Pennsylvania is to have more casinos, but it is anyone’s guess when they will open. On October 30th, Pennsylvania Governor Tom Wolf signed a bill to increase gambling dramatically in the Keystone State. The bill was part of the legislation passed during the budget process. Pennsylvania has a $2.2 billion deficit. The additional gaming is intended to reduce the deficit, but the lion’s share of the deficit will be financed by borrowing $1.5 billion. The gaming bill is only expected to generate $200 million annually in fees and taxes. However, gambling already provides the state with $2.4 billion in revenue annually- $1.4 billion in taxes on casino play and $1 billion from the state lottery. Although, the gaming bill was passed to help balance next year’s budget, it may take longer than that before the cash rolls into the state’s coffers.
The gambling bill, House Bill No. 271, authorizes ten mini-casinos, gambling at airports, video gaming terminals in truck stops, online casinos, online lottery products and sports betting when and if it becomes legal under federal law. Each aspect of the expansion will have its own timeline. For the mini casinos, communities have until December 20th to opt out; thus far seven potential sites have opted out and others are searching their souls. Several communities have indicated they are very interesting in hosting a casino. After the opt out deadline, the state’s existing casinos can bid on one of the licenses – combining the slot machine and table game licenses will make the minimum bid $10 million. If there are any licenses left over, the bidding will be opened to other interested parties. Once a bid has been accepted by the state, the operator can begin construction. In the meantime; the control board has to write the regulations that will govern casino operations. The tax rate on slot machines will be 54 percent; in today’s world that could dampen the casino operators’ enthusiasm. No one, except the lawmakers and governor expects to see new casinos in the state before 2019. The Pennsylvania Gaming Control Board had this to say about the process, “Satellite casinos have a new auction process before we even get to awarding the license and the location and doing the background investigation. And that process is really not going to take place until mid next year or so.” The board is referring to regulatory process, not the time necessary to raise the money and build a casino which can only begin after the board finishes its work.
The slots in the truck stops, airports and the online gaming both for casinos and lottery will have separate timelines. The quickest to hit the marketplace will probably be the lottery’s online offerings. There will be fewer regulatory requirements and the lottery commission does not need outside investments or approvals. The online casino gaming should be simple once the regulations have been written, but each casino will have to separately assess the viability of going online; as with every other form of gambling, Pennsylvania wants a hefty share of the profits in taxes and that limits the value of going online.
Eight airports are eligible to offer gaming. They are being described as interactive gambling parlors, but the legislation appears to authorize slot machines like those in airports in Nevada. Each city with an eligible airport has to give its approval. In addition, the gaming board has to approve the operations and the operator. In theory, the airports could be up and operating within a year if the gaming commission is able to write regulations and issue the necessary licenses within that time frame. Each new form of gaming that requires additional regulations and licensing puts further stress on the resources of the state’s regulatory agency and will slow down the process. In Illinois, the process of writing the regulations and approving the VLTs for play took two years.
The last of the new gaming options is truck stop gambling. The legislation anticipates 1500 to 2000 video gaming terminals – slot machines; each eligible facility can have five VGTs. Thus the lawmakers were planning on no more than 400 truck stops to qualify. However, one of the lawmakers that opposed the bill, said the definition was so broad that one could “drive a truck through it” and “most convenience stores” would also qualify. The bill was 675 pages long so it is highly unlikely that the lawmakers read and understood the entire bill. That lack of understanding will continue to complicate the process, especially when new surprises are discovered.
A week after the bill had passed, local media discovered one of those surprises. It seems that Mount Airy Casino Resort got special treatment. In general, the bill said that a new casino could not be located closer than 25 miles to an existing one, unless the new casino and the existing one are owned by the same entity. However, for Mount Airy the distance requirement different; new casinos must be at least a county away. The states: “A category 4 slot machine license may not be located in a sixth-class county which is contiguous to a county that hosts a category 2 licensed facility.” That sentence guarantees that Mount Airy remains the closest casino to the New York market. Only the lawmakers that inserted those words appear to have known of their existence.
It has only been two weeks since the governor signed House Bill No. 271. It is impossible after such a short period of time to assess the impact, anticipate the timelines or even to fully understand the content of the bill. At this point, all we have are questions and probably some doubts. The investment firm, Moody’s, wonders if the end result will help or harm the existing operators; by asking the question the company is saying the expansion will add to overall revenues of the state, but harm the existing casinos. Penn National is threatening to sue over the bill’s discriminatory nature and there will probably be other law suits over the definition of truck stops. As Nelson Rose once famously said about the National Indian Gaming Act, “no one knows what the bill means until it has been litigated.”
Governor Tom Wolf signed the bill because the state needs money, not because he is pro-gambling. However, much like Pat Quinn in Illinois, Wolf may forget about the expansion of gambling and the budget in the near future. Five candidates have already declared their intent to oppose Wolf in the 2018 election. He is not going to have much time to shepherd the new gambling options through the approval process when he is locked in battle for his office. So, while the governor fights for his office, it will be left to Pennsylvania Gaming Control Board to set the timeline for each of the elements of the grand gambling expansion in Pennsylvania. When will the first casino open in Pennsylvania? It will open after the regulators finish their preparatory work and the operators complete the financing and construction; in other words, not in the near future.
