Can A Push To Expand Video Gaming Terminals Overcome PA Casino Roadblocks?

Posted on June 19, 2020

Video gaming terminals might not only be at truck stops in the future if it’s up to top Pennsylvania Republican lawmakers.

The Philadelphia Inquirer exclusively reported that Joe Scarnati, the leading Republican in the state Senate, is expediting a gambling expansion bill that would add thousands more VGTs.

The proposal being pushed by Scarnati and other top Senate Republicans, including Senate Majority Leader Jake Corman (R., Centre), would permit VGTs in bars, taverns, social clubs and other venues with liquor licenses.

Push for more VGTs heating up in Harrisburg

According to Spotlight PA, an independent, nonpartisan newsroom backed by The Philadelphia Inquirer, last fall, a top lobbyist for a gaming company looking to expand hosted a fundraiser for Scarnati at the Bellagio in Las Vegas, with tickets ranging from $7,500 to $25,000.

In the days leading up to the June 2 PA primary election, four top execs at Golden Entertainment combined to contribute $42,500 to Citizens for a Better Pennsylvania, a political action committee run by Scarnati and his close associates.

Now, there is a big push “behind closed doors” to pull together votes for a bill that would help Golden Entertainment and similar gambling companies expand in Pennsylvania with VGTs.

Proposed language written by a lobbyist for the trade association representing gaming operators of VGTs, which include Golden Entertainment, was circulating inside the Capitol in Harrisburg, says Spotlight PA.

According to two legislative sources, lobbyists and leading PA Republican lawmakers have turned up the heat to get other senators to vote for allowing more VGTs. A vote could come as early as Monday, June 22, when the PA Senate is in session again.

Massive budget problems and tax implications

The coronavirus pandemic is causing the PA legislature a massive budget headache. The economy and tax revenue has been ravaged by nearly three months of closures to slow the spread of coronavirus. More VGTs would translate into tax revenue for the state.

Corman commented in an interview with Spotlight PA that the money from more VGTs could be used to offset property taxes for seniors. Other supporters think it will help small bars that have suffered from a loss of business because of coronavirus closures and restrictions.

The economic impact of casino closures in Pennsylvania is massive and unprecedented. Tax revenue fell nearly $106 million in Pennsylvania from January ($124 million) to April ($18.3 million).

American Gaming Association SVP of strategic communications Casey Clark told PlayPennsylvania in late May:

“The tax implications are massive. Communities across the state will feel the shortfall in gaming revenue. It’s not just going to be in the areas around the casinos. The impact is going to be far-reaching. It will have a long and lasting impact on our industry and the people who rely on us.”

Total tax revenue generated collectively through all forms of gaming and fantasy contests by PA’s 12 casinos in 2020:

  • January: $124,106,057
  • February: $124,915,295
  • March: $62,183,897
  • April: $18,334,503
  • May: $25,762,836

Pennsylvania taxes slots at 54% and table games at 16%. It’s a much higher rate than New Jersey, which taxes both at a rate of 8%. PA taxes VGTs at a 42% rate, and the host municipality gets another 10%.

VGTs in Pennsylvania

Video gaming terminals earned approval as part of the 2017 gaming expansion law, which also legalized online casinos, sports betting, online lottery and mini-casinos.

There are currently 135 VGTs at 27 truck stops across the Commonwealth. All VGT operations had to shut down due to coronavirus on March 19.

A couple of roadblocks possible

The push for expansion doesn’t mean VGTs will suddenly break free from truck stops and pop up all over PA — at least, not anytime soon.

The last session day should be June 30 but could move back if a budget does not pass. Also, Scarnati is planning to retire from the Senate.

The Philadelphia Inquirer said a spokesperson for Scarnati commented the following: “The senator typically does not respond to inquiries on bills that have yet to see movement.”

Golden Entertainment did not return calls and emails requesting comment. Dave Thomas, the lobbyist who leads the Harrisburg-based firm that organized Scarnati’s Vegas bash, did not comment on the bill or fundraiser.

He did say, “Giving them money doesn’t mean jack.”

Pennsylvania’s 12 brick-and-mortar casinos closed in mid-March to help slow the spread of coronavirus. As of Friday, June 19, four reopened, with two more set to welcome visitors on June 22. The remaining six casinos can open when their counties move to the green phase on June 26.

Thirteen licensed casino owners and operators wrote a letter to legislative leaders about the possibility of more VGTs:

“We are shocked and alarmed by the persistent speculation that the General Assembly is considering an expansion of gaming to include both broad-based VGT gambling throughout communities and the legalization of currently illegal skill game slot machines that are being operated outside of our facilities. The legislature determined that such broad-based gaming expansion would have had a devastating impact on both Pennsylvania’s casinos and the Pennsylvania Lottery. This is even more true today.”

Just who is Golden Entertainment?

Golden Entertainment runs a number of casinos, taverns and gaming operations. It owns 10 casinos in Nevada and one in Maryland.

With more than 10,500 gaming devices in Nevada and Montana, it is the largest distributed gaming operator in the U.S. Its website lists future operations coming soon to Pennsylvania and Illinois.

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Katie Kohler

Katie Kohler is a Philadelphia-area based award-winning journalist. She covers the Pennsylvania gambling industry with an emphasis on sports betting, online casino/poker and the lottery.

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