Gambling industry's bets on slots law paid off

HARRISBURG, Pa. - A small army of lobbyists representing at least 34 businesses and individuals was paid $575,000 over a three-month period to help shape the final version of Pennsylvania's new slot machine law, state Senate records show. The lobbying leading up to the passage of the bill July 4 produced a number of favorable changes for those seeking to influence the negotiations, in particular the horse industry. The law establishes a relatively high minimum number of racing days for new tracks, allows the owner of Pocono Downs to benefit from slots at two tracks, and provides millions of dollars for capital improvements on top of the tracks' share of the gambling proceeds. Lobbyist fingerprints are all over the new law, said Thomas W. King III, a lawyer for a Pittsburgh developer who is suing the governor and legislative leaders, alleging they improperly excluded him from competing for a racetrack license. "I know what I read, we know what we've heard and we know what we saw," King said. "We know what the legislation looked like at the end of the day." The state expects slots, once fully up and running, to generate about $3 billion a year, with 33 percent being used to reduce local property taxes, 9 percent earmarked for the horse industry and another 9 percent for public projects and the host municipalities. The remainder of the proceeds will go to the tracks and casinos. The General Assembly legalized as many as 61,000 slot machines at seven racetracks, five stand-alone parlors and two resorts through a 145-page bill that bypassed many of the conventional processes by which legislation is introduced, amended and debated. "It's probably best to say that it's past. This is one of those classic 'sausage' situations," said lobbyist and former Lt. Gov. Mark Singel, who represented Penn National Gaming. Penn National owns a thoroughbred track in Grantville and Pocono Downs, a harness-racing facility in Wilkes-Barre, and slots are expected to be approved at both locations. Penn National successfully beat back a provision that would have forced it to divest itself completely of Pocono Downs, preserving the right for gambling licensees to keep a one-third interest in another license - which for Penn National is potentially worth millions. The state's four existing racetracks also helped persuade legislators to require all tracks with slots to race at least 150 days each year, keeping new tracks at Presque Isle in Erie, Chester Downs and an as-yet unlicensed harness track from concentrating racing purses - the industry's lifeblood - among fewer racing days. Bigger purses attract better horses and more betting, so a track that has to spread its slots revenue over 200 days of horse racing would have been at a competitive advantage against a track with just 100 racing days. More frequent racing also means a better livelihood for trainers, jockeys and others who will operate there. "At the end of the day, it looks like the tracks were the winners in this thing," King said. In addition to tripling purses, the bill diverted millions to long overdue property improvements at the tracks and guaranteed slots license-holders a refund of their $50 million fee if legislators tinker with the law's provisions in the future. No one in the horse industry seems to be complaining. "Would we have liked to have gotten more for the horsemen in terms of purse share? Without a doubt. But I think we got the best deal in the country," said Gary W. Babin, a lobbyist for Philadelphia Park's horsemen. During the three months ended June 30, casinos and slot-machine manufacturers also paid thousands for lobbyists to influence or at least monitor the Pennsylvania debate. Among them were Trump Hotels and Casinos, Boyd Gaming Corp., International Game Technology, WMS Gaming Inc., Harrah's Entertainment, Ameristar Casinos, Oberthur Gaming Technologies, Alliance Bally Gaming and Multi-Media Games. Spokesmen for several of the companies said their main interest was in seeing gambling expanded - and monitoring the legislation with an eye to how they might become a part of Pennsylvania's new slots industry. The three-month figure of $575,000 represents only money spent lobbying the Senate. Neither the House of Representatives nor the executive branch require lobbyists to register or report expenditures. A provision in the law that lets felons work in the gambling industry if their crime is more than 15 years old has aroused considerable suspicion, but a Democratic Senate staff member who worked on the language said it was not drafted with any particular felon in mind. The idea was to further strengthen the law's requirement that licensees prove their good character without limiting employment opportunities for some of the lower-paying jobs at casinos, said Christopher Craig, chief counsel to Philadelphia Sen. Vincent J. Fumo. Craig said Fumo pushed hard for the creation of licensed distributorships - a new class of business from which casinos must purchase slot machines, rather than directly from manufacturers. Craig said the provision is meant to create jobs and business opportunity in the state. The distributorships were an obscure provision of the law that have the potential to make millions of dollars for those savvy enough to obtain a license. Some have already begun laying the groundwork. Charles Brooke, a lobbyist for IGT, a manufacturer of gambling machines, said about 25 prospective distributors have already contacted IGT in hopes of becoming the company's middleman in Pennsylvania. "We're just throwing them in the file. The rules for these people haven't been developed yet, none of them are licensed yet. We're going to wait," Brooke said. The slots legislation was a major boon to the political fund raising of Rendell and state lawmakers. An analysis by the Philadelphia Daily News in March 2003 showed gambling interests had pumped nearly $2 million into legislative campaign war chests in the previous three years - close to half going to Rendell. Political contributions from casinos, racetracks and related entities have continued to pour in over the past year, although a complete picture of donations made in the final days of the slots-bill debate won't emerge until the next round of campaign-finance reports is released later this month. But the money spigot has closed - the slots bill barred future political donations by gambling interests.