House push for statewide betting machines again threatens lucrative gambling expansion effort – Allentown Morning Call

The state House and Senate are waging another high-stakes battle over how to expand gambling options to generate desperately needed state tax revenue and fix a constitutionally flawed casino law municipalities rely on for extra cash.

And, if the battle turns out like last year, everyone could go home broke.

Last June and into this year, the two chambers have failed to compromise on additional ways to gamble even though the current budget anticipated $100 million in new revenue from those options. Lawmakers also have missed court-ordered deadlines to fix a part of the state's 2005 casino law the state Supreme Court justices deemed unconstitutional because it did not set "uniform" taxes for each casino as it relates to $142 million in "host" fees they pay nearby communities.

That history could be repeating.

Tonight the Republican-controlled House, with Democratic support, is expected to alter a Senate bill that not only addressed the host fee court problem, but also welcomed new gambling options wagering online, buying lottery tickets over the Internet, and playing fantasy sports from home or while waiting in an airport.

In a 23-6 Rules Committee vote, the House Wednesday afternoon amended the Senate bill so it also would legalize 40,000 video betting machines in bars, VFWs, volunteer fire halls, restaurants, bowling alleys, truck stops, hotels and other places licensed to sell alcohol. The machines, known generically as video-gaming machines, or VGTs, are strongly opposed by all but one of the state's casinos.

Adding the VGT component will deliver even more tax money to the budget and help shore up the state Lottery, which supports programs for senior citizens, said House Majority Leader Dave Reed, R-Indiana. The bill also fixes the host fee problem caused by the court decision, he said.

"We think this is a good start to final budget negotiations," Reed said after the committee vote.

Full House debate on the bill starts about 8 p.m. tonight. Approval would send it to the Senate, where approval is far from certain. The Senate previously has rejected VGT bills because of concerns they will over-saturate the gaming market and cut profits and tax revenues generated by the state's dozen casinos.

"We are still working with the Senate, Reed said Wednesday afternoon.

If the bill dies, either in the House or Senate, it could leave a $150 million hole in next year's budget. That's how much Gov. Tom Wolf's administration has projected in estimated tax revenue from expanding gambling in the fiscal year starting July 1. It could also jeopardize the local host fee fix, leaving municipalities like Bethlehem and Allentown in a financial lurch.

Sen. Pat Browne, R-Lehigh, the chamber's Appropriations Committee chairman and a VGT opponent, declined comment ahead of the full House vote.

Sands Casino Resort Bethlehem this weeklaunched a $1 million advertising campaign to stop VGTs. The campaign, by a Sands-funded lobbying group called Pennsylvanians For Responsible Government, includes an online landing page, radio ads and 30-second television spots telling people state lawmakers want to "create over 12,000 casinos" across Pennsylvania. The ad also warns that slot machines can be placed in the 35 nursing homes with liquor licenses, including three in the Lehigh Valley.

Sands Casino, perhaps more than any other in the state, has much to lose if VGTs are legalized and according to sources, it already has. Parent company Las Vegas Sands Corp. had a tentative deal to sell its Bethlehem Casino complex to MGM Resorts International for $1.3 billion. However, sources said, MGM pulled out of the deal in part because of the threat of VGTs.

Las Vegas Sands Corp. spokesman Ron Reese had no further comment and referred to the company's previous comment that the approval of VGTs would cause Sands to re-evaluate its future investment in the Bethlehem property.

Sen. Lisa Boscola, D-Northampton, a VGT proponent, has said adding VGTs will not hurt casinos and the ads will not affect her vote in the Senate.

Sands is not alone in its opposition to VGTs. Ten other casinos oppose it. The only licensed casino that wants VGTs is Penn National Gaming, owner of Hollywood Casino in central Pennsylvania. Penn National has a video gaming wing already operating in Illinois and hopes to expand that business to Pennsylvania.

"That many machines added to the market would definitely have an impact on casinos," said John Cunnane, a Wall Street gaming and leisure analyst for Stifel Investment Services.

The House amendment would charge licensing fees of $50,000 to VGT manufacturers and suppliers; $25,000 to companies that operate the machines $100 to any place that hosts them. The tax rate then would be 37.5% on revenue generated from the machines, with most of the money going to the state and smaller percentages going to counties and municipalities. The amendment did not list a corresponding revenue estimate from the tax rate.

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House push for statewide betting machines again threatens lucrative gambling expansion effort - Allentown Morning Call