Pennsylvania lawmakers are ready to pass a $32 billion budget when they return from the long 4th of July Weekend. Gov. Tom Wolf and congressional leaders indicated they would wait until after the holiday to make final decisions on the spending bill.
Meanwhile, the online poker and land-based gambling provisions remain in a legislative limbo. The Pennsylvania House and Senate passed separate bills that would legalize online gambling and daily fantasy sports, but they cannot agree on whether to expand brick-and-mortar gambling.
The $32 billion budget plan leaves a $2 billion deficit, leading to speculation that the more ambitious gambling bill might become law. The Republicans who lead the House and Senate do not want to raise taxes to make up the deficit. As the national healthcare debate shows, politicians do not like to eliminate services, either. Generating tax revenues through gambling expansion makes sense, in that scenario.
Pennsylvania House Gambling Bill
The Pennsylvania House of Representatives passed a bill which includes online poker and daily fantasy sports. Controversially, the bill include video gambling terminals (VGTs) or video lottery terminals (VLTs). VGTs look much like slot machines, though they use Class II game mechanics — lottery or bingo style gaming — to produce results.
The House bill is expansive in trying to raise new revenues — and not just from gambling reform.
The Philadelphia Inquirer reported Rep. Bill Adolph of Delaware County (pictured) claiming “the House would raise about $1 billion from legalizing online gambling, breaking the state’s monopoly on the sale of wine, increasing tobacco taxes, and launching a tax amnesty program.”
Mark Mustio Predicts $300 Million from VGTs
As for the VGTs, they would be placed in taverns, restaurants, airport terminals, and small businesses. In all, Pennsylvania would have an estimated 35,000 to 40,000 VGTs, if the House bill passed.
State Rep. Mark Mustio, a Republican from Allegheny, told Fox43 that the VGTs would generate $300 million a year in “new, non-taxed revenue”. That represents a significant opportunity to generate tax revenue without raising taxes in any sector.
Senate Gambling Bill
The Pennsylvania Senate balked at such a bill, though. Republican Senators do not want to pass “sin taxes”, which would generate revenues based on what they consider bad habits or vices. The social conservatives in the Senate Republican caucus believe expanded gambling leads to social problems, including crime and problem gambling.
Pennsylvanians For Responsible Government
Social conservatives are not the only opponents. Anti-VGT lobbyists are pushing hard to squelch the video gambling terminals, too. The Bethlehem Sands Casino and Resort, owned by the Las Vegas Sands Corporation, founded a political action committee named “Pennsylvanians For Responsible Government” to oppose the video gambling terminal expansion.
So far, Pennsylvanians For Responsible Government has paid $1 on advertisements that have claimed pro-gambling advocates want to place slot machines in nursing homes and laundrymats. The ads’ call Pennsylvania “The Land of 12,000 Casinos”. It is a harrowing prospect, if you are uninformed about the issues — and do not know the state’s biggest slot machine purveyor is behind the advertisements.
Governor Tom Wolf: “Real Revenue”
It is unknown whether Tom Wolf, a Democrat, would sign a gambling expansion on the scale of the House bill. Gov. Wolf said he wanted “real revenue” from the gambling bill he signs. While that might sound like the governor wants the most revenue he could get, he was actually playing to the casino lobby’s complaints that VGT revenues simply would cannibalize the slot machine revenues that Pennsylvania’s casinos and racinos make now.
The implication is Pennsylvanian’s would stay in their own communities and play VGTs in their local taverns and laundrymats, instead of driving out-of-town to the billion-dollar casino resorts to play the slots. Under the worst-case scenario painted by the casino lobby, the big investments in those casino-resorts or racetrack expansions would go to waste, as the slots revenues (about 70% of all casinos’ gaming revenue) would go to the local operators.
Thus, Tom Wolf wants to sign a bill that generates new revenues, instead of cannibalizing an existing business’s profits.
Pennsylvania Online Poker Bill
Either way, it looks like all sides approve of the online poker bill, which would generate up to $400 million a year in revenues. Unless all provisions of the gambling bill get tossed out with the VGT clauses, it looks like Pennsylvania is on the verge of passing an online gambling bill sometime in July 2017. Under the circumstances, it would undermine the goal to close the budget gap to do otherwise.
If the online poker bill is passed, then the online gambling media will spend all of July analyzing how Pennsylvania became the 4th U.S. state to pass online gambling regulations, and what the implications of Pennsylvania online poker might be.
