Feb 25 2009
Hope you're sitting down for this one, but the casino operators in Pennsylvania -- the ones who, by law, are restricted to offering only slot machines (but not table games) at their casinos, and the same ones who have just learned that Gov. Ed Rendell now wants bars and social clubs to be allowed to operate paying video slot machines -- now say they want to be able to offer table games in addition to slots:
Yes to table games at state casinos, but no to video poker machines in thousands of bars and clubs statewide. That was the view today of Timothy Wilmott, president of Penn National Gaming Inc., which runs a racetrack/casino 20 miles northeast of here plus several other casinos in other states.
Two other casino executives -- from the Pittsburgh area -- agreed about bringing table games to Pennsylvania casinos but wouldn't comment on Gov. Ed Rendell's controversial plan to allow 80,000 or so video poker machines in bars and taverns across the state.
Ed Fasulo, president of the Rivers Casino, which will open in Pittsburgh in August, and Mike Graninger, general manager of The Meadows, which will open its enlarged, permanent casino in April, said table games would increase employment and the state's income tax base. But they tactfully sidestepped commenting on Mr. Rendell's idea for video poker to raise tuition relief for college students.
All three of them spoke Tuesday at Spectrum Gaming Group's annual Pennsylvania Gaming Congress and Mid-Atlantic Racing Forum in Harrisburg. State legislators attended the same conference:
Democratic Rep. Tim Solobay sat right next to Republican Rep. Curt Schroder yesterday at a forum on possible expansion of gambling in Pennsylvania, but they couldn't have been farther apart on whether Pennsylvania casinos should add table games.
Mr. Solobay noted that his Washington County district "is close to West Virginia," where casinos already have games like blackjack, roulette, poker and baccarat. ... Mr. Schroder, from Chester County, [said] it's too soon to be talking about a major expansion of gambling, when only seven of the 14 slots casinos authorized by a July 2004 law are operating.
... More from the conference, via state Rep. Sam Smith.
Around the state
"Representatives of The Meadows Racetrack & Casino and the Australian firm trying to buy it insisted yesterday that they want to complete the deal, despite efforts to back out by a part-owner of the foreign company. A spokesman for The Meadows stressed, meanwhile, that the dispute holding up the sale will not affect the planned opening in April of the Washington County racetrack's permanent casino. It is to more than double its size, which will give it about 3,800 slot machines."
What's the dispute? Bloomberg explains:
A $1.75 billion U.S. casino buyout by Crown Ltd., the Australian company controlled by billionaire James Packer, prompted a lawsuit by his sister that seeks to keep family trust information private. Crown said in December 2007 it would buy Cannery Casino Resorts LLC, co-owned by Millennium Gaming Inc. of Las Vegas and Oaktree Capital Management of Los Angeles, to acquire three Nevada casinos and The Meadows Racetrack and Casino south of Pittsburgh.
"It turns out that the approval process in Pennsylvania, but not in Nevada, required licensing applications to be made by the trusts and Gretel Packer as a beneficiary," Gretel Packer said in a lawsuit filed today in Delaware Chancery Court in Wilmington. She said she doesn't want to release financial information.
... From wire reports: "The state Supreme Court yesterday ordered the appointment of a special prosecutor to investigate possible grand jury leaks in the case of a Poconos casino owner charged with perjury. Lawyers for Louis A. DeNaples had subpoenaed 15 reporters from six news organizations seeking to learn the sources of articles describing the deliberations of a Dauphin County grand jury that indicted Mr. DeNaples in January 2008. A county judge threw out the subpoenas in July."
... The casino industry, like most other American industries, is suffering right now, but Wall Street is bullish on the Pennsylvania segment of the market:
"Alex Picou, managing director of Gaming, Travel and Leisure for KeyBanc Capital Markets, said if he were opening a casino today, he'd rather be in Pennsylvania than any other market in the Mid-Atlantic. [And] David B. Katz, executive director of Oppenheimer & Co., said Pennsylvania does better as a high tax state because it has a roster of seasoned operators such as Penn National Gaming Inc., Harrah's and Mohegan Sun. Penn National operates the Hollywood Casino at its racetrack in Grantville."
... Penn National racetrack near Harrisburg, which once offered the lowest thoroughbred purses of any track in the mid-Atlantic, is becoming more generous, thanks to slots money.
The Lone Star State
The big buzz within the casino industry is that Texas, second most-populous state in the country, is about to dip its cowboy boots into the pool:
State lawmakers from Houston, Dallas and San Antonio - plus the head of the House budget-writing committee - on Tuesday launched a fresh push for Las Vegas-style destination resort casinos in Texas. Slot machines also would be allowed at the state's existing race tracks under the proposal by Sen. Rodney Ellis, D-Houston; Sen. John Carona, R-Dallas; Rep. Jose Menendez, D-San Antonio, and House Appropriations Committee Chairman Jim Pitts, R-Waxahachie. In addition, the three federally recognized Indian tribes could operate a casino on their tribal lands.
"Texans already are voting with their feet and going out of state" to gamble, Ellis said. Menendez noted that Texas is "surrounded by gaming." Opposition immediately arose from conservative and Christian groups and a racetrack group pushing more narrowly for slot machines at tracks. Backers of Joint Resolution 31 and Senate Bill 1084, the broad gambling legislation, said their proposal would bring in at least $3 billion a year in new state and local revenue.
Up to 12 casinos would be allowed statewide, including two in Dallas county.
Odds and ends
"The US Supreme Court has delivered a crippling setback yesterday to the Mashpee Wampanoag in Massachusetts and many other tribes across the nation that are seeking to build casinos, ruling that the federal government cannot place land into trust for newly recognized tribes." ... The decision has ramifications across the country, including in Michigan ... Boyd Gaming may try to buy Station Casinos ... Crown is still rolling "the Pennsylvania dice" (see the earlier blurb about The Meadows) ... Casino foes in Philadelphia just won't give up the ghost:
"Several large church groups stepped up their opposition [last week] to a slots parlor in Center City, joining an anti-casino protest outside the Philadelphia offices of Gov. Rendell. About 50 people, including the head of the influential Black Clergy of Philadelphia, chanted "No slots" and held up anti-casino signs in English and Chinese at the Bellevue building at Broad and Walnut Streets, which is also the headquarters of the real estate trust that owns the Gallery mall."
Feb 16 2009
America is the land of second chances, and I'm not saying a guy with a 20-year-old cocaine conviction doesn't have as much of a right as the next guy to run a casino, but at some point you have to wonder if the Pennsylvania Gaming Control Board is intentionally seeking out operators with criminal records:
"At a Philadelphia City Hall news conference on Sept. 10, Michael J. Thomas stood shoulder-to-shoulder with Gov. Rendell and Mayor Nutter for a surprising announcement: Facing delays and angry neighbors, the Foxwoods casino project would be moved from the Delaware River in South Philadelphia to the Gallery mall in Center City ... Since then, Philadelphia has gotten to know another side of the 40-year-old Thomas: the ex-convict. Last month, the Pennsylvania Gaming Control Board confirmed that Thomas had been licensed to run a casino even though he had been convicted of drug dealing at age 20. The board defended its decision on grounds that his record in Rhode Island, where he was arrested, had been expunged. Under Pennsylvania law, such information cannot be considered in the licensing process, the board said."
Remember that Louis DeNaples, he of the Mt. Airy casino and resort, has a decades-old criminal record as well, and was indicted on perjury charges last year.
... Speaking of Mt. Airy, how does that casino even turn a profit, given its payout rate?:
"Mount Airy has averaged 92.1 percent since it opened. It's among the highest payout rates in the state. Why so high? The casino has said it uses the payout rate as a marketing tool to attract visitors and build loyalty. And in a competitive environment, the casino targeted customers traditionally drawn to Atlantic City, which generally pays a lower rate. So, before the money even leaves the machines, 92 percent is paid back to the bettors, leaving only 8 percent. Where does that go? More than half of it goes to the state. Between 55 percent and 60 percent, depending on the local share, a complicated formula developed by lawmakers to reward larger host counties at greater rates."
... Enough about casino operators with criminal records. Just think of all the bar owners in the state who have criminal records -- and just think how they'd all become mini-casino owners if the governor's plan to legalize (and then tax) video slots at bars and private clubs.
"Despite the protests of Pennsylvania House Republicans and pro-family organizations, we just don't understand how legalizing video poker and using its revenues to send students to college represents a threat to the commonwealth. Gov. Ed Rendell's proposal would provide more than 175,000 students with grants of up to $7,600 to attend one of the state system schools or state community colleges, according to state officials ... there are an estimated 17,000 illegally run video poker machines in use throughout the state's bars and clubs -- a ready-made revenue source that's just waiting to be tapped for a good cause. The way we see it, if gambling revenues from the Pennsylvania Lottery can help senior citizens, then gambling revenues from legalized video poker can help kids get a college education."
All good points. But have you ever been to South Dakota? Overnight, every bar, 7-11 and liquor store in the state was suddenly advertising itself as a "casino" because it has paying slot machines in the back. It's tacky and grotesque. Our advice to the guv'nah is this -- if this bill goes through, how about some language forbidding bars from advertising their slot machines on the outsides of the building?
Otherwise you're stuck with South Dakota's experience:
Convenience gambling -- a cheerful phrase for an alarming idea -- is premised on the notion that once gambling is legal, it should be allowed just about everywhere: convenience stores, bars, restaurants, bowling alleys, gas stations. Eight states permit convenience gambling now. In several, including South Dakota and Oregon, convenience gambling takes the form of a so-called "video lottery." To those who haven't played it, "video lottery" sounds like some kind of high-tech Powerball -- a lottery played with a computer instead of a ticket. In fact, "video lottery" bears no relationship at all to a lottery. It is simply a euphemism for state-run video poker machines.
These Western states introduced video gambling in the late '80s and early '90s for one reason: It is a stupendously effective way of parting citizens from their money. According to the North American Association of State and Provincial Lotteries, the average American in a state with a lottery spends about $150 per year on the lottery. But in the five states with video lotteries (Delaware, West Virginia, and Rhode Island, along with South Dakota and Oregon), average per capita lottery spending is about $600 per year. In South Dakota, where lottery play is the highest in the country, the average person spends an amazing $750 per year on the state lottery.
This generates monster revenues for both state and retailer. South Dakota's government splits the revenue 50-50 with the bars and restaurants. The state clears $90 million a year, which it is using to cut property taxes 20 percent. (This money represents about 5 percent of the total state budget.)
Video gambling delivers tax revenues, but it exacts huge social costs. Video poker is known as "video crack." Its rate of play is dizzyingly fast -- I once played more than 400 games of video poker in an hour--and the flashing lights and flickering screens send players into trancelike reveries. Unlike other kinds of gambling, video poker discourages social interaction. "The machines suck people into the screen," says Professor William Thompson, a gambling expert at the University of Nevada, Las Vegas. "You don't talk or socialize. You don't trade stories. It is different from blackjack or even handle slots. These are the most addictive of any gambling instrument we have today."
So we have that to look forward to. On the plus side, all those Moose lodges and McKeesport convenience stores won't have to worry about the staties barging in and sledge-hammering their slot machines every couple of years. And The Trib notes that New York and Oregon reap hundreds of millions from legalized bar gambling each year.
From the home front
If you're looking for a job at the Rivers Casino on the North Shore, get your resume handy:
"The major recruiting effort for Pittsburgh's Rivers Casino begins in late March with a one-day career fair, where managers in charge of everything from food service to finance will set up booths and talk shop with potential employees. Following that, the company will hold periodic job fairs -- a mall booth with pamphlets, for example, to spread awareness of the new employer. Job postings and applications also are listed at thepittsburghcasino.com."
... The Rivers Casino is handing out contracts:
"Before a single gambler pulls the lever at the Rivers Casino in August, dozens of Pittsburgh businesses will have already taken home their share of the pot, supplying the new structure with everything from custom wood paneling to a roof over its head. Dozens of license applications pending before the Pennsylvania Gaming Control Board tell a story of local economic opportunity."
... One casino mag predicts struggling Atlantic City will lose millions more this year, once Pittsburgh's casino comes online.
... Pittsburgh's City Paper muses on whether poker is a game of skill or chance, and the potential impact of recent court rulings:
"On Jan. 14, Columbia County Common Pleas Court Judge Thomas James ruled that poker was a game of skill and dismissed criminal charges against two defendants accused of running an illegal poker game out of their garage. 'This court finds that Texas Hold 'Em poker is a game where skill predominates over chance,' James wrote in his opinion. 'Thus, it is not 'unlawful gambling' under the Pennsylvania Crimes Code.' But that doesn't settle the issue. On Feb. 2, Common Pleas Court Judge Richard McCormick Jr., in Greensburg, ruled that poker was illegal gambling and thus subject to the state's crime codes. The defendant in that case, Larry Burns, was arrested for running tournaments in Westmoreland County fire halls. His lawyer argued that the state law regulating gambling was 'unconstitutionally vague.'"
The state regulation says unlawful gambling amounts to "the payment of a consideration or fee ... for the chance to win a prize ... the winner of which is determined by chance."
I've been in enough poker games to know that I'm not losing my shirt by chance; I'm losing my shirt because the other players are better than me.
Odds and ends
Nevada's casinos (Vegas and Reno) saw a 19 percent revenue drop from December 2007 to December 2008 ... The Trop in Atlantic City wants to go from high-end to low-budget ... Minnesota's casinos are floundering ... They're still fighting over the casinos in Philadelphia ... An update on the push for gambling in Texas ... And an update on the push for expanded gaming in Kentucky.
You know how the iPhone claims to have an app for just about everything? Well, it was only a matter of time:
"Nevada gambling regulators have warned casinos in the state about a card-counting program that works on Apple Inc.'s iPhone and iPod Touch that illegally helps players beat the house in blackjack. Card counting itself is not illegal under Nevada gambling laws, but it is considered a felony to use devices to help count cards. In blackjack, certain card counting techniques help players determine when they are likely to win a hand and adjust their bets accordingly."
Feb 05 2009
It's been kinda slow around here at CJ central ever since Don Barden's Majestic Star team gave up control of Pittsburgh's casino to Neil Bluhm's MegaVentechGlobex Corp., but this week some actual news-type stuff happened, and darned if it wasn't buried beneath the confetti of Super Bowl XLIII (pre-order your commemorative book today!).
In case you missed it, the governor wants to legalize video poker machines in bars and social clubs across Pennsylvania:
"Gov. Ed Rendell has devised a startling and controversial plan to generate $550 million a year for tuition assistance for 175,000 Pennsylvania college students -- by legalizing thousands of video poker machines in bars, taverns, restaurants and private clubs across the state. Students would be eligible if their families earn up to $100,000 a year and if they attend one of Pennsylvania's 14 community colleges or the 14 universities in the State System of Higher Education."
It's a reversal of policy that taverns have been seeking for decades. Walk into any neighborhood bar in Pittsburgh, and it will have a poker machine or two -- or several dozen, hidden in a back room. They're supposed to be for recreation only, but they pay out to bar regulars.
Casinos won't be happy about this, as they thought they'd cornered the slot machine market in Pennsylvania. Morals police obviously aren't happy about it either:
"House Republicans reacted negatively to the video poker plan. Rep. Douglas Reichley, R-Lehigh, said it's true that some bars now have illegal gambling devices, but added, 'Prostitution is illegal too, so what's next? Legalizing prostitution?'"
Not to overreact or anything.
"Rep. Mike Vereb, R-Montgomery, called it 'barbaric to legalize gaming in neighborhoods. This is a major expansion of gambling, no matter how they spin it.'"
I'd maybe agree with that, if I didn't already know of at least 30 places where I can feed a video poker machine already.
... The PeeGee editorial board, as it often does, urges caution:
"Pennsylvanians have good reason to deal themselves out of Gov. Ed Rendell's sudden bid to legalize video poker in bars, restaurants and private clubs. Let us count the ways. First, his spokesman said as recently as six weeks ago that the administration 'continues to believe it is too soon to think about expanded gaming until all the currently licensed [casino] venues are up and running and there is an opportunity to assess their impact.' [Second], investors who plunked down $50 million for a license to operate one of the 14 casinos may feel double-crossed. For one thing, seven casinos, like Pittsburgh's, have yet to open and already the governor is eager to permit up to five video poker machines at 18,000 establishments with state liquor licenses for gambling that his administration says could yield $550 million a year."
... This barbaric expansion of neighborhood gaming seems to be going over pretty well in the neighborhood of North Strabane:
"While many local municipalities postpone capital improvements to balance increasingly tight budgets, North Strabane, the host community to The Meadows, has money to spend. [The] Meadows pays 55 percent of this amount in taxes, with 2 percent going to each Washington County and North Strabane. By law, North Strabane cannot receive more than 50 percent of its budget from these revenues. In 2008, North Strabane received $2.219 million for being the host municipality to The Meadows. This amount is deposited in a capital reserve fund and represents roughly 32 percent of the township's budget."
Dispatches from the south
Now it's about to get interesting:
"Bids were accepted [this week] for potential operators for the five newly-created Maryland gambling sites, and Penn National Gaming is thought to be among the six companies offering bids ... Maryland's auction of the five slot licenses drew less attention than hoped, according to a report by the Washington Post. This was blamed not only on the recession and credit difficulties, but also an extremely low thirty-three percent of revenues earmarked for the operators."
That's even less than Pennsylvania.
Odds and ends
Penn National scraps its Atlantic City plans ... Trump Casinos wants, and gets, another extension so it can pay its debt service ... Stop me if you've heard this one: smoking foes in Indiana want to ban cigarettes in casinos; Indiana casinos say this would cripple their business ... The Bay State ponders an entrance into the casino industry, while farther down the Atlantic Coast, Rhode Island may have to bail out its own casino ... Atlantic City is shedding jobs like a dog sheds its coat ... Vegas takes in $80 million-plus on the Steelers-Cardinals tilt, keeping about 10 percent of the handle.