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Lawmaker says Pa. should study Internet gaming, sports betting

| Wednesday, March 18, 2015, 11:54 a.m.
To remain competitive with other states in garnering gambling revenue, Pennsylvania needs to look at legalizing Internet gaming and fantasy sports betting, the chairman of a House panel said Wednesday.

HARRISBURG — To remain competitive with other states in garnering gambling revenue, Pennsylvania needs to look at legalizing Internet gaming and fantasy sports betting, the chairman of a House panel said Wednesday.

“People say, ‘You want to expand gaming.' That's not the case. It already exists. I'm asking, ‘Could we raise more revenue from an industry that's already here (online)?' ” said Rep. John Payne, R-Dauphin County, chairman of the House Gaming Oversight Committee.

New Jersey and Delaware allow Internet gaming.

His comments were made after back-to-back hearings at casinos in the Philadelphia region, Harrah's and Sugarhouse. Payne says his bill is an effort to find alternatives to offer his colleagues, rather than voting for higher sales and income taxes to help erase a $1.5 billion to $2.3 billion deficit by June 30.

Rep. Nick Kotik, of Coraopolis, ranking Democrat on the panel and a co-sponsor of Payne's bill to legalize Internet gaming, said it could materialize for this budget but it's probably a long shot. “We're very early in the game,” Kotik said. “We're gathering information. We've got a long way to go.

“It all depends whether the (majority) Republicans think it's a viable alternative. For a lot of Republican members, gambling is taboo,” Kotik said. “That makes it a hard sell.”

On the other hand, finding revenue to fund Democratic Gov. Tom Wolf's higher tax plan is “like climbing Mt. Everest,” Kotik said.

In a letter to the House and Senate oversight panels, the state's casino industry asked lawmakers to block legislation that would legalize video gaming terminals in bars and other locations because they would “cannibalize” existing gambling revenue, which has declined the past two years. The letter was signed by executives of Pennsylvania's six racinos and four stand-alone casinos, including Rivers Casino in Pittsburgh's North Shore.

The industry letter does not address Internet gaming because of a lack of consensus among Pennsylvania's casinos. Payne said his plan would allow casinos to run Internet games and reap some of the revenue.

Rep. Paul Costa, D-Allegheny County, sponsor of a bill to legalize video machines in bars and taverns, said Wednesday he sees no threat to casinos. “I'm of the belief people who go to taverns and frequent local bars are more inclined to stay in their neighborhood” rather than go to casinos, he said. By taxing video games, which include poker, blackjack and slots, Pennsylvania could realize additional revenue toward closing the state deficit.

In its letter, the state's casino industry wrote that “a rollout of (video terminals) in Pennsylvania will almost certainly result in casino-like games on every Main Street in every town across the commonwealth and threaten thousands of living-wage jobs currently filled at our casino facilities.”

The letter cited a sharp decline in Illinois' gaming revenue since that state approved video gaming terminals several years ago — figures Costa disputes.

One of the goals of video gaming legislation is to replace illegal poker machines that bring no tax revenue, Costa said.

Payne said he held the hearings to ask casinos, “What is it you need over the next 10 years to be successful?” He hopes to hold hearings in the Poconos and in Pittsburgh.

The competitive situation is far different now than in 2006, when the first casinos opened, industry representatives said. Since 2006 every neighboring state has legalized or expanded gaming, they noted. Gambling tax revenue declined from a high of $1.4 billion in 2012 to $1.38 billion in 2013 and $1.3 billion last year. The casinos attribute that decline to other states recapturing Pennsylvania gamblers who had stopped going out of state and the loss of patrons coming from neighboring states.

Michael Geer, president of the Pennsylvania Family Institute, which opposes gambling, said state officials' thirst for more gaming revenue is akin to a drug addict's need for a fix. In opposing casino gambling in 2004, Geer said, “We predicted the government would be back for more (revenue) because it's addictive.”

Internet gaming would be the worst option because it provides easier access, he said.

Tax revenue from gaming helps curtail higher property taxes. It was sold as a major cut in property taxes in 2004.

Sen. Kim Ward, R-Hempfield, chairwoman of the Senate Community Economic and Recreational Development Committee, which oversees casinos, said any discussion of online gaming must include compensation or involvement by existing casinos. “If you don't (include them), you won't get the support of the industry and we will end up in some type of lawsuit,” she said.

But casinos waved the right to reclaim their multimillion-dollar license fees — provided in the 2004 law — when table games were approved by the Legislature in 2010, Payne said.

The casino industry's letter called on lawmakers to reject any legislation to prohibit smoking in Pennsylvania casinos. By law, there are smoking and nonsmoking areas. States with smoking bans experienced “dramatically decreased revenue and taxes,” the letter argued.

Ward said she does not see the Legislature approving the casinos' request for 24-hour drink availability.

Brad Bumsted is Trib Total Media's state Capitol reporter. Reach him at 717-787-1405 and bbumsted@tribweb.com.

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