Although some have predicted that Pennsylvania’s HB 271 – a House Bill regulating and expanding gambling and online gambling in the state – would be wrecked by the massive differences between its Senate- and House-passed versions, it looks like state lawmakers desperate to narrow the multibillion-dollar 2017-2018 budget deficit currently staring them in the face, have set out to make it work.
To reconcile the considerable differences over the bill, 5-party talks have been initiated [paywall], between House Republicans and Democrats, Senate Republicans and Democrats and Governor Tom Wolf.
What’s at Stake
According to legislative analysts tasked with estimating the revenue the expansion of online gambling would generate for the state’s coffers, the potential windfall here is in the $110m-$357m range – depending on the version of the bill that would eventually be enacted. While it wouldn’t be enough by far to plug up the budget deficit, it would certainly represent a determined step in the right direction.
While both the House and the Senate have passed HB 271, they passed radically different versions of the same bill, as the fault-lines between supporters of land-based casino interests and those looking out solely for the interests of the state, became painfully obvious.
It its current form(s) the bill is peppered with several points of contention, among which VGTs (video gaming terminals), slot machines in off-track betting facilities and “ancillary” facilities (establishments with a liquor license) stand out. The tax rate to be levied on revenues generated through online channels is also a major issue.
The casinos support slots machines at off-track betting and “ancillary” facilities, while opposing VGTs. The House version of the bill proposes a 16% tax rate, which is obviously supported by most casinos, while the Senate version insists on a rather unrealistic 54% rate, which would potentially derail the whole project.
Intra-Party Squabbling Over VGT’s
The biggest problem plaguing the above said 5-party talks is that the aforementioned interest-based fault-lines cut right across party-loyalty pitting Republican against Republican.
The Senate majority Republican caucus is known to oppose VGTs. The House majority Republican caucus on the other hand has made it clear it would not even consider the bill without the VGTs included. According to Republican House Majority Leader Dave Reed, the inclusion of VGTs is essential in order to maximize gaming revenue potential. While that approach may indeed make sense from the perspective of the budget, the casinos see it as a direct threat to their interests.
Proponents of the VGTs have already taken steps towards a compromise too, circulating a draft version of the bill, which would see the number of these terminals reduced from 40,000 to 7,000. Even with this issue out of the way, though, the parties would still have to tackle tax rates and off-track betting parlor-based slot machines. Fortunately, according to some sources, progress has been made on these points as well.
Putting it Together
The bottom line in the case seems to come down to a side which is eager to scoop up any and all bits of gaming revenue to help out the budget, and another side which is indeed looking to have the cake and eat it too, by squeezing money out of the gambling industry without devastating it.
If a compromise version of the bill is agreed upon, both the Senate and the House would have to approve it, after which Governor Wolf could sign it into law.
Wolf’s position on the issue is clear: he is looking for recurring, real revenue from the gambling industry, while protecting jobs.