As Pennsylvania prepares to enter the new year, Gov. Rendell and many other lawmakers across the state are busy counting the flood of new tax dollars pouring into state coffers from the legalization of slots gambling.
On its face, that cash makes the state's fledgling gambling gambit look like a success. But Pennsylvania's venture into the slots racket has been riddled with so many setbacks this past year that it raises questions about the state's ability to properly regulate this industry.
One slots owner was indicted in February, charged with lying about his alleged mob ties. The same casino operator also was recently forced to kick in millions more to cover expenses due to "significant liquidity challenges," according to the trustee appointed to oversee the business after the indictment.
Another slots owner ran out of money while building his casino in Pittsburgh, and had to be bailed out by a politically connected investor. Still another planned slots parlor near Pittsburgh is in limbo because that owner can't secure financing.
The two slots parlors slated for Philadelphia have yet to be built because of a series of legal challenges, and opposition from residents and the mayor who are unhappy about the proposed locations.
The state has awarded 12 slots licenses, and almost half of them face some financial or legal trouble.
The most egregious misstep was in giving a license to Louis DeNaples, the Mount Airy Resort owner who was indicted on charges that he lied to state Gaming Control Board investigators about his alleged mob ties and dealings with figures in the federal pay-to-play probe of former Mayor John Street's administration.
The lax vetting of DeNaples, a felon, exposed many of the weaknesses in the gaming law. That prompted lawmakers to draft a bill amending the law. The legislature should adopt the measure if it wants to restore credibility.
The seeds for the state's troubles were sown in 2004, when the legislature legalized slots in the dark of night around the July 4 holiday, with little public input or scrutiny. The law's main author, former state Sen. Vincent Fumo, is on trial for unrelated corruption charges.
One loophole in the law mandates that all gaming challenges go straight to the state Supreme Court, bypassing the lower courts. For the most part, the high court has sided with the state and gambling.
The symbiotic relationship between the legislature and the Supreme Court prompted the League of Women Voters to sue former Chief Justice Ralph Cappy in federal court in May, alleging that the court upheld the gaming law to gain legislative approval of a judicial pay raise.
Days after the lawsuit was filed, the executive director of the gaming board resigned from her $180,000-a-year job. As part of her separation package, she received three months pay, or $45,000, for no work.
At least the former director left the state. Several attorneys who formerly worked for the gaming board quit to represent the very slots owners they had regulated.
All this coziness between the lawmakers and the court and the gaming board and the slots owners has never smelled right. Nearly all of the slots owners have investors who have contributed to state leaders, from Gov. Rendell on down.
The situation prompted entrepreneur Donald Trump in September to say that Pennsylvania is "too political" and that apparently "you have to be a friend of the governor to get a gambling license." Last week, Trump sued the gaming board, alleging he was denied a license in Philadelphia because of his Atlantic City casinos. Indeed, in making its decision, the board said Atlantic City's lower tax rate on gaming revenues would encourage Trump to steer high rollers to New Jersey, where he could enjoy higher profit margins.
Trump argues that the board has put up a protectionist barrier that violates interstate commerce. (Trump's investors included Brian Tierney, publisher of The Inquirer.)
Despite gambling's series of troubles, gaming board member James Ginty recently told The Inquirer Editorial Board that the gaming law has been a success. But he acknowledged there have been "hiccups."