State lawmakers eye gambling expansion

by Ben Waxman

Published Jun. 10, 2010, 8:53 a.m. ET

Lawmakers in Harrisburg are scrambling to deal with a $1.5 billion deficit. The state's ongoing budget woes have elected officials considering various revenue options, including allowing small games of chance in bars across the state.

Today, a bipartisan group of state senators, including Democrats Sean Logan of Monroeville and Jay Costa of Forest Hills, joined the call for permitting taverns to have gambling options such as punch boards and raffle tickets, as ways to raise money for themselves and also to provide revenue for the state and local charities in each tavern's area.

Essentially, this bill would allow bars to compete with casinos for profits generated from gambling. Already, many private clubs host bingo games, poker tournaments, and raffles. If this proposal passes, it would dramatically broaden the type of establishment that can profit from small games of chance.

So, how much money are we talking about?

Sen. Mike Stack, D-Philadelphia, estimated that a 30 percent tax on the revenue raised by small games of chance in the thousands of bars in Pennsylvania could generate at least $100 million for the state. Sen. Ted Erickson, R-Delaware, put the tax estimate even higher, as much as $200 million, which would help shave the deficit.

The bill would also raise the limit for prizes for charities that run these types of games to raise money. Currently, winners can only walk way with $5,000. The legislation would increase that to $20,000. Of course, the non-profits will also have to pay a higher tax rate.

The legislation also calls for a separate 20 percent tax on the revenue from the games, generating at least $80 million for charities around the state, including fire companies, emergency medical units and local recreation programs. Taverns would keep 48 percent and the rest would go for state costs of monitoring the program.

Of course, in addition to the potential revenues, some obvious questions arise here. First, does Pennsylvania really know enough about the impact of gambling to consider such a radical expansion? After all, casinos are very new to the state and several aren't even up and running yet.

Also, does the state really have the resources to monitor every bar in the state for cheating? Some establishments might be tempted to rig the games to get higher profits or help favored bar regulars. It would take a lot of monitoring to make sure that doesn't happen in the thousands of taverns that would be eligible to host these games.

The state desperately needs money. Many lawmakers are unwilling to consider tax increases, which is why officials are coming up with other ways to raise revenue. And maybe some of these will be good ideas -- but legislation that could have a profound impact on Pennsylvania communities shouldn't be pushed through in a hurry.