Gambling news from http://www.post-gazette.com/
HARRISBURG -- Now that slots casinos are on the verge of being built at state racetracks, some track owners are saying they don't like the rules of the game and want to change them.
Officials at The Meadows in Washington County; Pocono Downs, near Wilkes-Barre; and a new racetrack being built in Erie are objecting to the amount of taxes that tracks must pay as outlined in Act 71, the July 2004 law legalizing slot casinos in Pennsylvania.
The tracks are threatening to reduce the size or scope of their casino projects unless they get some tax relief, either from the Legislature or the courts.
Act 71 requires the tracks to pay a 4 percent local share of their gross terminal revenue -- the amount remaining after winners are paid -- to their local governments. Half, or 2 percent, goes to the county where the track is.
What the tracks are complaining about is the other 2 percent, which goes to the municipality where the track sits. The law says the towns where the tracks are will get "2 percent of the gross terminal revenue or $10 million annually, whichever is greater."
It's those last three words that are causing the problem for The Meadows, Pocono Downs and the new Erie track, to be called Presque Isle Downs.
All three are in areas of limited population. The Meadows is in North Strabane; Pocono Downs is in Plains, Luzerne County; and the Erie track is in Summit, Erie County.
A typical gross terminal revenue for a track in these smaller areas of the state would be about $100 million a year, said Mike Jeannot, vice president of MEC Entertainment Corp., of Toronto, the owner of The Meadows.
So 2 percent of that total would be $2 million a year. But the law requires the tracks to cough up "the greater" of 2 percent or $10 million a year, which obviously would be $10 million.
Racetrack owners want to limit the amount going to the host town to a flat 2 percent, as the amount going to the host counties will be.
With a 34 percent tax on the track's gambling revenue earmarked for state coffers, 12 percent going to horse owners, and 5 percent going into a special state-run economic development fund, track owners say they're already committed to paying enough to government agencies.
The track owners say that, if they have to give so much of their revenue to the state, the horsemen and the host counties and towns, it will impair their ability to create first-class tourist destinations -- plush casinos with hotels, restaurants, shops, spas and other amenities.
"It's causing us to re-evaluate our plans," Mr. Jeannot said.
"We want to make our Erie project as much of a tourist destination as possible," said John Brabender, a spokesman for track/casino developer Ted Arneault.
"If there is less money available" because of the tax rate, he added, "it will certainly impact the type of facility that can ultimately be built."
But some officials say the language of Act 71 and the tax load on the track owners shouldn't be a surprise, because the law has been in place for two years.
The state Department of Revenue issued regulations this month, saying it would implement the tax structure outlined in Act 71.
"The regulations say a racetrack must pay 2 percent [of gross terminal revenue] or $10 million, whichever is greater, to the host municipality," said department spokeswoman Stephanie Weyant. "That's what Act 71 says. We believe our regulations comply with the Legislature's intent. If the Legislature wants to change Act 71, they can do it."
But that doesn't seem likely at this point. Some influential senators with racetracks in or near their districts -- Jane Earll, R-Erie; Robert Tomlinson, R-Bucks; and Vincent Fumo, D-Philadelphia -- support the $10 million requirement on tracks.
"We think the Revenue Department's interpretation of the slots law is correct," Fumo aide Gary Tuma said.
The law authorizes 14 casinos. Up to seven licenses have been reserved for racetracks, five for nontrack casinos and two for resort hotels.
Mr. Tuma said towns would need considerable funds to pay for expenses caused by the casinos, such as police and other employees, better roads, more traffic signals and other infrastructure improvements.
Scott Bair, research director for the Pennsylvania Economy League, who followed the adoption of the slots law closely two years ago, also supported the Revenue Department's regulations.
"The only way to change the $10 million requirement is to change the law," he said. "It's not as if this is something new that nobody told them about."
So why are the tracks objecting now, two years after the slots law was passed?
Two years ago, when the gambling act was adopted, "Some people felt different parts of the act would be modified" at some point, Mr. Brabender said.
That hasn't happened, but there is a multipage bill of amendments to Act 71 that could be acted on in the fall.
The tracks' objections could be coming now because the Pennsylvania Gaming Control Board is getting close to issuing the racetrack slots licenses. It could happen by late September.
There are four tracks in the state, with a fifth one, in Chester, south of Philadelphia, due to open Sept. 10. Erie is the sixth track, due to open next year.
Eventually, there is to be a seventh track, but no racing license has been issued to either applicant, one from Lawrence County and one from Beaver County.
Some racetracks, such as Philadelphia Park in Bucks County, Penn National Race Course near Harrisburg and the new Chester track, haven't objected to the tax rate mandated by Act 71.
Meadows officials are concerned because the 43-year-old track is due to be sold by the end of July. MEC is selling it to Millennium Gaming, of Las Vegas, which had planned first to build a temporary casino by early next year and later replace it with a permanent casino. Plans recently released showed plush structures for both, but those plans now could be in doubt.
The Mohegan Sun, a Connecticut-based group, bought Pocono Downs last year for $280 million from Penn National Gaming. But Mohegan officials say the sale still could be canceled if the tax dispute isn't settled by the time the slots licenses are issued in late September.
Robert Soper, Mohegan Sun president, said he continued to believe that Act 71 limits the tax burden on tracks to 2 percent to the host county and no more than 2 percent to the host town.
If the Revenue Department and the Legislature continue to disagree, he said, "We aren't sure what we will do, but we are looking at alternatives."
As of now, he said, "We are not moving forward with further development of our project," meaning plans for a casino are on hold.
As for the Erie project, West Virginia-based MTR Gaming has spent $40 million. While the racetrack is due to open next year, the timetable for opening the slots casino isn't known.
"There is no doubt [the tax burden] will affect the scope of the project," Mr. Brabender said.
Mr. Tuma, Sen. Fumo's aide, said the tracks shouldn't complain. Under Act 71, up to seven racetracks are "virtually guaranteed" a slots license, he said, as long as something negative, such as a connection to organized crime or financial problems, isn't uncovered by a background investigation.
This situation contrasts sharply with the licenses for five stand-alone, or nontrack casinos.
There is huge competition for those licenses, Mr. Tuma said, with three serious bidders battling for one license in Pittsburgh, five bidders fighting for two licenses in Philadelphia and several other groups fighting for the two remaining licenses.
The tracks still will make considerable profits from their slots licenses, Mr. Tuma said.
|
|
World Casino Directory 
Gambling Forums 
