Expanded gaming not yet here; fighting over projected revenue is

HARRISBURG, Pa. (WHTM) – Nearly everyone involved in the budget imbroglio concedes that expanded revenues are needed in Pennsylvania.

With legislative Republicans refusing to budge on broad-based tax increases like sales and income, wary eyes are increasingly looking at an old fiscal friend: gambling.

Casinos were initially created in Pennsylvania as a way to save the struggling horse racing industry. In fact, Act 71 of 2004 is not called the Let’s Bring Casino Gambling to Pennsylvania Act. It’s called The Racehorse Development and Gaming Act. It gave horsemen a hefty 18-percent cut of slot revenues; money that’s used to sweeten purses which, in turn, attracts horse owners to bring their equine to the state.

Lawmakers were attracted to supporting a bill that would put casinos in the commonwealth because they could also say they’re saving the racing industry.

“Without the racing provisions within Act 71, there would not have been the votes for final passage,” said Todd Mostoller, Executive Director of the Pennsylvania Horsemen’s Benevolent and Protective Association.

Mostoller was an enthusiastic supporter of Act 71 and says since surrounding states like Delaware and West Virginia had casino-enhanced purses at their race tracks, Pennsylvania couldn’t compete. It’s simple economics, he says. Horse owners have trailers and can race their horses wherever they please. Are they going to race in a state with small purses or large purses? Casino money helps enhance Pennsylvania purses and offers bonuses for horses bred in Pennsylvania. Act 71 worked as intended, Mostoller said, and an industry was saved.

But 10 years later, the state is contemplating expanding gaming to the Internet or perhaps putting slot machines in off-track wagering facilities. The horsemen are concerned the new ventures will siphon bettors away from the tracks and they won’t get the same cut of the new revenues.

“These mini-casinos, Internet gaming, they will all have a devastating impact on horse racing and what we created in 2004,” Mostoller said.

Representative John Payne (R-Dauphin) chairs the House Gaming Oversight Committee. He concedes there are multiple options for expanded gaming, but says nothing has been finalized.

“The horsemen want their share and this group wants their share,” Payne said with exasperation. “We don’t have a bill passed yet. We’re still trying to write the language and you guys are arguing over the money.”

But in a tight budget year, and a year with a 112-day impasse, arguing over money is to be expected. Last year, the horsemen’s cut was $240 million.

“Where do you come off giving taxpayer money to subsidize horse racing?” asked local activist Barry Shutt, who protests almost daily at the Capitol about the lack of pension reform. On this day, he had a sign ripping the horsemen’s payout, arguing that it’s a quarter-billion dollars that’s not going to schools, pensions or property tax relief.

“It’s not a conservative principal, it’s not a free market principal to subsidize an industry that should be able to make it on its own,” Shutt said

But horsemen don’t work alone.

Keith Oellig is a third generation farmer whose property spans the Dauphin and Lebanon County line about a mile from Penn National Racetrack. His farm supplies hay and straw to Penn National. He says a healthy horse racing industry keeps his bottom line healthy.

“It’s probably about 30 percent of my revenue,” Oellig said.

Mostoller says that’s just one guy near one track supplying one product.

“Sales of trucks, sales of farm equipment, all those things are ancillary impacts of the racing industry,” Mostoller said.

He added that before Act 71, horse racing had a $1 billion impact in the state. It now has a $4 billion economic impact.

Payne sees all sides. He promises not to raid money already promised to horsemen in Act 71 as some of his colleagues would like, but he’s making no promises should gaming expand into new territory.

“I don’t know that I get the sales pitch that somehow I-gaming and fantasy sports that horses are involved in that and should get the revenue,” Payne said. “That doesn’t connect with me.”

Publicly, legislative leaders and the governor have said little about expanding gambling in Pennsylvania. Capitol insiders say it’s coming and it will be pushed at the last minute as a way to generate revenue without raising taxes; pretty much the way it’s always been pushed, except this time it won’t have the cover story of saving the horse racing industry.

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