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November 19, 2017 | Edition Nº3368

Pennsylvania

Online gambling gets push from Senate Dems

Online gambling gets push from Senate Dems
The push to legalize internet gambling - computer-generated games that can turn all laptops, tablets and smartphones into potential bettor positions - may have just gotten a important shove from one of the state legislature's least-powerful players.
United States | 01/11/2017

The push to legalize internet gambling - computer-generated games that can turn all laptops, tablets and smartphones into potential bettor positions - may have just gotten a important shove from one of the state legislature's least-powerful players.

S

enate Minority Leader Jay Costa, a Pittsburgh Democrat, signaled in a legislative memo last week that he is solidly for internet gambling in Pennsylvania.

On most issues, with the Senate Democrats now working from a 34-16 disadvantage in the 50-seat state Senate, that might generate a yawn.

But this may be different.

Because of historic troubles in getting GOP-only majorities for gambling bills, if Costa can deliver even as many as eight to 10 members of his outgunned caucus, it may be enough to get a long-stalled 2016-17 budget goal to the finish line.
Costa, in a little-noted co-sponsorship memo released last week, has proposed:

Permitting internet-based games offered through the state's existing casino operators, if they first agree to ante up a $10 million license fee.

Profits from the new games would be taxed at 25 percent. Sixty percent of that revenue would go into the state's school property tax relief pot, according to Costa's plan. The other 40 percent would be available for economic development initiatives in counties that don't physically host casinos at present.

Costa said other states, including New Jersey, Nevada and Delaware, are showing that forms of so-called "i-gaming" - seen as more attractive to younger bettors - can grow existing casino markets.

New state licensing, and taxation, for daily fantasy sports firms doing business in Pennsylvania. Costa proposes a licensing fee of $2.5 million and a tax rate of 25 percent, with those tax revenues going into the state Lottery Fund.

Permitting the Pennsylvania Lottery to keep pace with the commercial gamers by allowing internet-based sales of lottery tickets for existing games direct to the player.

Allowing kiosk-based tablet gambling in airports. Costa's bill would create a five-year pilot project limited to portions of the Philadelphia and Pittsburgh airports. Participating operators would pay a $2.5 million licensing fee.

Costa's bill would also complete a legislative fix required to preserve the host municipality payments paid by the existing 12 casinos that were ruled out of order by the Pennsylvania Supreme Court last year.

None of this is a slam dunk, of course.

All gaming bills in Pennsylvania typically have to survive a minefield of issues ranging from how to protect existing casino operators and their nearly 20,000 employees, preventing new surges in gambling addiction, and the all-important divvy of any new state money.

Fragile majorities must also be held together in the face of a small, but significant band of lawmakers who are opposed to most forms of expansion.

To show how many hurdles still have to be crossed, one key, pro-gaming lawmaker was already sniping at Costa's proposal.

Sen. Robert "Tommy" Tomlinson, R-Bucks County - the last remaining architect of the 2004 bill legalizing slots play in the legislature - was inflamed Friday by the 25 percent internet games tax rate that Costa had proposed.

When in-casino slots play is taxed at 54 percent, Tomlinson noted, casino operators would likely push their customers toward the more profitable (under Costa's plan) online games.

That could threaten both casino jobs and the current foundation of the state's property tax relief fund.

"This is like moving a factory to Mexico," Tomlinson said of Costa's proposal, noting that he wants an online gaming regimen restricted to poker, with in-person player registration at casinos and a higher tax rate.

That said, there are some important areas of consensus between Tomlinson and Costa's visions:

Both resist an idea advanced by some lawmakers last year of creating new, satellite casinos designed to sop up unused slot machine allocations and steer economic benefits of gambling into more counties.

And they both also oppose permitting video gaming terminals, or VGTS, at thousands of bars and restaurants statewide, another proliferation of gambling that both men see as eroding the existing casinos' business.

A renewed effort to reach consensus on the gambling expansion issue is expected this winter and spring, if only because legislative leaders and Gov. Tom Wolf booked $100 million in new licensing fees in the 2016-17 state budget.

Costa says his bill could yield up to $137 million in licensing fees.

The timing is a bit uncertain, with new committee chairmen running gambling issues in both the state House and Senate.

But with this year's budget already running at a projected $600 million deficit, walking away from the gambling commitment would only exacerbate the problem.

With the majority Senate Republicans unable to reach a consensus on what that expansion should look like last year - a House-passed plan died in the Senate without a vote - Costa's ideas may help define the starting point for those talks.

Senate Democrats were largely absent from the gambling debate last year, perhaps in an effort to avoid exposing vulnerable members to a potentially-contentious vote in an election year.

Industry lobbyists, who generally believe Republican gaming supporters in the Senate would always have needed at least eight Democratic votes to pass any expansion bill, are encouraged by Costa's lead.

"I looked at it as OK, this means he's ready to play," said one industry insider commenting on a not-for-attribution basis.

Costa's plan has not been distilled into bill form yet, and he stressed in an interview last week it is just a "starting point" for the negotiations to come.

But there are signs that some of Costa's fellow Democrats are with him so far.

Sen. John Blake, a Democrat from Lackawanna County, noted Monday he still doesn't like expanding gambling in general. But given last year's budget agreement, "that horse is already out of the barn and we have to catch up to it."

Blake said he likes that Costa's plan strives for an expansion that partners with existing casinos, and the local communities that rely on them.

Blake also said he appreciated the effort to keep the Lottery on an equal competitive footing in the online gambling world.

Casino lobbyist Steve Crawford, who represents three operators that have cautiously supported internet gambling, said a next good step would be a statement by Gov. Tom Wolf of what he would sign, and what he would veto.

"A lot of energy was spent last year on things that maybe were never going to pass," Crawford said, referring to a strenuous, but ultimately unsuccessful effort by VGT supporters to get those games included in the House bill.

"He (Wolf) can be helpful in framing the debate."

Efforts by PennLive to reach Wolf Administration officials for comment on gambling-related issues Monday were not successful.

But late Monday night, Wolf's Press Secretary J.J. Abbott released this statement:

"We are committed to working with Democrats and Republicans on a package that meets the collective commitment we made in passing last year's budget. With any gambling expansion, there will be effects on the industry, consumers, and revenue that exists now, so we are committed to working on a package that balances those parties' concerns."

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