Pennsylvania Republicans Voice Gambling Oversight Fears

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Pennsylvania Republicans Voice Gambling Oversight Fears
by No Luck Needed member ttwna2k for NoLuckNeeded.com

A budding proposal that could see the licensing of tens of thousands of video poker machines across Pennsylvania ran into a political roadblock yesterday when a top state lawmaker blasted the plans in remarks made to industry executives gathered at the annual Pennsylvania Gaming Congress. The news came after Australian gaming firm Crown confirmed it was continuing to seek a gaming license in the Keystone State, contrary to media speculation.
In a bid to raise hundreds of millions to close a large budget deficit, Pennsylvania’s Democratic governor Ed Rendell has called for licensing and taxing of thousands of video poker machines now operating illegally in restaurants, bars and taverns. Thousands more would also likely be rolled out under the governor’s plan, which envisions up to 34,000 video poker machines divvied up between nearly 9,000 establishments in the state with liquor licenses.

But State Rep. Sam Smith, the Republican leader in the state’s House of Representatives, yesterday offered a strong critique of the governor’s video poker plan. With the Pennsylvania Gaming Control Board (PGCB) struggling to establish its authority over the state’s fledging racino and casino industry, Smith argued it is the wrong time to embark on another ambitious expansion of gambling.

Instead, before any new games are added, Smith and House Republicans contend they want to see an overhaul of the state’s embattled gambling regulator. The board has recently come under fire for having granted gaming licenses to a pair of casino operators with past criminal convictions.

Smith said his concerns about new gambling additions extend beyond video poker to actual table games as well, an idea some industry executives expect will resurface.

“I don’t think now is the time to expand legalized gambling into each and every community,” Smith told executives at the Pennsylvania Gaming Congress, which began yesterday. “We need to restore the public’s trust in gaming as an institution, as an industry.”

The comments by one of the state’s top legislators suggest any new major gambling endeavor in Pennsylvania would likely have to overcome significant political opposition.

Smith also argued the video poker proposal would likely present a major competitive threat to Pennsylvania’s relatively new gambling industry. More than half a dozen racinos and casinos have opened up since the Keystone State legalized slot machines in 2004, with several more new gambling venues set to open over the next few years.

The proposal fits a larger pattern of less than welcoming actions by state lawmakers towards the industry, from a 55 percent tax rate, to a ban on the ability of casinos to issue credit. The state’s current gambling operators each paid $50m for their licenses, he pointed out. “The business atmosphere has been less than 100 percent favorable,” Smith noted. “It’s something we need to take care of.”

Meanwhile, there are ongoing concerns surrounding the PGCB’s regulatory oversight record following the controversy over the granting of casino licenses to two gambling operators featuring top executives with checkered pasts.

The most damaging instance involves the gambling board’s decision to award a casino license to Scranton businessman Louis DeNaples who now is grappling with four counts of perjury on federal charges that include lying to the gaming board about his ties to organized crime bosses. He now faces the loss of his license to operate his $400m gambling get-away in the Poconos, the Mount Airy Resort Casino.

Added to that have been additional cases of contractors with criminal pasts who have wound up with coveted contracts to work on casino construction projects, a controversy Smith alluded to in his comments to industry executives yesterday.

“We need to work on the issue of convicted criminals working in casinos,” Smith said, adding that Governor Ed Rendell’s proposals to further expand gambling “fundamentally ignore the public’s loss of confidence in the state’s ability to regulate gambling.”

To that end, Smith plans to file again legislation calling for a sweeping restructuring of the state’s top gambling regulator. While House Republicans offered up a similar plan last year, they are hoping mounting public concerns about the board’s oversight of the industry will give the proposal a political boost.

The House Republican leader’s proposal, which will be formally filed in the next few weeks, calls for shifting the board’s much maligned investigative unit to the control of the state police or another law enforcement body. It would also change how members of the gambling control board are appointed, taking that power away from legislators and putting it into the hands of the governor himself. Finally, Smith’s proposal would restrict casino companies from hiring gaming control board members and officers to lobby, while also opening up the casino licensing process to greater public scrutiny.

Ironically, Smith’s call for stronger gambling oversight in Pennsylvania came after the news that certain individuals connected to Australian gambling giant Crown Ltd – including James Packer’s sister Gretel – had asked to be removed from Crown’s application for a Pennsylvania gaming license.

Crown has been required to apply for a gaming license to operate the Meadows Racetrack and Casino in Washington, Pennsylvania under the terms of its December 2007 acquisition of Nevada-based Cannery Casino Resorts. Last month, Crown gained an operating license from the Nevada Gaming Control Board for Cannery’s three properties in northern Las Vegas but the Melbourne-based firm is still awaiting the outcome of its application to operate Cannery’s Meadows gaming venue.

Reports over the weekend suggested that Gretel Packer and three others are seeking to back away from the licensing process in Pennsylvania, however. The quartet have apparently applied to have their names withdrawn from the application, citing privacy concerns over the disclosure of certain personal information not required by the Nevada regulators.

In a statement released yesterday, Crown said that executive chairman James Packer and the firm’s other relevant directors and senior executives would remain as applicants for a gaming license in Pennsylvania.

Crown said: “Certain parties associated with Consolidated Press Holdings Limited, a Crown shareholder, are seeking to withdraw from the Pennsylvania Gaming Control Board (PGCB) licensing process. These parties have not been required to be licensed in other jurisdictions in which Crown holds a casino license.”

The statement added that discussion between those parties, Crown and the PGCB remained ongoing, as did Crown’s license application in the Keystone State.

Crown has greatly reduced its US expansion ambitions since its $1.7bn Cannery acquisition. In June 2008, the company cited credit concerns in abandoning plans to build a $5bn casino resort on the Las Vegas Strip, while just last month Crown chose to write off nearly $450m in balance sheet assets related to the minority shareholdings it has acquired in US-based operators Harrah’s Entertainment, Station Casinos and Fontainbleau Resorts.

The company said yesterday that it remained determined to take control of the Meadows racetrack venue, however. “Crown is committed to the Cannery acquisition and continues to work with the Pennsylvania Gaming Control Board to resolve outstanding issues in Crown’s [license] application.”