Casino gamblers may be eager for table games, but one group that has benefited from Pennsylvania’s slot machines fears their gravy train will shrivel if blackjack and roulette catch the eye of slot players.
The Pennsylvania Equine Coalition, a group that claims to represent the state’s horse racing industry, argues that introducing table games will reduce slot play by 8 to 13 percent. If they’re right, what’s at stake is a good chunk of the tax on slot revenues that is directed to supporting horse racing in Pennsylvania. In July alone that amounted to more than $21 million, so real money is in play. Current proposals would set the overall tax rate on table games at less than half of the 55 percent collected on slots and would not direct any of the money to equine interests.
But is the coalition’s position sound? Its contention is based partly on a study of one West Virginia racino where table games were installed last year. Mohegan Sun at Pocono Downs chief executive Bobby Soper says that’s an invalid comparison because a competing facility opened in nearby western Pennsylvania during the same time period, and that more likely caused the decline, just as Atlantic City casinos have suffered since the Downs and other gambling halls opened in the eastern part of the state.
At a Wednesday license renewal hearing, Soper acknowledged that about 100 slots could be removed to make room for 70 table games, but that doesn’t mean less money will run through the one-armed bandits.
“You bring more people to the place, you create more of a complete destination,” he said. “We are modeling an increase in slot revenues when we introduce table games.”
According to an analysis paid for by three Pennsylvania casino operators, table games would create 16,000 jobs and boost annual casino revenue by 30 percent to $976 million by 2012.
Obviously one’s perspective on this issue depends on where they sit. Casino operators want the lowest tax rate possible and horse racing advocates don’t want to lose the windfall that has made Pennsylvania one of the premier destinations in the U.S. for owner and trainers. The other player in this tussle – and the most powerful, the state – wants to maximize tax collections.
There’s one other thing to consider. Horse racing has been on the decline for some time and higher purses and better stock have only slowed the descent, not stopped it.
“We have held our own; we’re doing better than most in the industry,” Soper said, but overall revenues from race betting at the Downs and elsewhere have slid.
Given that, the millions being thrown at Pennsylvania’s horse racing industry are only cushioning the fall, and continuing to prop it up with taxpayer money is a loser’s game.
“Ultimately the industry will have to find a way to generate demand for new customers,” Soper acknowledged.
Enough already about weaknesses in the soon-to-end cash for clunkers program. Despite the snags – mostly caused by unexpected popularity – this is one example of government getting more bang for our bucks. Car dealers, carmakers and most everyone associated with this key industry got a boost and car buyers got bargains. Polluting gas guzzlers were removed from the roadways and there’s a good chance some of the people who didn’t clinch a deal by Monday’s expiration have been bitten by the new-car bug and will return to showrooms.
This is as close to a win-win-win as we’re likely to see.