View: A Legislative and Governmental Wish List for the Gambling Industry in Pennsylvania

Posted By Kevin Shelly on August 27, 2021

Editor’s Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect PlayPennsylvania’s position.

While Pennsylvania’s governmental and political leaders take summer breathers, I’ve spent the time since the June recess began ruminating on legislative and governmental issues, which need not just empty rhetoric, but decisive action when the Legislature reconvenes in late September.

What did the Legislature or the Commonwealth’s chief executives – the governor and the attorney general – accomplish in the gaming space during the old fiscal year?

Little is my kindest assessment. Certainly not enough.

Legislative and governmental gambling action wishlist

Unregulated gambling machines are unquestionably the core failing in PA.

Pennsylvania casinos abide by rigorous regulations by the Pennsylvania Gaming Control Board and are taxed at the highest rate of any jurisdiction. On the other hand, unregulated grey machines are untaxed and unregulated.

The disparity is not fair to players, legal operators, or taxpayers.

Pennsylvania Skills machines from POM – the  Pace-O-Matic company of PA – may have legal cover due to one district court ruling in Beaver County, which found an element of skill was needed to win. Which meant they were not covered under the wording of the gaming act. But that ruling covered only certain specific POM devices, Pennsylvania Skills machines using the same computer code as in 2014.

A subsequent civil case brought by POM meant to clarify the initial court finding, but the case remains undecided beyond that one old ruling.

Now a slew of different machines from other manufacturers hide behind that tiny legal fig leaf and a general misunderstanding of the ruling.

After a long delay, PGCB says all unlicensed machines are illegal

After initially sitting on its hands, the Pennsylvania Gaming Control Board (PGCB) decided it was high time to police and regulate the machines in Feb. 2020, declaring them illegal and joining the civil case.

By then, the stampede out of the open barn door was unstoppable. Bars, fraternal and veterans organizations, pizza joints, convenience stores, and gas stations have installed thousands of unregulated machines throughout PA. One district attorney estimates 20,000 unregulated machines in his county alone.

No one is sure of the total number, but they seem to outnumber casino slots vastly. Casinos currently have about 23,000 licensed machines. About 220 approved video gaming terminals operate.

The machines outside casinos are untaxed, unregulated, unmonitored, unaccounted for, often accessible to minors, and sometimes magnets for crimes, including one murder.

Illegal, but everywhere

Casinos’ land-based slots pay a tax rate of 42%. Of that, 2% goes to local governments. Unauthorized machines pay nothing.

The PA Skills company has asked to be taxed, albeit at a much lower rate than casino machines. PA Skills have objected to the copycat competition from other makers and distributors, sometimes outing locations where competitors ran illegal video parlors.

With Attorney General Josh Shapiro‘s head in the sand for more than a year despite having a gaming enforcement office funded by the casino industry, enforcement efforts have instead fallen to county district attorneys, such as in Berks and Delaware counties, sometimes assisted by PA State Police.

But there is a clear turn in the tide recently with some former skills game supporters among the Republican ranks returning campaign cash, as reported by City & State and other publications, beginning with a USA Today report in GoErie.com.

But not all of the Republican party faithful are ready to give up the green, GoErie.com showed in a subsequent report.

On Wednesday, state Rep. Bud Harkin, the Democrat minority leader of the House Gaming Oversight Committee said “it is time to root out competition from illegal, unlicensed machines.”

Just days before, two state Senators, Jake Corman and John Yudichak, also put a bullseye on unlicensed machines.

There is finally a move to tackle regulatory legislation once the PA Senate reconvenes on Sept. 20.

But with just 18 legislative days left before the end of 2021 and the campaign season kicking in after Labor Day, the odds still may not be favorable.

And what about grey machines across the river in Jersey?

An aside: Ever hear of problems with grey machines in neighboring New Jersey? No. None.

New Jersey never allowed unlicensed machines to creep in and grow like black mold. Getting rid of black mold requires time, money, grit, and will.

PA’s leaders have instead chosen to look the other way, pretending they don’t notice the spreading cloud of choking spores. Clean-up is still possible, but it will take legislative and executive branch leadership, not just scattershot law enforcement actions at the local level.

What’s to be done with legislative and governmental actions?

So, what to do?

Pass legislation that makes possession of all gambling machines outside casinos and licensed truck stops a felony.

Draconian. But effective.

The consequences of making the possession of unlicensed machines then becomes severe and costly. Reinforcing that, trading illicit gambling income for a right to hold a valuable liquor license is not worth it.

One exception

But I think we can allow one carve-out exception. Fraternal groups, say the Elks, for example, or the veteran’s groups, such as the VFW, can each have up to three licensed machines if they sell liquor. Call the exception Shelly’s Law if you need a title.

Such locations are relatively safe and secure. Minors are not their customers. They do charitable work. They are part of the fabric of civic life in vast swaths of PA between Philadelphia and Pittsburgh.

I know that close-up. My dad was a VFW member in Delaware County. Relatives in Bloomsburg took us to the Elks for lunch. And who isn’t for cheap beer and the civic good?

To assure the machines in such locations are on the up and up, I propose the gambling machines must pass an initial review by the PGCB. Annually update paperwork. And there’s a nominal annual administrative fee, perhaps $50 to $100 per machine.

Pizza shops, convenience stores, gas stations, and such? Nope.

Pull the machines if not removed by a reckoning day. Gambling machines don’t belong in locations accessible to kids.

As well as making it a felony to have the gambling machines, punish offenders by yanking Pennsylvania Lottery machines from non-compliant locations for at least a year.

There is actually a way for bars and taverns to legally host some games of chance through the Liquor Control Board.

No one ever talks about that option, and it was never a popular program. Perhaps time to review and update the games of chance law for taverns?

So, what else?

Here goes the rest of my list.

Approve esports wagering, at least on an experimental basis

The Cordish Company, parent company of Live! Casino Philadelphia, has plans for an esports arena near its casino at the South Philadelphia Sports complex.

Esports are popular in Pennsylvania however, betting on esports is not permitted.

But they are on the way in neighboring Jersey, our sister publication PlayNJ reports.

Passing a pilot approval of esports wagering for PA should be a no-brainer.

Try fixed-odds wagering at race tracks

Not to nag – that’s my one allotted horse pun – but it is time to offer fixed rate odds at PA tracks. At least try it.

Pari-mutuel wagering, with its last-minute shifts in odds, is off-putting to new – as in younger – gamblers. That may largely explain the slow death horse racing faces as the railbird geezers decline and no one takes their place at the tracks.

I sound like a broken record, but Jersey had experimented before, and now fixed odds are on their way, Play.NJ reports.

If Jersey is doing it, shouldn’t PA?

And P.S.: Parimutuel betting allows well-financed remote gambling syndicates to sway odds, to the detriment of trackside PA wagerers. More on that to come in a future story.

A realistic conversation about the horse racing fund

Two years ago, Wolf pulled a sneak attack on the PA horse racing industry, only to stumble in the stretch, with no support from his own party to reallocate more than $200 million from an encumbered racing trust fund to a scholarship program for students attending one of the 14 PA university system schools.

The money, part of the deal which brought casinos to PA in the first place in 2004, comes from a stream of about 10% of land-based casino slot machine revenue.

Several years ago, Wolf signed the legislation which encumbered the money, a fact he never mentions. The legislation has no sunset provision, but he signed it. Duh.

And while the encumbrance of the fund can be broken legislatively, a lawsuit and years of delay would likely follow – other points Wolf has never addressed.

His well-intended education advocacy supporters – including some media – never address the history and context of the symbiotic horse/casino deal, the encumbrance of the horse fund, what undoing it would take, or even the political reality that they have been outrun by the pony people.

And real bottom line: they don’t have the votes.

Betting on students, not horses, is a cute catchphrase. But even some of Wolf’s own party were not persuaded.

Realistically, now seems the time to invite stakeholders to the table and discuss the fund and find a long-term compromise. There is no reason the PA pony people still need that level of living on the casino dole almost two decades later.

The Wolf pack’s lack of statesmanship, planning, and execution these past two years means it is time for a realistic cards-on-the-table discussion instead of beating a dead horse for the third year during the fiscal cycle next year.

New appointments could mean a new dynamic

One way the governor might get the attention of the horse community is simply by appointing new blood to the Pennsylvania Horse Racing Commission, which oversees the racing fund monies.

There are nine members of the commission, which Agriculture Secretary Russell Redding then chairs. At least four of those on the commission are serving even though their terms have expired without reappointment.

Kids and casinos are a bad mix

Every PGCB meeting regularly seems to feature another appalling case of a parent leaving their kids in a car in a casino parking garage to gamble.

Commission member Sean Logan is rightfully angered each time. He holds perpetrators and regulators to task by asking tough questions of casino security and the gambling house’s lawyer, but of course not the adult who created the problem.

Sometimes casino security is no doubt slow to find and free endangered children, but Logan’s umbrage often seems misdirected since the offending parent is not present.

This is why it is time for the PGCB to reach out to the legislature. Find a way to bump up the punishment. Now punishment means putting the adult on the exclusion list. Some will soon try again. Requiring counseling would also seem like the right step. But that needs someone above my pay grade to make it happen.

Lead image via Dreamstime

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Kevin Shelly

Kevin C. Shelly is an award-winning career journalist who has spent most of his career in South Jersey. He's the former assistant city editor of The Press of Atlantic City, where he covered the casino industry and Atlantic City government as a reporter. He was also an investigative, narrative enterprise, and features reporter for Gannett’s Courier-Post.

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