To the editor:
I am writing to respond to the recent post: Lebanon County veterans deserve our support – not a devastating tax. Over the next several months we expect to hear histrionics about how taxing skill games will devastate local businesses. Nothing could be further from the truth. Sensible regulation and taxation will benefit clubs and non-profits with less competition, better quality of product, and a safer, stable operating environment.
While the opinion piece claims that the tax and regulation of skill games under SB 756 will be “devastating” it fails to recognize some significant economic benefits that will accrue to the VFWs and American Legion posts, which will likely result in them making MORE money after taxes, not LESS money.
SB 756 significantly limits the number of locations that can have skill games, while providing a tax and regulatory structure that is still significantly less than the casinos currently pay (35% versus 54% tax on slot machine revenues). The idea that paying taxes on gambling is devastating has been proven false again and again as casinos and VGTs at truck stops operate successfully at much higher tax levels than are proposed in SB 756.
More importantly, right now, VFWs and American Legion posts are competing against thousands of illegal slot machines that are operating under the guise of skill games. In fact, Pennsylvania Attorney General Dave Sunday recently seized over 400 illegal games and there are thousands more like them across the Commonwealth. These illegal machines are everywhere.
By some counts there are upwards of 100,000 games operating without any tax or regulation in the Commonwealth and mini-casinos have sprung up in communities across our state. These games compete with the clubs and non-profits for limited leisure spending. This bill would end those mini-casinos as well as remove games from many of the locations where children can easily access them.
By reducing the number of games available from 100,000 to 35,000 (a 65% decline in the number of games) those operators who follow state law will be operating legal and licensed machines. It is basic supply and demand that we all learned in economics.
The VFWs and American Legion posts should see a significant increase in the demand for their legal and regulated games, which will drive the win per machine higher. Even after considering a 35-40% tax rate on revenues (the casinos currently pay 54%), the increase in demand and win per machine increases should more than offset the taxes.
Pennsylvania currently has the largest number of untaxed and unregulated gaming machines in operation of any state in the United States. They are magnets for crime and money laundering and under-age and compulsive gambling. It is time for the Commonwealth to enact sensible regulation, taxation, and limits on these games, similar to every other state in which they operate. Let’s not let histrionics get in the way of sensible regulation, taxation, and basic economics.
Pete Shelly is a Harrisburg based consultant to Parx Casino
