[toc]The battle to bring online gambling to Pennsylvania still rolls on, but now casinos and lawmakers have another issue to consider, video gaming terminals (VGTs).
These standalone machines are similar to slot machines in casino, but offer multiple games and can be placed in non-casino venues.
After failing to pass last year, the measure to allow truck stops and bars to offer this form of gambling is back in the state legislature.
New House bill similar to last year’s failed VGT efforts
The new VGT legislation, HB1010, is a bill proposing VGT expansion. It is similar to last year’s failed push to bring VGTs to the state. The proposed law establishes a set number of terminals in the following establishments:
- Truck stops
- Licensed bars
- Parimutuel betting parlors
Rep. Mark Mustio, who was at the center of the 2016 effort to brings VGTs to Pennsylvania, is the bill’s sponsor.
Supporters of VGTs point to the successful implementation of terminals in Illinois five years ago. Last year, VGTs in the state generated over $330 million in tax revenue.
Opponents of VGTs cite PA casino cannibalization
The idea of VGTs is a polarizing issue. In fact, the inclusion of VGTs in the state’s gambling legislation last year was a non-starter for many lawmakers.
Critics are mostly concerned with VGTs cannibalizing existing land-based casinos in Pennsylvania. Penn National Gaming spokesman Eric Schippers admits since VGTs started in Illinois, casinos saw revenues drop around 10 percent.
It is worth noting Penn National has more than casino interests in Illinois. The company acquired a VGT supplier for Illinois in 2015. With that in mind, it stands to financially benefit if VGTs are legalized in Pennsylvania as well.
Supporters of VGTs point to measures in the bill to reduce the tax burden on casino slots and cap regulatory fees.
Cannibalization is a recurring theme in Pennsylvania casino expansion discussions.
At a joint committee hearing earlier this month, online casino critics expressed concerns it would cannibalize land-based properties. However, New Jersey operators rebuked the notion, citing hard statistics which indicated it actually drove traffic to properties.
Revenue projections of $500 million annually may be too optimistic
Mustio and others suggest within five years VGTs could generate $500 million. The supporters also claim there are a number of illegal VGTs currently operating without regulation in the state.
Sen. Guy Reschenhalter, who is looking to introduce a similar bill in the state Senate, offered more concrete numbers about the underground VGT scene:
“Pennsylvania State Police estimate over 40,000 illegal VGTs – 40,000 illegal VGTs – are now operating in Pennsylvania and these illegal machines exist in an unlicensed, unregulated, untaxed platform. We need to legalize this industry to bring it out of the shadows.”
Rep. Bryan Cutler told Lancaster Online he does not put much stock in these figures. Cutler said, “The revenue projections having historically missed. Every time we’ve counted on gambling in the budget those revenues have undershot it or something unexpected has happened, such as the decrease of the lottery fund in response to the expansion of table games.”
Given the continued state budget woes, the legislature is willing to consider anything. The recent debate on gambling expansion does indicate that lawmakers are being cautious before pulling the trigger on anything. New revenue streams are important, but not at the expense of existing ones.
