Track owners warn against higher license fees, taxes

Marc Levy

Tuesday, June 3, 2003 | 9:39 a.m.

HARRISBURG, Pa. -- Owners of Pennsylvania's four horse tracks are warning lawmakers that the amount of money demanded in license fees to operate slot machines or taken out of gross revenue would mean less for them to invest in building facilities for gambling patrons.

Their message came last week as Senate Democrats work to fashion a compromise proposal with Republican-sponsored legislation that could draw enough votes to pass the divided chamber.

Senate Democrats, however, have said they will seek to extract more from the track owners in licensing fees and taxes on the gross revenue to benefit various state programs than what was previously proposed by Sen. Robert M. Tomlinson, R-Bucks.

"Whatever you do in terms of upfront licensing fees takes away from the amount of money you can invest in the business," said Kevin DeSanctis, president and chief operating officer of Penn National Gaming Inc., which owns Pocono Downs near Wilkes-Barre and Penn National Race Course in Grantville, near Harrisburg.

DeSanctis appeared with executives from The Meadows in Washington County and Philadelphia Park in Bensalem to argue the case for the legislation, which Gov. Ed Rendell wants to provide revenue for his $3 billion plan to boost education funding and private business investment while lowering property taxes.

The slots proposal, along with a proposed 34 percent increase in the state income tax, would provide the bulk of the revenue to finance the Democrat's initiatives.

Track owners also argued against proposals to auction the licenses, include the legalization of other forms of gambling, and make room for gambling on land claimed by Indian tribes.

Those proposals are geared to sink legislation on authorizing slot machines, or are impractical, they said.

"All we're trying to do is focus the issue and make sure it gets done," DeSanctis said.

The Rev. Tom Grey, executive director of the National Coalition Against Legalized Gambling, also attended the press conference, held at a downtown Harrisburg hotel.

"Did they tell you about addiction? Did they tell you that their product is going to addict 4 percent of the population?" Grey asked.

Authorizing slots would then open the door to a wider state legalization of gambling, Grey warned.

"It's just the beginning," he said. "It's like cancer, it metastasizes. Next year, you're going to have riverboats because you're not filling your budget deficit."

Tomlinson's proposal, which was supported by the track owners, would allow up to 3,000 slot machines at each of eight racing tracks in Pennsylvania -- and up to 5,000 if state regulators approve a track owner's application.

Under Tomlinson's bill, the state would take 35 percent of the gross revenues and allocate 16 percent to the horsemen, leaving the track owners with 49 percent.

After the track owners pay their operating expenses and taxes, they'll be left with about 7 percent of gross revenues, an amount that is "not an unreasonable return" for the risk and investment, said Bob Green, president of Philadelphia Park.

That amount would then fund the $700 million that the four tracks plan to invest in buying slot machines and building facilities in which to house them, said Mike Jeannot, vice president of The Meadows.

The state has licensed one harness track and one thoroughbred track that have yet to be built, and one harness-racing license and one thoroughbred-racing license have yet to be issued by state commissions.