Report: Capacity for more gambling in Pa.

HARRISBURG - Pennsylvania legislators will explore the authorization of online gambling, state Senate President Joseph B. Scarnati III said Wednesday in response to a just-released report.

Scarnati (R., Jefferson) sponsored a resolution in December directing the Legislative Budget and Finance Committee to examine the viability of casino gambling in Pennsylvania as lawmakers grapple with deep budget deficits.

"It has become clear that Pennsylvania casinos are facing increasing competition from surrounding states, some of which have begun to utilize new and innovative revenue generators. As we move forward, authorization of online gambling in the state will be explored," Scarnati said in a statement.

The report, prepared by Econsult Solutions Inc., of Philadelphia, predicted that the introduction of Internet gambling could produce up to $68 million in tax revenue the first year and as much as $110 million annually after that - without hurting the state's bricks-and-mortar casinos.

"The net effect of igaming would be to complement, not cannibalize, land-based gaming," Stephen P. Mullin, president of Econsult, testified.

At least two casino operators in New Jersey, where Internet gambling started in November, have said they have reached gamblers who are not regulars on the casino floor. However, revenues have been far below those predicted by Gov. Christie.

"The Current Condition and Future Viability of Casino Gambling in Pennsylvania," the title of the report, was requested as it became clear that the upward surge in Pennsylvania gambling revenue and taxes since the first casinos opened in late 2006 had crested. In 2013, direct casino taxes fell for the first time, to $1.38 billion from $1.44 billion.

Given the rising competition from Maryland and Ohio, and the wild card of what might happen in New Jersey and New York, Mullin said there was potential for a long-term 5 percent to 10 percent decline in Pennsylvania gambling revenues - but nothing on the order of the 40 percent collapse seen in Atlantic City.

The palette of potential regulatory changes suggested in the report, which cost $153,000, includes some that would be controversial if they came under serious consideration.

Allowing gamblers to get credit-card cash advances on the casino floor and eliminating the $2,500 ceiling on check-cashing in casinos are two ways state government could help Pennsylvania casinos remain competitive by allowing big spenders easier access to their money, the report said.

In addition to easing access to cash, including ending the prohibition on cashing third-party checks, the report suggested that allowing Pennsylvania casinos, which are open 24 hours, to serve alcohol after 2 a.m. would keep gamblers at slot machines and poker tables deeper into the night.

However, any attempt to ease that restriction would likely meet stiff resistance from bar owners unless it applied to them as well.

Other items on the casino-industry wish list include speeding the approval of new games, reducing the industry-funded state police presence at casinos, and scaling back the cost of regulation.

One member of the panel had a mixed reaction to the suggested regulatory changes.

"Many of them are very good," said Sen. James R. Brewster, a Democrat representing parts of Allegheny and Westmoreland Counties. But, he said, "regulations are there to protect the taxpayers."

Among the senators at the hearing, different views on the opening of two more casinos - one in Philadelphia and the other in Lawrence County - were evident.

Sen. Kim L. Ward (R., Westmoreland) expressed skepticism on the issuance of the state's 13th and 14th casino licenses.

"I have reservations," she said, while admitting she had no say in whether it happens.

Sen. Bob Mensch, a Republican whose district covers parts of Berks, Bucks, and Montgomery Counties, by contrast, said he sees room for growth.

"I have a hard time getting my mind around the idea that we in Pennsylvania are reaching the point of saturation," he said.

Mullin, whose firm did the economic-impact study for Bart Blatstein's proposed Provence casino on North Broad Street in Philadelphia, agreed with Mensch.

"We do believe that we are not near the saturation point," Mullin said. "We do believe that the Philadelphia metropolitan market is very, very large and can have more supply."

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