Answering casino question may prevent Pa. layoffs

AP News
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Posted: Dec 23, 2009 9:14 AM

If Pennsylvania Gov. Ed Rendell follows through on his threat, the jobs of more than 1,000 state employees are riding on the timely resolution of a dispute among legislators over where a potentially lucrative casino gets built.

Legislation designed to generate new revenue by legalizing table games such as poker and blackjack at Pennsylvania's slot-machine casinos is stuck largely on that question, legislators say.

The potential sites include a suburban Reading hotel, a luxury resort in southwest Pennsylvania, a family getaway in the Pocono Mountains and a Gettysburg-area hotel.

But if the House and Senate leaders cannot put aside differences over their hometown concerns and submit a bill to Rendell by Jan. 8, the governor has warned he will set in motion plans to cut $250 million in spending, including the layoffs.

"Hopefully we can come up with some viable alternative that we can both agree to," House Gaming Oversight Committee Chairman Dante Santoni, D-Berks, said Monday. "We don't want this to drag on. At the beginning of January, I think we'll have the issues resolved."

The matter has divided legislators now for several months.

It began as a bill to legalize table games and raise new revenue for the cash-strapped state without hiking taxes. The state budget deal approved in October assumed that the bill would be passed promptly.

But the bill became mired in the disagreement over the last available "resort" casino license.

The prize is a license to operate up to 500 slot machines. (The state's larger casinos are allowed to install 5,000.) Gamblers at the smaller sites must be a resort "patrons" _ which the Pennsylvania Gaming Control Board defines as someone who spends at least $10 at a resort.

In 2004, the Legislature legalized up to 14 slot-machine casinos in Pennsylvania, and set aside two licenses for upscale resorts such as Nemacolin Woodlands Resort and Seven Springs Mountain Resort.

But Nemacolin and Seven Springs withdrew their applications and different establishments stepped up.

Earlier this year, the gaming board awarded the first resort license to the Valley Forge Convention Center, a hotel and conference center in suburban Philadelphia.

For the second resort license, the owners of the Reading Crowne Plaza Hotel in Wyomissing and Fernwood Hotel & Resort in Bushkill each submitted an application. The gaming board is considering those applications and has not indicated whether it will consider additional applications.

Now, that license is about to become more valuable. The bill under discussion in the Legislature would not only legalize table games, but it would allow a resort casino to operate 100 more slot machines, for a total of 600, and loosen the rule over who may gamble there.

In the meantime, two other potential applicants _ Nemacolin's owner and an investment team with an option to buy Eisenhower Inn & Conference Center near Gettysburg _ are telling legislators they want a resort casino.

The stakes are high.

All four groups have hired lobbyists.

Fernwood's owners say they have reassembled the financing for their $30 million casino plan after lenders pulled out last year, while a suburban Philadelphia investment firm is trying to raise millions for the Reading hotel project by selling small stakes to selected investors.

To satisfy the heightened demand, Santoni and the House Democratic majority support a plan to create a third resort license.

But the Senate's Republican majority opposes the creation of another license. Instead, they say new suitors should be allowed to compete for the resort license being sought by Fernwood and the Reading hotel group.

Each caucus views its plan as fairer, and warns that the other's plan would prompt a gambling-industry lawsuit against the state.

"We're not guaranteeing a license for anybody," said Senate President Joe Scarnati, R-Jefferson. "Open up the process so everybody can compete. It's fair."

Santoni, whose district ends a short distance from the Reading hotel, said senators with larger casinos in their districts are simply trying to prevent a potential competitor from locating in Reading or the Poconos.

"The two prospective (resort) applicants played by the rules and the Senate wants to change the rules in midstream," Santoni said. "If they want to change the rules, I think it's a fairness issue."

Rendell isn't taking sides on the question of the resort casino, but on Tuesday he said he has lost confidence that the Legislature will submit a bill to him before Jan. 8.

"I wouldn't be asking our (cabinet) secretaries to go through the exercise of preparing for layoffs if I had confidence that we're going to get this done," Rendell told reporters. "I have waited and I have waited and I have waited. ... Right now I am not sure we are ever going to have a table games bill."