New VGT Bill Sheds Some Light On Senate Leader’s Hopes For Gambling Expansion

It may not come up for debate or vote until November, if at all, but a Senate bill shows potential for legalized VGTs.

The Pennsylvania legislature adjourned for the summer without any public consideration of a controversial gaming expansion through widespread legalization of VGTs, but a bill introduced last week by a key Republican lawmaker makes clear the issue is far from closed.

Senate Majority Leader Jake Corman sponsored SB 1256, which was referred to the Senate Community, Economic and Recreational Development Committee on Thursday.

The measure, which has seven co-sponsors, represents the first public view of a concept discussed behind closed doors in the Senate Republican caucus in June.

Corman’s bill would allow for both video gaming terminals and so-called “skill games” in licensed liquor establishments that include bars, restaurants, clubs, and golf courses. The Pennsylvania Gaming Control Board would apparently oversee their operation, taking on additional duties to its regulation of casinos, PA online casinos, and sports betting. It also regulates truck stop VGTs, which are allowed on a far more limited basis than what SB 1256 contemplates.

Thousands of such machines already operate either illegally or in a gray area of the law, with no state regulation or revenue, at clubs and taverns as well as public businesses such as convenience stores and gas stations. The bill would sanction them at most of those locations, but not places like stores and stations without liquor licenses.

Tax on machines left unstated for now

Conspicuously absent from the 29-page legislation were some important provisions, such as the level of taxation on the machines and how many of them there could be.

That could reflect the level of contentiousness within the Senate GOP over such issues when the subject of further gaming expansion came up before the summer recess. The casino industry, anti-gambling forces, and others raised concerns about the potential impact.

While some notable aspects were left out, the bill does spell out various facets being sought by Corman as one leader of the Republican-controlled legislature:

  • VGTs, which are similar to slot machines, and skill games, which have an element of player involvement beyond the VGTs’ random number generator, would be treated equally.
  • Municipalities would have the ability to prohibit legal operation of the games within their borders, similar to how many hundreds opted out of hosting mini-casinos in the state through resolutions in 2018.
  • A portion of state revenue from the games would be dedicated to programs benefiting senior citizens, including property tax relief, as a way to address concerns that the games could reduce Pennsylvania Lottery revenue assisting older adults.
  • Existing agreements between establishments that host games and the operators providing them would all be declared void, with criminal offenses for those that continue providing unregulated devices. Under the legislation, establishments hosting the machines could receive no more or less than 25% of their revenue.

Any consideration seems unlikely before November

The discussion of further gaming expansion came up somewhat unexpectedly in Harrisburg in June, first reported by the Pennsylvania Spotlight media organization. Its story also focused on political contributions made to Senate President Pro Tempore Joe Scarnati, who heads the GOP caucus with Corman, by a Nevada company in the VGT business that stood to profit.

The June discussions led to no legislation or votes, however, leaving the proposal’s status uncertain.

When asked last month where the VGT proposal stood as the summer recess began, Corman’s spokeswoman, Jennifer Kocher, responded by email, “There’s not really much to say. Talks are continuing on the issues.”

As legalizing thousands of machines could lead to new fee and tax revenue for a state facing a huge COVID-19-related budget hole, it’s possible the issue could be revived as part of budget talks in the fall. Corman’s bill could serve as the starting point for such discussions, but considering the controversial nature of adding more gambling, it might not arise until after the November general election, if at all.

Democratic Gov. Tom Wolf has indicated his opposition, with the state still in the process of implementing the gaming expansion created by 2017 legislation.

The Pennsylvania casino industry is vociferously opposing the Corman proposal, viewing it as unfair to operators who invested hundreds of millions of dollars each in brick-and-mortar properties and slot machines under the belief they wouldn’t have to face such additional competition.

Corman explains his stance in memo

A memo to colleagues from Corman attached to SB 1256 and dated Jan. 8, indicating the VGT plan had been contemplated for many months before it became public in any way — and well before COVID-19 affected the state’s revenue picture — spells out his purpose with the measure.

“As we have experienced in our districts, unauthorized video gaming machines have proliferated into almost every corner of public establishments,” noted the senator from Centre County, whose district is far removed from any of the state’s casinos.

“These devices are currently unregulated. Consequently, there is no oversight to determine if these machines are operating fairly; no prohibition on minors playing the games; and the Commonwealth does not receive the same revenue as it would from other forms of gaming,” the memo continued.

Corman did not address how much potential revenue he believes VGT legalization would or should raise. But the money is just one facet of what he said the legislation could address, considering the current impact of unregulated machines.

“Quite simply, the status quo is not an acceptable policy for the Commonwealth or our communities,” Corman wrote.

Photo provided by Shutterstock


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