Casino-expansion bill clears hurdle in Pa. House

AP News
Posted: Dec 15, 2009 8:43 AM

A proposal to expand casino gambling in Pennsylvania cleared a crucial first hurdle in the state House of Representatives on Monday, despite searing criticism that it is full of favors for casino owners and lawmakers' pet causes.

Proponents say the measure will help state government raise additional revenue to shore up its recession-ravaged tax collections and provide jobs at a time when many people are out of work.

The vote was 97-95 to amend the measure into an underlying bill. Most Democrats were in favor of it and most Republicans opposed it.

The bill, which also includes numerous reforms to the state's regulation of the casino industry, still requires a final vote in the House and approval from the Senate before it can become law.

Those votes could happen this week, as legislators rush to finalize a key piece of October's state budget agreement and free up more than $700 million for universities that is being held up by Gov. Ed Rendell until it passes.

The measure, unveiled by House Democratic leaders in recent days, would raise the state's number of casino licenses from 14 to 15 and legalize table games such as poker, blackjack and craps at the state's slot-machine casinos.

It is supposed to raise $320 million for the state over the first two fiscal years by setting a tax rate on gambling revenue from table games at 14 percent and requiring the casinos to pay millions of dollars in license fees.

Casinos also would have to pay an additional 2 percent tax to local governments, while the state's tax rate would fall to 12 percent after July 1, 2011.

The provision to allow one more resort casino comes after two groups _ the owners of the Nemacolin Woodlands Resort in Fayette County and investors interested in a Gettysburg-area site _ expressed interest in one.

The bill, however, likely faces changes in the Senate. For instance, senators are unlikely to agree to authorize an additional casino license, said Erik Arneson, a spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware.

Meanwhile, the leaders of Pennsylvania's four state-related universities _ Penn State, Pitt, Temple and Lincoln _ accused Rendell and House Democrats of holding them hostage by stalling their schools' subsidy until the Legislature approves a gambling expansion.

On Monday, the schools' leaders said their institutions have lost millions in investment income and are risking losing their ability to finance large construction projects.

House Republican leaders opposed the bill, saying they believe financing state government with gambling dollars is bad public policy.

In addition, opponents of the bill said it reeks of back-room dealmaking that benefits casinos and certain lawmakers. For instance, critics pointed to a time extension that will allow the unbuilt Foxwoods Philadelphia Casino to keep its license and questioned whether the winner of the 15th license was preordained.

"There are more lobbyists and interest groups involved in this law than you and I here on this floor," said Rep. Mike Vereb, R-Montgomery.

Critics also called unsavory and unconstitutional provisions in the bill that, they say, carved up the local tax money into sums designated for specific municipalities or institutions favored by certain lawmakers, such as the Lower Bucks Hospital and the Commonwealth Medical College in Scranton.

"It will not pass the smell test when it reaches the courts," said Rep. Bryan Cutler, R-Lancaster.

The bill also would reinstate a ban on cash contributions to political causes by gambling industry executives and investors. In April, the state Supreme Court struck down the five-year-old ban, which had been considered a key bulwark against the political influence of the gambling industry.

It also would toughen the Pennsylvania Gaming Control Board's "revolving door" policy to require top and midlevel employees to wait two years, instead of just one, before leaving the agency to go to work in the industry.

It also would prohibit convicted felons from owning or being a top executive of a casino.