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Some say House slots bill too loose

| Friday, July 25, 2003

HARRISBURG -- The House bill legalizing slot machines in Pennsylvania fails to safeguard the public against corruption, according to the public interest lobbying group Common Cause.

Senate Democrats, instrumental in passing the upper chamber's version of a more restrictive slots bill, agree.

"Savvy operators in the gaming industry are now seeing the welcome mat laid out for corrupt practices," said Rebecca Deibler, chairwoman of Common Cause of Pennsylvania.

The bill makes "reckless concessions to gaming interests," said Senate Majority Leader Robert Mellow, a Lackawanna County Democrat.

Those were some of the concerns expressed this week following Saturday's House passage of a bill legalizing slot machines at nine racetracks and at two non-track locations in the greater Pittsburgh area and Philadelphia. The Senate last month passed a bill allowing slots at eight racetracks.

The House bill appears dead in the Senate, but key components of it are likely to be on the bargaining table as a final version of the legislation is negotiated. It will be shaped in informal negotiations between Gov. Ed Rendell and leaders from both parties, or, depending on what the Senate decides next week, in a more formal legislative conference committee.

Under the House bill:

  • A new state gambling oversight board would monitor slot machines instead of using a central computer at the state Department of Revenue, which could shut down machines immediately if problems surface.

  • Gambling interests could contribute to the campaigns of legislators who would appoint most of the members of the oversight board.

  • Sports team owners could apply for slot machine licenses.

  • Shareholder-owned companies holding slots licenses could sell their businesses without the oversight board's permission and without the buyer paying the state a $50 million licensing fee.

    The Senate's gambling bill bans political contributions from slots owners to state and local officials and prohibits sports team owners from owning slots parlors. It also calls for the state to centrally monitor all slot machines.

    "The safeguards regarding politics and political influence are very important," said Sen. Jack Wagner, a Beechview Democrat.

    The ban on political contributions "is a safeguard that needs to be there," said Sen. Jay Costa, a Forest Hills Democrat. The ban is similar to those in New Jersey and Louisiana.

    Rendell supports the House bill because it allows more venues and would raise more money for the state. He said he doesn't care whether the final version bans contributions from slots operators. "I'm ambivalent," he said.

    Rendell defends the House's addition of one track and two non-track slots halls.

    "I don't think you'll see much expansion of gambling in Pennsylvania (beyond those who already travel out of state to play the slots)," Rendell said. Gamblers would largely be the 1 million Pennsylvanians who spend $3 billion annually in West Virginia, New Jersey, Delaware and New York, he said.

    Rendell described Senate objections as "posturing to get leverage over the bill."

    The Senate passed its bill with the support of all Senate Democrats and six GOP senators. It's a fragile coalition that took three months to put together.

    There's "a broad chasm" between the House and Senate versions of slots legislation, said Joseph Sabino Mistick, a Pittsburgh political analyst.

    Rendell and House Speaker John Perzel, a Philadelphia Republican, are betting that ultimately the Senate won't refuse the "irresistibly attractive bottom line" of using the House bill's projected $1 billion in annual gambling revenue to cut property taxes, Mistick said.

    G. Terry Madonna, director of the Center for Politics and Public Affairs at Millersville University, predicted that legislators eventually will work out the differences between the bills.

    Madonna said he believes the House ultimately will agree with some of the public protection language in the Senate bill.

    The public interest group Common Cause charges that "backroom manipulation" in the House "seriously damaged key public protections in the gambling legislation."

    Common Cause's Deibler complained that the House watered down "revolving door" restrictions that would keep state officials from quickly jumping to positions in the gambling industry.

    The Senate bill bans gambling oversight board members from working in the gambling industry for four years after leaving their state jobs. The House bill bans them from taking industry jobs for two years. The House loosened similar restrictions on General Assembly members and those who work in state government's executive branch, Deibler said.

    Sen. Costa objects to the House-added provision that allows shareholder-owned companies holding slots licenses to sell their businesses without the oversight board's permission. The provision wouldn't require buyers to pay the state's $50 million licensing fee.

    The language was added to the House bill by lobbyists for Penn National Racetrack, said Sen. Vincent Fumo, a Philadelphia Democrat. Penn National is a shareholder-owned company that owns Pocono Downs and a track near Harrisburg.

    The provision caters to the "greed of track owners" and amounts to a "rip-off of Pennsylvania taxpayers by a multimillion-dollar corporation," Fumo said.

    The Senate's licensing language requires the payment of a $50 million licensing fee each time a gambling facility is sold.

    Former Lt. Gov. Mark Singel, a lobbyist for Penn National, said the language is part of a package "to allow flexibility. Penn National has to look after its business interests. It was not intended to be any kind of rip-off."

    Penn National President Kevin DiSanctis said the provision applies only to the sale of the entire company, not the sale of a slots license or racetrack.

    "It does not let (the buyer) off the hook for a transfer fee," he said. "It's only if the entire company is sold."

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