HARRISBURG, Pa. - Pennsylvania, the nation's second-largest commercial casino state, is taking an even deeper plunge into gambling and will allow people to bet online, in airports and at truck stops.
With government leaders searching for money to plug holes in the state's tattered finances, Gov. Tom Wolf on Monday signed legislation authorizing a major expansion of gambling.
Under the measure, the state will become the fourth to allow online gambling, joining Nevada, New Jersey and Delaware. It also makes Pennsylvania the first state to allow online play for both commercial casinos and its state lottery, as both go in search of newer and younger players.
Wolf, a Democrat, had not been enthusiastic about expanding gambling, but he entertained the idea in dealings with a Republican-controlled Legislature that saw it as a better option to balance the state's persistent deficits than a tax increase.
While lawmakers also saw a gambling expansion as a way to bring tax revenue to their districts and pet projects, Wolf had focused on ensuring a gambling expansion wouldn't damage the state's existing tax collections from casino revenues or receipts from the struggling Pennsylvania Lottery.
"There's been a lot of pressure from a lot of places in the commonwealth to actually expand this, and we do need some recurring revenue," Wolf said. "Again, the goal has been all along to do what's prudent, not cannibalize existing gambling revenue coming to the state, and I think what we're settling on will actually do that."
Besides online play, the new law will pepper Pennsylvania with games of chance.
Ten of the state's 12 existing casinos can bid on a license for a new, smaller casino with hundreds of slot machines. Bidding would start at $7.5 million, with a table games certificate costing an extra $2.5 million, for a casino limited to 750 slots and 30 table games. Currently, the state's larger casinos can operate up to 5,000 slot machines.
Meanwhile, casinos will be able to offer interactive gambling parlours in eight airports, including Pittsburgh and Philadelphia, while qualifying truck stops can operate up to five slot machine-style monitors called video gaming terminals. Only Nevada and Puerto Rico currently allow airport gambling.
Lawmakers expect the gambling legislation to produce $200 million or more annually from casino license fees and taxes on higher gambling losses.
The legislation was years in the making, and the compromise came together after House leaders dropped their long-standing demand that a gambling expansion favour bars and other liquor licensees, rather than casino owners.
The Northeast's slow population growth and big post-recession casino expansions have drawn warnings that the region is so saturated that new gambling opportunities are cannibalizing existing ones.
Chris Grove, a gambling industry analyst at California-based Eilers & Krejcik Gaming, said Pennsylvania's expected haul of cash from the online licenses, potentially above $100 million, will not go unnoticed by lawmakers in neighbouring states.
But Colin Mansfield, a gambling industry analyst for Fitch Ratings, said he did not expect Pennsylvania's move to spur much competitive response from other states. Still, he said, he could envision benefits for casinos and internet poker players if the law leads to an expansion of player pools joining Pennsylvania with New Jersey, which has the nation-leading internet gambling market.
Pennsylvania's casinos rake in more gross revenues than any other state's except Nevada's, American Gaming Association figures show. But Pennsylvania is the No. 1 state in tax revenue from the casino industry, netting $1.4 billion in the most recent fiscal year. Pennsylvania's lottery is one of the nation's biggest, delivering $1 billion in profits on $4 billion in sales.
The bill emerged last week and won passage within 18 hours in both chambers of the Legislature despite opponents' protests that they barely had a chance to read it, warnings that it carried unforeseen consequences and complaints that it was packed with sweetheart deals for casinos.
The gambling bill passed as part of a broader package designed to break a four-month budget stalemate over how to wipe out a projected $2.2 billion deficit.
Wolf also signed other elements of the Legislature's package to bail out the state's finances, a $1.5 billion borrowing measure and a grab-bag of tax adjustments that could net $140 million annually.