Pa. budget debate likely to include gambling: expanded lotteries and legalized online gaming

HARRISBURG - With Pennsylvania's budget forecast gloomy, the legislature looks to be placing its bets on gambling.

As budget discussions unfold over the next few months, it is widely expected that the GOP-controlled House and Senate, along with the Corbett administration, will seriously consider a proposal to expand lottery gambling and, possibly, one to legalize online gambling.

Both measures could mean hundreds of millions in annual tax revenue at a time when the state is in the red. The administration says Pennsylvania could be facing at least a $1.2 billion budget gap for the fiscal year that begins July 1.

But the proposals are also bound to stir anew concerns that Pennsylvania is moving at breakneck speed to offer more options to gamble, which many believe will increase addiction and the social ills that go with it. Gov. Corbett, for instance, signed a law late last year allowing small games of chance - including pull-tab games and raffles - in bars and restaurants.

"We have to ask ourselves, what are we about as a state?" said State Rep. Paul Clymer (R., Bucks), who, as one of gambling's most vocal opponents in the legislature, has introduced a bill to ban online gambling. "Do we want to strengthen families, make them more whole? Or do we want to see them deteriorate, and [become] dysfunctional? Because that is what this issue is about."

Still, with Corbett bound by the no-tax pledge he took in 2010, he and, by extension, the legislature are limited to what they can do to generate new revenue.

Expanding gambling comes with an added benefit: It can raise money fast.

The measure that seems to have the most momentum is one to introduce keno, a bingolike game in which players pick up to 10 numbers, aiming to match them to 20 numbers between 1 and 80 that are randomly chosen by a computer.

By all accounts, the legislature believes the keno game should be run by the Pennsylvania Lottery. But that is where agreement, and any real detail, ends. How much keno could generate in revenue - there have been estimates of $100 million to $200 million annually - and what that money should finance are moving targets.

An informational hearing on keno is scheduled next week in the Senate.

Senate Majority Leader Dominic Pileggi (R., Delaware) said in an interview last week that there hadn't been much controversy, at least to date, about introducing keno as a lottery game. More than a dozen other states' lotteries offer the game, including Ohio, Maryland, and Delaware.

"There is very little concern expressed over keno," Pileggi said, adding he believed that much of the discussion would revolve around the mechanics of rolling out the game.

But there is bound to be political horsetrading over where the keno proceeds should go.

Pileggi has said he would like to see it used to freeze senior citizens' school property taxes. Democrats are likely to argue for the money being directed to programs for seniors that the lottery already finances, such as property tax and rent rebates, free transit and reduced-fare shared rides, and low-cost prescription drugs.

That debate will pale in comparison with the fight likely over legalizing online gambling, which recent opinion polls show lacks much public support in Pennsylvania.

The Senate has passed a resolution to have the legislature study whether the state should legalize online gambling. The study's due date: May 1, or just as budget negotiations begin intensifying in the Capitol.

Only three states now allow online gambling: Nevada, Delaware, and, most recently, New Jersey.

Jonathan Griffin, a policy specialist at the National Conference of State Legislatures, said that recently released reports charting the first six weeks of online gambling in New Jersey did not show jumps in revenue for the state.

Online gambling in Pennsylvania, even under the best of circumstances, won't be an easy lift. Legislators will have to sort out what types of games to offer as well as who would be authorized to operate the websites - with the latter expected to stir controversy.

And casino operators, armed with scores of lobbyists, have made it be known they worry that online gambling will cut into their business and cost jobs in the industry, as people stay home to gamble.

All that means it could be months, if not longer, before online gambling gets a serious look.

"There has been almost no discussion on the issue to date," said Pileggi, adding that any measure seeking to change the gambling landscape so dramatically would require hearings and much public input. "I don't think it is something that could be done quickly."

Pennsylvania leads the nation in gaming revenue. Graphic, A12.

Estimates of slot-machine revenue are key to the city's second casino license. Business, D1.

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