Pennsylvania governor signs historic gambling bill

Tuesday, July 6, 2004 | 9:34 a.m.

SUN STAFF AND WIRE REPORTS

BENSALEM, Pa. -- The lengthy push for slot machines ended Monday when Gov. Ed Rendell signed a bill allowing Pennsylvania to have up to 61,000 slot machines -- a deal that could make the state the nation's third-largest gambling market behind Nevada and California.

But gamblers will have to wait until at least next summer before they can start pulling the levers.

Along with the slot-machine legislation, Rendell signed a companion bill that finances $1 billion a year in property-tax reductions. That will also take time, though, as initial relief would be deferred until at least 2006 to allow the slots parlors to obtain licenses and gear up.

The laws authorize up to 61,000 slot machines at 14 sites. Most of the resulting tax revenue would be used to cut local property taxes by an average 20 percent. California tribes now operate an estimated 63,000 slot machines, but that number could climb to as high as 200,000 under deals agreed to by Gov. Arnold Schwarzenegger. Nevada has some 220,000 slot machines.

The Pennsylvania laws could mean existing horse tracks, including Philadelphia Park, would have slots by as soon as Memorial Day. First, officials must appoint a gambling commission and do background checks for slots manufacturers. Tracks also must complete the license-application process.

Rendell, a Democrat who had made slots-for-tax-relief the centerpiece of his 2002 election campaign, signed the bills at a ceremony at Philadelphia Park, the thoroughbred track that produced Kentucky Derby-winner Smarty Jones.

"It isn't a panacea, but it certainly isn't the demon it's been made out to be," Rendell said. "It's a good, significant step on the road to property-tax relief."

Opponents of the slots law predict a proliferation of crime, addiction and other social ills.

They complained that the law was crafted in secret by a handful of party leaders and lacks adequate safeguards against corruption and conflicts of interest among members of the state panel that would oversee the slots parlors.

Addressing that issue, Rendell signed an executive order Monday prohibiting administration officials, state police, Revenue Department officials and others from holding financial interest in the gaming industry. The law allows members of the House and Senate to own up to 1 percent interest in a company with a slots license.

Of the roughly $3 billion a year slots are expected to generate, the licensees would keep 48 percent, the state would get 34 percent and the rest would be divided among the equine industry, public construction projects, and counties and municipalities in which slots parlors are located.

Proponents said the law will enable the state to recapture much of the money Pennsylvanians currently pour into slot machines in neighboring states, and also revive horse racing.

Bob Green, president of Philadelphia Park, said he will work quickly to get the licensing application done and wants to have slots in place by next summer. Slots could help keep his track's star horse, Smarty Jones, from leaving the state for higher purses. Trainer John Servis has said he would have to go elsewhere if slots weren't approved.

Racing fan Ed Kelly, 77, of Philadelphia, said he thinks the profit from slots will help support the racing industry and groups benefiting senior citizens. When slots make it to Philadelphia Park, he said, he's also more likely to have company when he goes -- his wife and five daughters love to play slots, but typically end up going to New Jersey.

"They all love it and they don't want to travel," he said.

Ultimately, state taxes on slots are expected to generate $1 billion a year for reducing property taxes in all but one of the state's 501 school districts. In Philadelphia, there would be reductions in the city's wage tax.

The new gambling commission would issue slots licenses to racetracks, resorts and other sites for fees ranging up to $50 million apiece. Seven licenses would be granted to horse-racing tracks, including ones not yet built. Five licenses would be given to standalone sites and two licenses would be given to resorts.

The law makes Pennsylvania the 18th state to legalize slot-machine gambling, not counting casinos run by Indian tribes, according to the American Gaming Association.

The House approved the slots bill and the property-tax bill Sunday. The Senate approved the slots bill Friday and the tax bill early Saturday.

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