Licensing of Slots Casinos Seems Back on Track

The Pennsylvania Gaming Control Board approved licenses for the manufacturers and suppliers of slot machines June 28, which could accelerate the licensing process for casino operators in the state.

Licenses for three slots manufacturers and 12 suppliers were approved, according to a release from the gaming control board. Delays in the licensing process have stalled installation and operation of slots, which were legalized in July 2004 under the Pennsylvania Race Horse Development and Gaming Act.

"Approving these licenses is another major step forward for gaming in Pennsylvania," board chairman Tad Decker said in a statement.

The board was running out of time statutorily to award the licenses. Now, it expects to consider operator licenses for racetrack and non-racetrack slots casinos in September, Decker said.

The 2004 law allows for 14 slots casinos around the state. Seven would be located at racetracks.

Pennsylvania has four operating tracks--Penn National Race Course and Philadelphia Park, both Thoroughbred, and The Meadows and Mohegan Sun at Pocono Downs, both harness facilities. Regulators have licensed Presque Isle Downs, a Thoroughbred track planned for the Erie area in the northwest part of the state, and Harrah's Chester Downs, a harness racino in Chester, not far from Philadelphia.

A seventh license, for a harness track, also is eligible for slots. Many of the non-track slots casinos are slated for the Philadelphia and Pittsburgh areas. The gaming control board has scheduled public hearings on the racetrack casinos for Aug. 7-9 in the state capital of Harrisburg.

A bill passed by the Pennsylvania Senate June 27 includes a potentially volatile provision that would raise the tax on casino slots revenue by 4% to pay for enforcement. Meanwhile, some owners of proposed racetrack casinos already have balked at an interpretation of the law that would hike the tax on casinos to benefit local government.

Officials at Pocono Downs near Wilkes-Barre in northeastern Pennsylvania have said a tax increase could lead it to rethink its plans to build a slots casino.

The 55% tax rate in the slots law includes a minimum of 12% of gross revenue that would go toward purses and breed development. (Contributions from non-track casinos would increase that figure.) Under the law, the state actually gets 34% of gross revenue, local governments 4%, and state economic development 5%.

Some in the casino industry consider the tax rate to be anything track operators or gaming companies don't receive; operators thus would get 45% of adjusted gross revenue in Pennsylvania.