JULY 2, 2010

Credit to be Offered at PA Casinos

Last week, the Gaming Control Board approved regulations for "casino credit." Now patrons can effectively take out a loan of credit to play table games and slots, with no legal cap established.  The casinos are to have access to some of the applicant's financial information, such as bank accounts and credit information; and are also cross-checked against Central Credit, an international database.  Applicants can be approved within hours, and can even apply ahead, so their credit is available for pick-up upon arrival at the casino.  Casinos are responsible to collect the debt if patrons fail to pay back the credit. 

Offering credit is supposed to attract high spending players, who often spend hundreds of thousands of dollars, or more, during their visit.  In Atlantic City, one player walked away $10 million dollars poorer after using credit lines.  However, some question Pennsylvania's ability to attract high rollers.  Pennsylvania's casinos are not located very near each other, so players cannot easily switch venues.  Also, Pennsylvania has a higher tax on table games (16%) than do Atlantic City and Las Vegas.  This may hinder PA casinos' ability to offer free perks (i.e. airfare, limo rides) to attract high spenders. 

The Morning Call has a pretty good article about the new casino credit.  With, or without, casino credit, table games will not offer predictable tax revenue.   

posted by NATALIE ROGOL | 08:56 AM | 0 comment

MARCH 26, 2010

Slots vs. Lottery

PA Independent summarizes a recent Pennsylvania Legislative Budget and Finance Committee report that concludes slot machine gambling has not undermined lottery sales.

I would question that conclusion, as the analysis notes that lottery revenue has stagnated since slots we introduced, following years of steady growth.  (I would further hypothesize that slot has had a substitionary effect on other forms of entertainment in the area, such as movies).

I was suprised to see, however, how much more money is gambled on slots than on lottery tickets - about $25 billion to $3 billion.  Of course, the house advantage is much higher on the lottery, so the net revenue of about $1 billion is about the same as what the state collects from slots (about 55% of the net losings from gamblers).

posted by NATHAN BENEFIELD | 08:50 AM | 0 comment

FEBRUARY 25, 2010

Property Tax Relief Not as Awesome as Rendell Says

Pennsylvania Auditor General Jack Wagner put out another report that should embarrass the Rendell administration, this one one the claimed benefits of property tax relief. (Full report in PDF).

Specifically, Wagner points out that:

1) You have to apply as a "homestead" or "farmstead" to get property tax relief (except in Philadelphia where everyone gets a wage tax reduction), and a lot of people did not - they either didn't know they had to, or were too confused.

2) While over $3 billion has been collected in gaming taxes since 2004, and the Rendell administration claims $2.1 billion in property tax relief over that time, there has actually only been $1.7 billion actually delivered in property tax relief.

The report also notes in passing what I find to be the most important fact - the level of property tax relief (about $600 million per year) is vastly exceed by the increase in school property taxes since 2004 ($2.1 billion through 2007-08, and probably another $1.5 billion since then). In fact, Wagner's report identified several school districts in which last year's property tax increase exceeded the amount in property tax relief.

posted by NATHAN BENEFIELD | 08:49 AM | 0 comment

JANUARY 5, 2010

Deal on Pennsylvania Table Games Appears Done

After Gov. Rendell threatened to lay off 1,000 state workers if he didn't sign legislation to establish table games (and the licensing fee and tax) at Pennsylvania casinos by weeks end, legislative leaders announced they had made a deal.

The reported agreement hammers out the disagreement by allowing a 3rd resort casino, and doling out the pork projects in Philadelphia in a manner that suits both the House and Senate members.

posted by NATHAN BENEFIELD | 09:33 AM | 0 comment

DECEMBER 21, 2009

PA Lawmakers Need Table Games to Fund Pork Projects

Mario Cattabiani writes in the the Philadelphia Inquirer about all the pet projects funded in the table games bill. He writes:

It parcels out the local share in ways that remind critics of an old Harrisburg favorite: walking-around money.

Robert Swift has a similar piece in the Citizens Voice, noting the difficulty of identifying the earmarks from the bill's language. (HT Grassroots PA).

We previously blogged on the long list of earmarks in the table games legislation, but our new term "Wambling", has yet to be adopted.

posted by NATHAN BENEFIELD | 09:01 AM | 0 comment

DECEMBER 18, 2009

Taxpayers Fund Defense of Gaming Board Employees

As table game legislation inches towards final approval another reason to doubt the integrity and fiscal responsibility of the PA Gaming Control board has come to light. The Gaming Control Board has hired outside lawyers to represent agency employees and a former employee in a grand jury investigation.

The Morning Call of Allentown reported information from a Right to Know Law request revealing that the Gaming Board hired Pittsburgh lawyer W. Thomas McGough Jr. and the Philadelphia law firm Goldberg Katzman. McGough was hired in June at $500 an hour (a total of $25,856 so far) and the agency is paying $295 an hour to Goldberg Katzman.

Gaming Board employees "earn" generous pay checks compared to other state's gaming boards, and the commission has been under scrutiny in the past for lavish travel habits, but spending taxpayer funds to defend their questionable actions before a grand jury is appalling.

posted by ELIZABETH STELLE | 01:18 PM | 0 comment

DECEMBER 16, 2009

Earmarks in Table Games Bill

I mentioned previously that the legislation authorizing table games at Pennsylvania casinos included a number of earmarks (directing funds to a specific project) and WAMs (creating a pot of money to hand out later) from the 2% local share tax. I call these handouts Wambling - WAMs from Gambling.

Of course, it is difficult to identify exactly where this money is going from the 460-page bill - i.e. " a community college campus in a county of the 5th class with a Category 2 casino". But the folks who craft legislation do know how to translate between legalese and English. In very few cases is the local share distributed the same as under the slots law.

From the House Republican Gaming Committee summary of SB 711:

Sets local share tax rate at 2% to be distributed as follows:

Harrah's

• Chester County: 1% to the county
• Chester City: 1% to the city for becoming a sponsor of the community college

Mohegan Sun

• Luzerne County: 1% distributed the same as slots
• Plains Twp: 1% to the township until budgetary cap is reached; excess over cap to be distributed to county

The Meadows

• Washington County: 1% to DCED for grand to economic authorities and redevelopment authorities
• North Strabane Twp: 1% to the township until budgetary cap is reached; excess over cap to be distributed to county

Unknown Harness Track

• Host County: 1% distributed the same as slots
• Host Twp: 1% to the township until budgetary cap is reached; excess over cap to be distributed to county

Philadelphia Park

• Bucks County: 1% to the Lower Bucks hospital
• Bensalem Twp: 1% to the recreation department of Bensalem

Penn National

• Dauphin/Lebanon Counties: 1% to the county for a violent crime task force
• East Hanover (Dauphin Co)/East Hanover (Lebanon Co): $120,000 to each township; excess to the county for the violent crimes task force

Presque Isle Downs

• Erie County: 2% (entire local share) for a new community college
• Summit Twp: distributed per county share

SugarHouse/Foxwoods

• Philadelphia: distributed pursuant to slots formula

The Rivers

• Allegheny County: 85% of the 1% to county libraries; 15% of the 1% to a tourist promotion agency in Monroeville
• Pittsburgh: 1% to the county library system

Mount Airy

• Monroe County: 50% of the 1% to DCED for grants in Monroe County for roads and economic development; 50% of the 1% for grants from PHEAA to a school of medicine
• Paradise Twp: 1% to the township until budgetary cap is reached; excess over cap to be distributed to county

Sands Bethworks

• Northampton County: 60% of the 1% for county economic development; 20% of 1% to Easton; 20% of the 1% to Lehigh County with 50% of the 20% to contiguous municipalities for economic development
• Bethlehem City: 50% of the 1% to Bethlehem; 20% of 1% to Allentown; 30% to Easton

Valley Forge

• Host County: 1% to the Commonwealth Financing Authority for Business in our Sites, Tax increment financing and water and Wastewater projects
• Host Twp: 1% to the township until budgetary cap is reached; excess over cap to be distributed to county

Unknown Class 3 (Resort)

• House [sic] County: 1% distributed the same as slots
• Host Twp: 50 % of the 1% to host twp; 50% of 1% to contiguous city

posted by NATHAN BENEFIELD | 09:08 AM | 0 comment

DECEMBER 9, 2009

Legislators Wambling with PA Table Games

After reportedly taking "WAMs" out of the state budget, it appears Pennsylvania lawmakers are may create a new pot of funds for WAMs in the table games bill - i.e. WAMs from Gambling, or "Wambling." From the Morning Call:

Rep. Craig Dally, R-Northampton, said he is concerned about the local distribution of slot machine money, which in some cases differs from region to region. In Luzerne County, for instance, the money would be used to underwrite economic development projects that some deride as little more than government-funded pork.

Indeed the omnibus (gut-and-replace) amendment to be voted on (it is not available for viewing on the General Assembly's website yet, but may appear here at some point) includes changes to the "local share" fund in the gaming code like:

• $2.4 million per year for a community college campus in a county of the 5th class with a Category 2 casino (little help here: anyone know which class 5 county has a category 2 casino?)
• Changing the language for 3rd class counties with Category 1 casinos ("racinos") to fund "projects in the public interest" and do so via the Commonwealth Financing Authority.
• New formula for distributing funds directly do municipalities in 4th class counties, with Category 1 casinos
• The local share from Category 3 casinos in 2nd Class A counties shall be used for Business in our Sites, Tax Increment Financing Guarantee, and Water Supply and Wastewater Infrastructure Program.

Other things to look for or note in the table games debate:

• The tax rate and license fees for tables games. The deal appears to include a $16.5 million fee for larger casinos, and $7.5 million for Category 3 casinos. The tax rate on table games would be 16% (14% for the state and 2% for the local share) in the first year, and 14% (same local share) thereafter.
• Gambling on Credit. There has been some discussion of the ability of casinos to lend money directly to gamblers (i.e. open up a tab). See NoSlotsonCredit.org for more.
• Money from video poker/video table games. Gross revenues from "fully automated electronic gaming tables" would be taxed at 34% tax (the same as slots), but the collections would go to the General Fund (at least until the Rainy Day Fund reaches $750 million, when funds from table games will go to the Property Tax Relief Fund). Will this undermine slots revenue, and if so, undermine the property tax relief moneys?
• Ban on political contributions from gambling interests. The legislation would seek to reimpose a ban on political contributions to candidates for state office, which was recently struck down. We're not sure how this version of a ban on contributions from a select group of people will meet Constitutional muster.
  

posted by NATHAN BENEFIELD | 00:27 PM | 0 comment

DECEMBER 1, 2009

Failing to Learn from Past Gambles

The Patriot New ran in an article on property tax "relief" the day after Thanksgiving, giving homeowners a reason not to be thankful.

The governor's dream to make Pennsylvania a gambling state has come true, but it has failed to live up to its much-hyped solution to end the ever-burdensome school property tax

Slot machines were introduced into Pennsylvania with the promise that revenue collected would considerably lower homeowners' school property tax. Unfortunately, this promise never materialized as the projected revenue from slot machines fell short (around $400 million short). Meanwhile, school property taxes rose (and continue to rise) far above the "relief" from slots revenue.

Gambling in the Commonwealth is now being extended to include table games, but the revenue doesn't go towards easing homeowners' school property taxes; instead, it is intended to balance the state's budget deficit. Just as slot machines have undermined the sales of state lottery tickets; table games will likely undermine slots revenue.

This article reiterates a point which state lawmakers continually ignore - revenue from gambling is an unreliable source of revenue. Slot machines failed to materialize the expected revenue and table games cannot be guaranteed to fare better. Pennsylvania's state budget should not be balanced with projected revenue from such sources.

posted by KATRINA CURRIE | 08:33 AM | 2 comments