The latest push to expand gambling in Pennsylvania, explained

Photo by Daria Sannikova from Pexels via Creative Commons.

Republican leaders in Pennsylvania’s state Senate have spent much of the last week in Harrisburg trying to drum up support for a bill that would bring gambling video games to bars and taverns across the state.

Proponents, including Senate President Pro Tempore Joe Scarnati, R-Jefferson, and Senate Majority Leader Jake Corman, R-Centre, said the gambling expansion would add $250 million annually to the state’s general fund, which has been badly battered by COVID-related job losses and business closures. 

But they’ve had a hard time winning over skeptics from both parties who are either staunchly opposed to gambling, or who say the deal is a giveaway to Republican campaign donors.

As a result, the proposal didn’t see a vote before lawmakers returned to their districts on Wednesday. With legislators set to return to Harrisburg on Monday for just two more days of lawmaking before adjourning for a two-month summer recess, the push to expand gaming terminals to bars and clubs may carry into the fall. 

Here’s what you need to know.

What’s on the table?

Draft legislation began circulating this week that allows bars, adult entertainment venues, and clubs serving clients over the age of 21 to install video gaming terminals – coin-operated gambling devices more commonly known as VGTs . The proceeds from the terminals would be subject to a state tax and also generate revenue for the businesses that install them. 

Video gaming terminals have been legal in Pennsylvania’s truck stops since 2017, when lawmakers passed a gambling expansion bill that also included new licenses for casinos and legalized internet gambling. 

But you may have noticed gaming terminals also popping up in convenience stores, gas stations and eateries across the state. Lawmakers say those devices — often billed as “games of skill” — are technically gambling devices that are operating illegally. Manufacturers, meanwhile, point to court decisions that have said they’re allowed to operate outside the purview of the Pennsylvania Gaming Control Board. 

However, those games aren’t taxed by the state, and critics say their manufacturers don’t do enough to enforce gambling laws or calibrate their odds to avoid gouging consumers.  

Lawmakers such as Corman, who authored the draft proposal, say it would allow lawmakers to sweep up the unregulated devices while also creating new revenue for the state.

Why now?

Lawmakers first started whispering about a gaming expansion in May, two months into a statewide business shutdown as they were staring down a $2.6 billion revenue hole.

One of the hardest-hit sectors of the economy has been the food and hospitality industries. Bars and restaurants were restricted to take-out service for much of Pennsylvania’s shutdown, and only operate at 50 percent capacity in the “green phase” of Gov. Tom Wolf’s reopening plan. 

Gambling industry groups courted lawmakers with a fix: legalize video gaming terminals in bars, adult entertainment venues, and clubs to drive the new revenue source to Pennsylvania’s bruised general fund, as well as a new profit stream for hurting businesses.

“Financially speaking, the expansion of [VGTs] … will really help restaurant and bar owners and vendors … when we need the revenue to survive,” Rich Teitelbaum, the president of the Pennsylvania Video Gaming Association, told the Capital-Star in May.

Corman and Scarnati also said the legislation would allow them to eventually provide property tax relief to seniors. 

But it would also deepen Pennsylvania’s reliance on so-called sin taxes – those levied on alcohol, tobacco, marijuana, and gambling – to balance its budget. 

Even before the state last expanded gambling in 2017, it consistently ranked among the top 10 states for its share of revenue that came from sin taxes. 

An analysis by the Pew Research Trusts found that gambling revenue nationwide has been up in recent years but can be unreliable in the long-term. While consumers typically flock to new gambling attractions when they’re first legalized, revenue can dip as the novelty wears off, Pew says. That means that states find themselves eyeing new gambling expansions to maintain robust revenues.

What’s the debate?

Gaming expansions are almost always controversial. The industry is crowded – with casinos and the state lottery being the biggest players in Pennsylvania – and has deep pockets. That means there’s no shortage of political and ideological concerns competing in proposals like the one Republican leaders are spearheading now.

First, some lawmakers flat out oppose gambling expansions. They include Sen. Scott Martin, R-Lancaster, who confirmed to PennLive earlier this week that he would vote against the VGT bill, and who previously sponsored legislation that would give local municipalities the chance to opt out of gambling expansions if they don’t want the industry to have a larger presence in their communities. 

Other lawmakers are loyal to the state’s casinos, which were forced to close their doors for two months and are operating at half-capacity now that the state is reopening. They say an expansion of VGT terminals would create new competition for the ailing gambling halls and for the state lottery system, which drives proceeds to programs for seniors.  

“We shouldn’t be pushing this thing at all as long as our casinos aren’t up and running 100 percent,” Sen. Robert M. ‘Tommy’ Tomlinson, R-Bucks, told PennLive. “We are thumbing our nose at their economic distress.”

As a spokeswoman for Corman told the Capital-Star this week, any gambling bill needs Democratic votes. But the Republican majority in the Senate faced an uphill battle with Democratic lawmakers since this legislation emerged in a last-minute push that some said was shrouded in secretive dealmaking. 

Senate rules call for bills to advance through a committee and be considered three separate times on the floor before they can exit the chamber with an affirmative vote. But the draft language reviewed by the Capital-Star would have circumvented the usual timetable, since it would have been amended into another bill that had already seen two votes in the Senate. 

That means the proposal did not get a comprehensive analysis by the Senate Appropriations Committee, the panel that typically prepares a fiscal analysis for every piece of legislation that will cost the state money or create new revenue.

Plus, as the investigative news site Spotlight PA reported last week, the expansion also appeared to be a boon to gaming industry executives. Campaign finance records show they’ve donated $42,000 to Scarnati’s campaign committee this year, and Spotlight reported that industry lobbyists also appeared to be drafting legislation for the expansion.

Lawmakers such as Sen. Lindsey Williams, D-Allegheny, said the short timeframe they had to review the legislation, as well as the perception that leaders were fast-tracking it to please campaign donors, prevented them from supporting it.