Measure would legalize up to 3,000 machines

Marc Levy

Thursday, June 24, 2004 | 9:03 a.m.

HARRISBURG, Pa. -- Negotiators said Wednesday they struck an agreement "in principle" on legislation to legalize thousands of slot machines in Pennsylvania as a way to generate $1 billion to reduce property taxes.

The agreement comes after more than a year of discussions that previously produced a couple of near-deals. Lawmakers said the deal would be drafted into legislation in the coming days and presented to the Senate.

The deal dictates that up to 3,000 slot machines could be placed at each of up to 12 sites -- up to eight could be at horse racing tracks, and up to five could be at off-track sites -- and up to 500 machines at two resort sites, lawmakers said.

A gambling commission would award the gambling licenses, and winners would each have to pay $50 million for a license.

Later, the tracks and off-track sites could apply to the gambling commission to install up to 5,000 slot machines.

"I am confident that we have come to an agreement, and barring any disagreement over language, we'll overcome any technical difficulties we have," said Sen. Robert M. Tomlinson, the Bucks County Republican who has been a key negotiator.

The House Democratic leader, H. William DeWeese of Greene County, described the agreement as the first half of a baseball doubleheader.

"The second game is the counting of the votes in the four caucuses" to gauge whether enough lawmakers will support it next week, DeWeese said.

Gambling opponents, however, have their hopes set on the agreement failing to pass.

"It's not a done deal. They've got to vote on it, and certainly we've seen these votes fall apart before," said Michael Geer, the president of the Harrisburg-based Pennsylvania Family Institute.

The agreement was struck during a meeting of Tomlinson, DeWeese and other House and Senate leaders on Wednesday. Many of the hang-ups that were resolved Wednesday revolved around sharing the revenue, Tomlinson said. Members of Gov. Ed Rendell's staff were briefed on the details later, lawmakers said.

In his campaign for office, Rendell proposed legalizing slots as a way to reduce the more than $5 billion in residential property taxes that Pennsylvanians pay to fund schools. In Philadelphia, the revenue from the slot machines could help reduce the city's wage tax.

Track owners would get nearly half of the profit from the slot machines while 34 percent would go to the state for the tax relief, expected to reach about $1 billion once all the slots parlors are up and running. The horsemen would get 18 percent of the on-track profit -- much of that money would be poured into the purses at the tracks -- although each site, including the off-track sites, would devote nearly 9 percent of the profit toward the horsemen.

The municipalities and counties that host the sites would get an aggregate 4 percent cut of the profit for budget aid and development projects. Another 4 percent would finance public bonds, potentially worth more than $1 billion, that in turn would pay for development projects around the state, lawmakers said.

The development money is believed to be enough to help support an expansion of the Pennsylvania Convention Center in Philadelphia, improvements to the Allegheny County airport, and a new arena in Pittsburgh that is seen as crucial to keeping the Pittsburgh Penguins hockey team in town.

One of the issues that has held up a deal has been the insistence of Sen. Vincent Fumo, D-Philadelphia, that the bill have some protection against the possibility that an Indian tribe could operate a tax-free casino in Pennsylvania under federal laws.

Fumo had wanted the gambling commission to be able to offer a license to an Indian tribe that meets certain criteria if the tribe dropped all claims to a casino under federal law. Republicans, however, insisted that any special allowance for Indians could give their gambling operations a competitive edge over the other sites, and Tomlinson said that Fumo agreed to drop his demand.