Political insiders among possible Pennsylvania slot distributors

Marc Levy

Tuesday, May 24, 2005 | 9:28 a.m.

HARRISBURG, Pa. -- A lobbyist for the country's largest slot-machine manufacturer and the son of a former state Supreme Court chief justice are among the entrepreneurs interested in the potentially lucrative business of distributing slot machines in Pennsylvania.

Businesses from New Jersey, Nevada, Louisiana and Indiana also hope to capitalize on a controversial provision in Pennsylvania's slot-machine gambling law that requires slots manufacturers to use an in-state middleman to move their products to casinos.

Comments submitted in recent weeks about the Pennsylvania Gaming Control Board's proposed licensing requirements for manufacturers and distributors provide the best glimpse yet into who may pursue the licenses. The documents, which the board has not released, were obtained by the Associated Press.

Lobbyist Melissa Heller is one of two principals of Keystone Slots LLC and a registered lobbyist for IGT Corp., the country's largest slot-machine manufacturer.

Before starting her own lobbying and consulting firm, Heller worked for the Philadelphia City Council and raised campaign funds for Democrats, including Philadelphia Mayor John F. Street. Her last council boss, president Anna C. Verna, is a political ally of state Sen. Vincent Fumo, a chief architect of Pennsylvania's 10-month-old slots legislation.

Robert Nix III, son of the late state Supreme Court chief justice and chairman of Philadelphia's Fairmount Park Commission, is the president of KGM Gaming LLC. Nix's company already has an agreement with Aristocrat Technologies Inc. to supply its slot machines to Pennsylvania casinos if the state grants him a license.

Heller declined comment Monday and Nix did not return telephone messages at his Philadelphia law office.

Among the out-of-state firms that have expressed interest in getting distributor licenses are Atlantic City Coin & Slot Service Co. Inc. of New Jersey, Patriot Gaming & Electronics Inc. of Indiana, Modern Gaming Inc. of Louisiana and Atlantis Internet Group Corp. of Nevada.

The slots law's requirement for an in-state distributor faced heavy opposition from Republicans, casino companies and slot-machine manufacturers. Pennsylvania and Louisiana are the only states with such a requirement, according to IGT.

Critics say it siphons off profits that gambling companies could otherwise invest in the casinos and creates opportunities for the politically connected to insert themselves into the state's nascent gambling industry.

Supporters, including many Democrats, insisted on the provision, saying it would create more jobs in the state.

"Just because you're politically connected certainly doesn't entitle you to a distributor's license," said Michael R. Veon, the Democratic House whip who pushed for the slots law. "There's a lot of money in gaming and we're trying to do the best we can to share the wealth with workers and business owners in Pennsylvania."

In July, state lawmakers legalized up to 61,000 slot machines at 14 racetracks, resorts and standalone sites, potentially making Pennsylvania the nation's biggest slot machine market outside of Nevada. The law, however, could be undone if the state Supreme Court agrees with a pending challenge that says its passage was unconstitutional.

Regardless, the gaming board doesn't expect to award the first slot-machine operator's license until at least December.

IGT said at least two dozen parties have contacted the company about becoming distributors since the slots law passed, but spokesman Ed Rogich said the company has put talks with potential distributors on hold until it knows the exact licensing provisions.