The question of allowing video lottery terminals in Pennsylvania bars was among topics discussed this morning at the sixth annual Pennsylvania Gaming Congress.

Jack Wagner, the state auditor general and a Democratic, noted that the issue of allowing VLTs - essentially, slot machines - in neighborhood bars and taverns had been circulating in the General Assembly for decades.

"There cannot be VLTs in every neighborhood in the commonwealth," he said during a session on the politics and law of gaming in Pennsylvania, part of the two-day congress being held at the Valley Forge Convention Center in King of Prussia.

State Rep. W. Curtis Thomas, a Democratic who was seated next to Wagner, nodded in agreement and said: "Let's just stop. We can't get caught up in this bloated idea, bloated expansion, that gambling is the cure-all."

Thomas, a Democrat from Philadelphia's 181st District, is a key proponent of allowing communities to have a say in where casinos go and in favor of community-benefits agreements that stipulate what funds the community will get in return for hosting a casino.

The idea of VLTs was advocated heavily last year to Rendell as a way to raise funds for public schools, but it was overshadowed by table games, which ultimately were approved. The state continues to try to expand gambling operations to bring in more revenue.

But casino operators see VLTs as competition, the idea being that anyone going to a tavern and having access to gambling won't also go to a casino.

VLTs would be controlled by the state. Delaware has them; New Jersey is pushing for them.

New Jersey, which is facing a budget deficit similar to Pennsylvania's, also is exploring the idea of installing VLTs at the Meadowlands and at other racetracks.

The sixth annual Pennsylvania Gaming Congress is being held outside of Harrisburg for the first time.

State gambling executives, regulators, lawmakers, Wall Street analysts and others are in the second day of the event, which has the theme of "The Challenge Ahead."

The first Pennsylvania Gaming Congress took place in 2005, one year after lawmakers in Harrisburg legalized slot machine gambling. The Pennsylvania Race Horse Development and Gaming Act was signed into law by Gov. Rendell in July 2004.

The state's burgeoning casino industry grossed more than $2 billion in slots revenue last year with nine casinos. The state received a 55 percent cut of the revenue through taxes.

Five more casinos are on the way, including the SugarHouse Casino, planned for the Philadelphia waterfront, which is scheduled for an August opening.

Mayor Nutter, who gave today's luncheon address, said the city of Philadelphia was ready for its two casinos.

"Gaming is coming to Philadelphia," he told a packed room. "The city of Philadelphia is welcoming of the two new casinos."

Nutter joked about how surprised he was to be delivering the luncheon address at the gaming congress, given all of the turmoil over having two casinos in his city. The mayor himself had to be convinced of the merits of hosting two casinos on the waterfront. Neighborhood and civic groups continue to oppose them.

"We've certainly had our challenges in the city," Nutter said. "I'm still slightly stunned that you invited me.

"I was not opposed to casinos. I was concerned about their location. We've worked through all of that. I expect there will be two fully operating casinos."

The SugarHouse Casino is expected to open as early as August, while the investors behind the proposed Foxwoods Casino must still present a design, financing plan, and new operator to the Pennsylvania Gaming Control Board, beginning with a hearing March 3.

Nutter added: "It's about jobs and economic opportunity. There will be hundreds of people working to build them and thousands more once they're open."

Despite the rosy predictions by analysts and casino executives of future revenue growth for the state, Paul Boni, an attorney for Casino-Free Philadelphia, saw things differently. His grassroots group is opposed to the two Philadelphia casinos.

"I really see this [gambling] as a government program partnering with a predatory industry that preys on human weakness for profits," said Boni, who attended both days of the conference. "My opinion is that 90 percent of the profits come from 10 percent of the gamblers."

At a session called "Show Me the Money: The View from Wall Street," analysts focused on the impact of table games on surrounding markets, particularly Atlantic City.

Larry Klatzkin, managing director of Chapdelaine Credit Partners, of New York, said that 25 percent of Atlantic City's slots revenues had already evaporated since Pennsylvania slots parlors opened more than three years ago.

He said that with table games to come online in Pennsylvania in the second half of the year, "2011 will be more of a disastrous year for Atlantic City."

Atlantic City's casinos depend on table games for about 30 percent of their revenue.

Klatzkin and four other analysts agreed that table games in Pennsylvania would attract a younger, more affluent customer to the casinos. And, they said, table games would help expand the customer base.

But they disagreed on whether the lack of hotels and shows at Pennsylvania casinos would negate some of that growth. That's because table players typically like to spend the night where they gamble, according to industry data.

John Kemps, director and senior high-yield analyst for Barclays Capital, New York, said that, for instance, Mohegan Sun at Pocono Downs "would attract more people from further out if it had a hotel."

Future growth for Pennsylvania gambling would depend on the economy as well as the lending markets, gaming analysts say.

Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.