Thursday, January 11, 2007

Gambling board is a losing proposition

The Pennsylvania Gaming Control Board has run out of money. Again.

This is the same board that ran out of money in 2005, the same board that ran out of money in 2006. The very same board that had to borrow money on several occasions from other state agencies to keep its doors open. It's 2007 and the board is out of money again.

And these are the people we are entrusting to oversee Pennsylvania's fledgling gambling industry?

Did the gaming board lose the money playing the slots?

The news that the gaming board is broke came in an Associated Press story that moved Thursday. The AP says that the gaming board wants to take 5 percent of slot-machine revenues from existing casinos to stay in business.

The only problem is that the casino owners don't want to pay the 5 percent fee (which is four times higher than what New Jersey casinos pay). And some Legislators, who never liked the idea of gambling in the first place, are siding with the casino owners.

Except for Gov. Ed Rendell, the state's biggest gambling booster, not everyone is sold on the idea of paying for public services through gambling loses at casinos. See for more information.

The last time the gambling issue came before the Pennsylvania Legislature, 85 House members voted to repeal the entire gambling law, first approved in July 2004. Unfortunately, it takes 102 votes for a majority in the House. But 85 votes against the casino industry is not insignificant.

For now, we're stuck with casino gambling in Pennsylvania and a couple casinos have opened their doors, although projected revenues are less than what Rendell predicted. Other licenses were granted in December, so more casinos are on the way.

But that doesn't solve the problem of the gaming bureaucracy set up to regulate the industry. About 200 well-paid employees work for the Pennsylvania Gaming Control Board. The number of gaming board worker will continue to rise as more casinos open, to as many as 350 by 2008. The idea was that the casinos would end up funding the gaming board, but that hasn't worked out so far.

Bills are coming due from the wild spending by the gaming board (including $25 million in spent in 2006 in bonuses and perks for its employees). The gaming board approved a $34 million budget for 2007, a nearly 30 percent increase over what it spent in 2006. Where that money will come from remains a mystery.

The current law says the gaming board can tap into slots revenues to fund casino regulation, but the legislation that legalized slots gambling did not explain how to do it, according to the AP. That's what happens when you pass a 150-page bill in the middle of the night before anyone had a chance to read it. That's the way the Pennsylvania Legislature likes to tackle important business.

The pay raise bill in July 2005 that led to 55 new legislators being elected in 2006 was not the first time the Legislature passed a middle-of-the-night bill. In July 2004, the bill establish legalized gambling in Pennsylvania was passed after midnight with few of the lawmakers in attendance having an opportunity to read it.

Gov. Rendell, more concerned with his re-election and paying back the casino lobbyists who would help fund his 2006 campaign, promptly signed the slots bill, opening the floodgate for 61,000 slots in the state.

As a result, the Legislature has been trying for two years to fix all the loopholes in the gambling bill. Not setting up a source of funding for the gaming board would appear to be a giant loophole. Just like that big hole between the ears of the Legislators who passed the casino bill and the governor who signed it into law.

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