Tucked in Pa. gaming bill: A million-dollar clause for Mount Airy Casino

HARRISBURG — In a last-minute maneuver before the state Senate last month passed a sweeping expansion of casino gambling in Pennsylvania, lawmakers added a 28-word amendment, cloaked in legalese.

"A category 4 slot machine license may not be located in a sixth-class county which is contiguous to a county that hosts a category 2 licensed facility," said the phrasing, tucked halfway into the 939-page bill.

Pennsylvania has 12 casinos. But that single sentence could be worth millions of dollars to one: Mount Airy Casino Resort.

The bill paved the way for so-called mini-casinos to open around the state, requiring only that they be at least 25 miles from one of the larger, established gambling halls. The amendment nearly triples that buffer zone for the Monroe County casino, barring mini-casinos from contiguous Carbon, Pike, and Wayne Counties.

More important, it guarantees that the Mount Pocono destination remains the closest and most accessible casino for the thousands of New Yorkers who flock each week to the commonwealth to gamble.

Who inserted the amendment — which, with the rest of the bill, was passed by the legislature and signed into law by Gov. Wolf — and why they did it remains an open mystery in Harrisburg.

Mount Airy Casino Resort was founded by businessman Louis DeNaples, who nearly a decade ago was forced to sell his share in the establishment to a daughter after he was dogged by claims of ties to organized crimes. A public relations firm representing it said casino executives had no comment on the legislation.

Steve Crawford, president of the lobbying firm representing Mount Airy, said many establishments were worried about the bill and had lobbied for a larger buffer zone, not a carve-out. He said Senate leaders came up with the language that seems written exclusively to protect Mount Airy's business.

"As to who put pencil to paper, I can't answer that question," said Crawford, adding: "But I'm glad they did."

Senate Republican leaders didn't respond to request for comments. Their spokeswoman, Jennifer Kocher, said late Friday that she could not determine who crafted the amendment.

Sen. Mario Scavello, a Republican whose Monroe County district includes the Mount Airy casino, did not respond to a request for comment. He voted against the bill.

State Rep. Maureen Madden, who also represents the district that includes the casino, voted for the measure when it reached the House.

"To protect all of that Mount  Airy has committed to in Monroe County, we need to make sure it thrives," the Democrat said in an interview Friday, adding: "I understand that there are always winners and losers in every piece of legislation."

But the mysterious amendment is starting to generate criticism.

"Something smells here," said Rep. Mark Rozzi (D., Berks), who voted against the legislation. "Why are we giving special treatment to one casino?"

Rozzi said he expects Penn National, which is headquartered in his region and which owns the Hollywood casino, and other casino operators to sue over the new law, which he believes creates an uneven playing field. The irony, he said, is that a lawsuit could ultimately freeze the planned gaming expansion, preventing the state from cashing in on new revenue and pad its troubled finances.

Eric Schippers, a top executive with Penn National, said the firm was researching its legal options. Hollywood, located in a less densely populated area near Harrisburg, says it is unusually vulnerable because it draws half its gamblers from outside the 25-mile radius defined in the law.

"What's upsetting to us is that Penn National is being uniquely negatively impacted by this massive expansion of gaming," he said. "At the same time, they give this gift to Mount Airy. It's unequal treatment. This is an eleventh-hour giveaway."

The gambling expansion bill was among the GOP-controlled legislature's solutions this year for raising new dollars for Pennsylvania without raising taxes. The legislation set into motion one of the biggest expansions of gambling in the state since the 2004 law that legalized casinos.

Despite its complexity, it was cobbled together and approved by both legislative chambers in a breathtaking 24 hours. It passed the Senate in a 31-19 vote, with no debate. Wolf, a Democrat, signed it four days later.

Among other changes, the bill will allow 10 new mini-casinos to open around the state, with each being able to operate from 300 to 750 slot machines and 30 table games.

In what may have been a drafting error by the legislature, the same language that helps Mount Airy might also extend a lesser amount of protection to one other operation, Rivers Casino in Pittsburgh. Its home county, Allegheny, touches a sixth-class county, Armstrong, a rural area to the northeast, which would also be barred from hosting a mini-casino.  Rivers Casino declined comment.  State Rep. Madden said she had not heard of any talk that the measure would assist anyone but Mount Airy.

Because a number of the state's existing casinos are clustered around high-population areas — such as Philadelphia and its suburbs — the 25-mile buffer zone was, if not embraced, at least considered enough protection from having a mini-casino open nearby and eat away at their profits.

And some casinos are located close enough to each other to benefit by piggy-backing on a rival's buffer zone, in effect extending their own protection beyond 25 miles. Some casinos around the Philadelphia area, for instance, have an effective buffer zone of more than 90 miles. One, the Harrah's casino in Chester, has an effective range of 127 miles.

Crawford, president of the Wojdak Government Relations lobbying firm, said Mount Airy was among a long list of establishments concerned about the new mini-casinos "cannibalizing" business at the state's existing gambling halls, which pay more than 50 percent in taxes on slot-machine revenue.

"From the very beginning, all of us were concerned about the dramatic expansion of gaming and what it will mean to the brick-and-mortar casinos," he said, adding there was nothing "new" or unique about Mount Airy's position.

Among the dozen casinos, Mount Airy is seventh from the top in terms of revenue, taking in about $190 million last fiscal year.  It has a controversial history.

DeNaples, 77, a politically connected Scranton millionaire, relinquished his ownership of the Poconos gambling hall in 2009, shifting his stake to his daughter, Lisa DeNaples. The move was part of a deal with prosecutors in Dauphin County, who had charged him with perjury, believing he had lied to Pennsylvania's Gaming Control Board about his ties to organized crime when applying for a casino license.

Still, the casino came under scrutiny again in 2011, when the state Attorney General's Office released a stinging grand jury report questioning the process by which casino licenses were awarded in Pennsylvania.

These days, it reports annual gaming revenues of about $235 million.

Over the decades, DeNaples has been a heavy campaign donor, giving to both Republicans and Democrats, but known primarily as a GOP backer. In the last two years, state records show, he gave $20,000 to the Northeast Leadership Fund, a political action committee that has supported, among others, the State Sen. Joe Scarnati of Jefferson County, the top Republican in the chamber.

Joseph Weinert, a veteran business analyst with the Spectrum Gaming Group, which serves as a gambling-industry consultant, said Mount Airy had skillfully played its cards.

"You can't fault Mount Airy for trying to protect its marketplace," Weinert said. "Like other owners and operators, they have invested a substantial  amount in their operation. But if I was another operator in Pennsylvania, I would be questioning why I didn't receive special protection."