Using Gaming Expansion To Fund PA Budget Was Not Intent Of Legislation
Online Poker Report

Pennsylvania Rep. John Payne: Bill Legalizing Online Gambling Is Alive And Well

PA gambling spring
The push in Pennsylvania for online gambling expansion and other gaming reforms that began back in February were never intended to fund the state’s 2016 budget. That’s according to the man who led some 25 hearings on a variety of gaming reforms over the course of 2015, House Gaming Oversight Committee Chairman, John Payne.

In a telephone interview with Online Poker Report on Wednesday, Payne made it clear that any revenue from proposed gaming reforms was always meant to fix the structural deficit in the state’s pension.

Since the legislature began looking at gaming reforms in February, “I was never given instructions by the leadership to hurry up and get this done so we would have it for June’s budget,” Payne stated. “We always planned on using any revenue from gaming for the structural deficit in our pension; that’s still the plan.”

How gaming became entangled in the state budget

According to Payne, the plan got a little off track in the last month when some members of his caucus looked at using the revenue from the gaming reform package (HB 649), earmarked for the pension, to end the state’s budget stalemate.

“[Gaming] was like plan 1,000,” for the budget, Payne quipped.

The problem, as Payne noted, is that if gaming was used as funding mechanism for the budget, the state would have to find a new way to fix the structural deficit in the pension next spring. This would create a classic robbing Peter to pay Paul scenario in Payne’s view.

“I know we’re desperate here,” Payne said, recounting a conversation with members of his caucus, “but if we do that then you must be voting next spring for a tax increase for the structural deficit on the pension plan.”

Payne said the plan to appropriate gaming revenue was quickly rejected.

What happens next?

Online gaming is most likely not going to pass in 2015. However, Payne was adamant in saying that the gaming bill is not dead. “We’re back to the original plan,” Payne said.  And that plan according to Payne is to, “take gaming away from the budget process and put it on the shelf, and use it was originally intended for next spring.”

To highlight that the bill is not dead, Payne noted that it was recently brought up for second consideration on the house floor. “It’s physically alive and well and on the calendar for second consideration, so that literally within two days time we can run the bill,” Payne told OPR.

The path forward for the bill likely includes a bit more tweaking (Payne noted there were already over 100 amendments added to the bill), as different gaming reform proposals are likely to be added and subtracted before spring of 2016.

What will the 2016 version look like?

The proposal with the least amount of resistance appears to be gaming machines at airports. Payne noted that because they will be on the secured side of airports (for ticketed passengers) these machines will not compete with the casinos. According to Payne, the airports would use the revenue from these machines to lower gate costs to attract low-cost carriers.

Another proposal with widespread support is online gambling. Payne also told OPR that 11 of the 12 casinos in the state support online gambling expansion, “We’ve had one out of the twelve casinos push back against online,” Payne laughingly noted. That singular voice of opposition is of course the Sheldon Adelson-owned Sands Bethlehem Casino.

With almost across-the-board support, and considering the potential revenue it would generate, it’s hard to envision a gaming reform package sans online gambling being considered next spring.

Some other proposals are a bit more controversial.

One of the more controversial proposals is adding gaming terminals at off-track-betting parlors, since only Category 1 casinos (racinos) will benefit, and even though the legislature extended the required distance from land-based casinos from 35 to 50 miles, Payne still doesn’t expect the Category 2 and Category 3 casinos will support the amendment.

Payne also noted that there is a “clear issue” among the state’s casinos over the recent amendment that would allow VGT’s in virtually every tavern, restaurant and truck stop.

And then there is the issue of daily fantasy sports, which Payne said the legislature is trying to move along as quickly as it can. That being said, DFS will have to wait until a three-month study by the Pennsylvania Gaming Control Board is completed.

“They’ll come back with their recommendations and how we can regulate it and make it part of our gaming oversight,” Payne said. “We’re really trying to push that and have it as part of the gaming package” in the spring.

Pennsylvania Rep. John Payne: Bill Legalizing Online Gambling Is Alive And Well
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Steve Ruddock
- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.