Mar 19, 2015 5 min read

The general manager of The Meadows Casino joined nine other casino operators in sending a letter to the state Legislature seeking changes they say would make the gaming industry more competitive in an era of increased competition from contiguous states.

Sean Sullivan is among the signers from the state’s six racinos and four standalone casinos who sent a letter this week to Sen. Kim Ward and Sen. Sean Wiley, the majority chair and minority chair, respectively, of the Senate’s Community Economic and Recreational Development Committee. The letter also went to state Reps. John Payne and Nick Kotick, the majority chair and minority chair, respectively, of the state House Gaming Oversight Committee.

The letter notes when the General Assembly created the Pennsylvania Race Horse Development and Gaming Act in 2004, it “set lofty goals for the economic impact of casinos in the commonwealth, and working together, the commonwealth and gaming industry have met and, in some cases, exceeded those goals.”

Since opening the first casino in 2006, the writers state, the gaming industry directly employed 17,768 people, contributed $9.2 billion in gaming tax revenue and attained the highest amount of gaming tax revenue of any state with legalized gambling, while running second only to Nevada in attaining the highest amount of combined slot and table gaming revenue nationally.

But the writers said despite the impressive statistics, the state’s gaming industry is at significant risk, saying while the commonwealth “was a beneficiary of an unsaturated regional market in 2006, the competitive landscape in 2015 is very different.”

Every state that borders the Keystone State – Delaware, Maryland, New Jersey, New York, Ohio and West Virginia – legalized or expanded gaming since 2006.

“The result of this increased competition is predictable: decreasing gaming tax revenue over the past two years,” the letter states. “Since achieving a record high total of more than $1.4 billion in gaming tax revenue in 2012, gaming tax revenue slipped to $1.38 billion in 2013 and $1.32 billion in 2014.”

The letter notes the decline in gaming revenue can be attributed to a near “full-recapture of Pennsylvania gamers who previously had been traveling to out-of-state casinos, such as Atlantic City; and the loss of out-of-state gaming patrons from neighboring states who previously had been providing significant revenue at Pennsylvania casinos.”

The operators said it is “imperative that the General Assembly only take such actions that will protect the commonwealth’s casinos from further competition and increase the attractiveness of the commonwealth casinos to both in- and out-of-state gaming patrons alike.”

Sullivan said Thursday the letter came about as a result of a meeting of casino operators earlier this year.

“The letter is saying ‘Here’s what we’ve created, so let’s protect and grow (the industry) more,'” he said. “In general, these are the kinds of things we’re talking about, because if you don’t, you could be the next Atlantic City.”

The operators recommend the following steps to achieve a more competitive outcome:

• Reject video gaming terminals. Operators ask the General Assembly to “firmly reject any expansion of casino-like gaming that is not done through existing casinos.” They say adding a supply of casino-like games to the market through noncasino participants will cannibalize existing gaming revenue, while discourage existing casinos from making future capital investments in their facilities. Sullivan said he and the other operators view the addition of VGTs as a “very serious” threat, adding it could cause fewer visitors to the casinos, which in turn would give casinos less incentive to invest money in their operations. He noted The Meadows invested $650 million in its machines and property upgrades since opening the permanent casino in 2009.

• Continue to allow smoking. The letter urges legislators “to reject any legislation prohibiting smoking at casinos, noting the Clean Indoor Air Act already provides a sufficient balance between smoking and nonsmoking areas on the gaming floor.”

• No more resort casinos. Operators also ask the Legislature to reject any effort to accelerate the issuance of a third Category 3 Resort Gaming License and instead consider elimination of the license.

Under a section entitled “Initiatives to maintain and enhance competitiveness,” casino operators seek the following:

• Promotional play: The group says it views promotional play, or free-play offers, as a valuable marketing tool that is key to Pennsylvania’s casinos being competitive with their counterparts in neighboring states.

• Liquor: The writers also seek adjustments to the state’s liquor code, seeking to allow either 24-hour service or extended hours of service. They also seek authorization to provide complimentary drinks to patrons “regardless of whether they are engaged in gaming.”

• New games: The operators seek regulatory changes allowing for immediate installation of new slot machines and electronic table games “so long as the same have already been approved by another state gaming oversight authority or a recognized third-party testing lab.”

• Tax credits: Operators asked the General Assembly to consider the authorization of reinvestment tax credits “and/or other incentives” designed to encourage casino operators to update and invest in their facilities and equipment to retain and attract patrons to Pennsylvania casinos, noting West Virginia already has such a program in place.

• Underage sanctions: Casino operators ask legislators to implement serious sanctions designed to deter underage people from gambling at the state’s casinos. It notes New Jersey imposes fines and suspends for six months driver’s licenses of underage people caught gambling.

The writers also ask that lawmakers enact legislation designed to eliminate redundancy and increase efficiency among the various agencies – Pennsylvania Gaming Control Board, Department of Revenue, state police and attorney general – involved with regulating casinos to reduce “the regulatory cost burden carried by Pennsylvania’s casinos.”