s backers can say did offer a decent level of local control.

* The promise of future property tax relief.

Sponsors have devised a kicker that would – after two years – start to steer revenue from a 42 percent state tax on each VGT’s winnings to the reduction of property tax bills for senior citizens. For the first two years, Corman said, proceeds from the in-bar games would go directly to the general fund to help balance a state budget ravaged by COVID-19′s impact on the economy.

“We’ve always talked about doing more for seniors on property tax. That’s really the crux of the property tax issue, but we just didn’t have a revenue source for it,” Corman said.

He estimated the state’s take at between $200 million to $250 million annually upon full implementation. A 25 percent share of the game’s winnings would go to the licensee hosting the machines, while the remainder would be earmarked for the game manufacturer and suppliers.

Senate Minority Leader Jay Costa, D-Allegheny County, said Monday he is opposed to taking up any gambling expansion now – especially in isolation from a broader discussion of the state’s revenue picture, which Costa said may well wind up including billions of additional dollars in relief from the federal government before the 2020-21 fiscal year is completed.

Costa also said he doesn’t see the gain in adding more formats of gambling that he believes is a risk to the Pennsylvania Lottery and its mission of supporting senior benefits, especially when the last gambling expansion hasn’t even fully played out yet. He said he doesn’t see more than a handful of votes for the Corman / Scarnati plan coming from the minority caucus.

That makes the internal GOP caucus debate critical, both because Scarnati and Corman never like to run any bill that doesn’t have the support of the majority of their caucus, but also because in this case they’re likely to need more votes than that.

Most GOP senators contacted by PennLive Monday said they were still listening, and noted no one has seen the black letter of a final proposal yet.

There are, however, several pockets of opposition.

Sen. Robert “Tommy” Tomlinson, R-Bucks County, one of the fathers of the original 2004 gambling bill that legalized slots in Pennsylvania, has since become a fierce protector of the interests of the state’s original casino licensees, all of which have been closed for the last quarter because of the pandemic.

He is actively trying to rally other Republican members that have casinos in their districts against the bill.

“We shouldn’t be pushing this thing at all as long as our casinos aren’t up and running 100 percent,” Tomlinson said in an interview with PennLive Monday morning. “We are thumbing our nose at their economic distress and trying to do something else” that could hurt them further.

Corman, however, said the opt-outs in his plan can provide primary market protection for the casinos, and he noted that the bill also contains provisions delivering on a long-promised rollback of state taxes on table games at casinos from the current 16 percent to 14 percent.

There are also still a small handful of members in the Republican caucus who are typically opposed to any gambling expansion, like Sen. Scott Martin, R-Lancaster County, who affirmed for PennLive he’d be against the bill.

And finally, the leaders have opposition from Sen. Gene Yaw, R-Lycoming, whose district is host to Miele Manufacturing, perhaps the most-prolific producer of the skill games in Pennsylvania businesses at present.

Miele has said it wants to be regulated by the state, but Yaw said the company believes it would not be fair for its games to be taxed at the same rate as VGTs already operating in certain truck stops because the nature of the games and their profit margins is so different. “I don’t like the idea of putting them both together, because I think they’re two entirely different types of games,” Yaw told PennLive Monday.

A similar VGT proposal dominated late discussion in the 2017 gambling expansion bill. The debate ended later that year, after months of stalemate, with a pilot project permitting the machines in certain qualifying truck stops. There are now 135 terminals at 27 truck stops across the state.

At day’s end Monday, Corman was not declaring victory, but said he is encouraged enough to push forward for the remainder of the week.

“It’s going to be close,” the majority leader said, noting there’s a lot of lobbying and issue advertising coming from all sides on the issue on all sides.

Some of that lobbying is coming from David Thomas, a former top aide to Corman who was highlighted in the press last week for his role in hosting a Las Vegas fundraiser for Scarnati last fall. One of Thomas’s clients, VGT manufacturer Golden Entertainment, also came through with a $42,000 donation to a political committee controlled by Scarnati this spring, the Spotlight PA report noted.

The original casino licensees, meanwhile, are barred from making campaign contributions.

Corman said Thomas’s work with Scarnati has been all by the book, but he intends to win this fight on the merits.

“There’s lots of lobbyists in this town. When Gov. Wolf signed a big, new contract for (state) employees did anyone talk about all the money AFSCME (the state worker’s largest union) gave him? When Gov. Wolf proposes all this money or education, does anyone talk about how much money PSEA (the state’s largest teachers’ union) gave him?

“People lobby. People donate to campaigns,” Corman continued. “I will sit here and talk policy all day long with anyone who want to talk about this issue. Doing nothing, to me, is not acceptable because you have thousands of unregulated machines out there, where kids have complete access to them, and you have a cash business with who knows what’s going with it.

“This will bring it into the light of day.”

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