News

March 2, 2008

Pa. table games an odds-on favorite

By Ron Bartizek rbartizek@timesleader.com
Business & Consumer / City Editor

Players want them and even state legislators who opposed legalizing casino gambling now acknowledge that table games are likely to come to Pennsylvania.

How soon patrons will be able to sit down to a game of poker or roll the dice in the state’s casinos will depend on politics and money, not necessarily in that order. With property tax relief waiting in the wings and a slowing economy, it might not be long before enough legislators can be rounded up to support expanded gambling opportunities and the tax receipts that come along with them.

Whenever table games arrive, though, casino operators warn that the money gamblers lose playing the labor-intensive games can’t be taxed at the 55 percent rate applied to slot machines.

Some legislators participating in a panel discussion held last Tuesday at the Pennsylvania Gaming Congress in Harrisburg wouldn’t hesitate to authorize table games now.

“I can’t see a reason to wait,” said state Rep. John Pallone, D-Armstrong County. “If we’re going to satisfy the appetite for gaming, then we should give them a full menu.”

If it was up to Rep. Jim Wansacz, D-Old Forge, casinos would have had table games from the day they opened. But at this point he suggests waiting on the change until all 14 authorized casinos are open, and he believes getting legislation passed will take at least two years.

Rep. Michael Carroll, D-Avoca, takes a position somewhere between Pallone and Wansacz. He thinks it’s early in the process, and the state needs to settle questions about regulation and make sure promised tax relief is delivered before expanding gamblers’ options. Now that a state kitty filled by gambling taxes has crossed its minimum threshold of $500 million, he expects distributions by September.

“I’m reluctant to say that I support table games at this time,” Carroll said Thursday. “We have to be able to manage and regulate the industry.”

Politics and the embarrassment surrounding the license issued to Dunmore businessman Louis DeNaples and then suspended when he was indicted on perjury charges also cloud the table games question.

State Rep. Doug Reichley, R-Emmaus, who voted against casino gambling, remarked Tuesday that “we could have table games in eight months.”

On Thursday, he explained that speculation around the Capitol was that if Hillary Clinton was elected president, she would ask Gov. Ed Rendell to take a post in her administration. That would cause gambling interests to push for table games before Rendell left office, rather than take a chance with his successor, who Reichley suggested might be less supportive of the industry.

Competitive pressures

Table games supporters both in government offices and casino executive suites have fueled support for expanded gambling opportunities by warning that gamblers and the tax receipts on their losses would be lured to nearby states with more variety to offer.

Illustrating the point, operators of two West Virginia casinos claimed to have lost $22 million in revenue during the first few months after slots were introduced at the Meadows Racetrack & Casino south of Pittsburgh.

It didn’t take long for things to turn around after West Virginia authorized table games in December. Early results showed table games revenue running at twice the projected levels in the first few weeks, with extra customer traffic also boosting slots revenue by double digits.

Wayne Bosze, who was playing an electronic roulette game at Mohegan Sun at Pocono Downs on Thursday, fits a profile that casino operators say will raise their profits and fill state coffers.

“I’m really in favor of the governor pushing for tables,” he said. “I think I’d come more often.”

Bosze and his girlfriend drive to the Downs from the Lehigh Valley once or twice a month; she likes slot machines and he enjoys table games.

More jobs, more space

Mohegan Sun at Pocono Downs chief executive Bobby Soper pushes the benefit of more, higher-paying jobs that table games require. He said that one-fourth of the 10,000 employees at the Mohegan Tribal Gaming Authority’s flagship casino in Connecticut work on table games.

The same ratio would mean an additional 300 jobs on top of the 1,000 the Downs is planning to employ when its permanent slots casino opens in August.

The workers are needed because, unlike computerized slot machines, each game of blackjack, poker or craps is conducted by a casino employee. In the case of card games, that means overlapping shifts.

“Dealers rotate more frequently,” Soper said, taking 20-minute breaks every hour. “You’d have carpal tunnel if you dealed for eight hours straight.”

In addition, a floor supervisor is needed for each two or three tables, to assist dealers and players. At the next level, a pit manager might oversee 10 tables.

Craps and roulette, with more players involved, require even more manpower.

“When it’s all said and done it’s very labor intensive,” with many of the jobs paying $40,000 to $50,000, he said.

As at Mountaineer Casino, which built a 10,000-square-foot poker room after the games were made legal in West Virginia, Mohegan Sun at Pocono Downs would likely add space for table games.

“I don’t think we would take out slots and add poker tables,” Soper said.

Tax would be lower

Everyone on all sides of the discussion recognizes that higher-cost table games would not be viable if taxed at the 55 percent rate applied to slot machines.

West Virginia has allowed slot machines at racetracks since 1994 and taxes casinos’ winnings, called the hold, at nearly 58 percent, according to the American Gaming Association. While a rate of 12 percent was initially proposed for table games, the final figure was 35 percent, plus a $2.5 million annual license fee.

Rep. Reichley has heard that Pennsylvania casino operators are asking for a 10 percent rate. “I think that’s frankly too low,” he said, guessing the end result will be “somewhere in the middle” of that and the 55 percent rate applied to slots proceeds.

House Majority Leader Bill DeWeese, D-Greene County, has proposed House Bill 2121 that calls for a 28 percent tax on table games.

Both the nature of the games and the lower tax rate are likely to mean the state will collect less on table games than it does on slots. With six of a potential 14 casinos operating, the state collected $245 million for tax relief in the first seven months of the fiscal year that started in July. Mount Airy was open only four of those months and a seventh casino opened last month.

It used to be that slot players were the low-end of the industry, said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas. “But now you’ve got slot players gambling a lot more than the people at the tables.”

That’s because the new electronic slot machines operate so fast, he said. Even someone playing a nickel slot at the maximum allowed bet could risk $4 every six seconds, while someone playing $5 blackjack might take a minute for each wager.

And a skilled blackjack player can win back nearly all his wagers over time, Soper said, while slot machines are typically programmed to retain 8 to 10 percent of wagers for the casino.

Schwartz said states and communities must decide whether expanded gambling is good for their economy, but his experience shows that casinos, “definitely have a track record for creating jobs.”

Reichley has a simpler and less positive explanation for Pennsylvania’s embrace of the industry.

“We put ourselves in the position of an addict to the gaming money,” he said, because more revenue is needed to pay the state’s bills, but there’s no appetite for raising taxes.

Ron Bartizek, Times Leader business editor, can be reached at 970-7157.

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