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PENNSYLVANIA W


by Sharon Harris


hen Pennsylvania Governor Ed Rendell leaves office in January 2011, legalized gaming will be a signature achievement. Rendell has always railed against the hundreds of millions in gaming dollars that went to New Jersey each year. As Philadelphia Mayor in the 1990s, he advocated legalized gaming for Pennsylvania.


Upon becoming governor in early 2003, Rendell pushed slot machine legislation to


relieve property taxes. Passed in July 2004, Act 71 permits 61,000 slot machines in 14 casinos throughout Pennsylvania. State law allows casinos to open with up to 3,000 slot machines with application for up to 5,000 after six months.


Casino venues are designated into three diverse categories- seven Category 1 horse


racing track facilities; five stand alone Category 2 sites; and two Category 3 resort facilities.


However, with 55 percent slot taxes, some analysts caution that the operators will be unable to offer similar “comps”, promotions and property improvements with less discretionary capital.


In November 2006, northeastern Pennsylvania celebrated the state’s first slots casino opening at the Mohegan Sun at Pocono Downs horse track. The others followed. They surpassed New Jersey slot machine revenues for the first time in December 2009, generating $2.1 billion versus Atlantic City’s $2 billion.


In 2009, Rendell and top legislators threatened budget problems and massive layoffs for the recession-battered state without table games legislation. Rendell prevailed, and the bill passed in January 2010, with table games taxes at 16 percent.


After an expedited licensing process, the first table games opened in early July at the


Rivers Casino in Pittsburgh and The Meadows Racetrack & Casino in Washington County, both in western Pennsylvania. By mid-July, eight venues across the Commonwealth were operating table games. The Pennsylvania Gaming Control Board staggered the schedule to address any start-up problems.


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Despite the excitement, all has not gone smoothly. Scandal hit Pennsylvania gaming


early on when upstate businessman Louis DeNaples, owner of the Mount Airy Casino Resort in Mount Pocono, was charged with four counts of perjury after applying for a Pennsylvania gaming license. In April 2009, DeNaples transferred legal control of the resort to his family. In return, Pennsylvania dropped all charges against him.


In the Lehigh Valley, the Sands Casino Resort Bethlehem opened to acclaim with 3,000 machines in late May 2009, built on the site of the shuttered Bethlehem Steel complex. The region envisioned massive new jobs and economic rewards.


The first several weeks saw huge revenues. However, when revenues sharply dropped, the original six-month plan to increase to 5,000 stalled, as did the construction of the 300-room hotel tower. Currently, despite still losing money, company executives hope for profitable table games, and aim to open the hotel in May 2011.


Two suburban Philadelphia slots halls – Harrah’s Chester and Parx – have thrived. SugarHouse casino will open in September. However, the Foxwoods Philadelphia casino has been plagued with delays, fines, zoning and management problems.


In February 2010, gaming entrepreneur Steve Wynn explored assuming the majority


interest in Foxwoods, but abruptly canceled his plans by April. Since then, the Pennsylvania gaming officials have initiated procedures to strip the Foxwoods group of its license while daily $2,000 fines continue to mount.


Although novel, Pennsylvania gaming will also face additional competition at all its


borders. In the western region, West Virginia has added table games and Ohio voters have approved four casinos. New York state racinos and tribal casinos offer great options across Pennsylvania’s northern border. To the southeast, Delaware and New Jersey have established gaming, and, across the southern border, Maryland will soon offer up to 15,000 slot machines in five locations.


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