City will get second casino; who really wins?

Posted: July 12, 2012

IS IT DÉJÀ VU all over again?

A few hours after Mayor Nutter announced that he was pleased at the news that a second casino would be sited in Philadelphia instead of somewhere else in Pennsylvania, an anti-casino group announced it was not pleased at all, and says the state's Gaming Control Board has failed to protect the public.

So here's the first question arising from the gaming board announcement of a Nov. 15 deadline for applications for a second Philadelphia casino: Will public pushback create the same outcry and delays that followed the state's awarding of two licenses in Philadelphia back in 2006? One of those licenses went to SugarHouse, which opened in 2010. That's the same year that the second license, to Foxwoods, was revoked, following years of delays and financial struggles.

For a while, some Harrisburg lawmakers considered allowing the second license to go to another area of the state. Today, the mayor is happy that the jobs and revenue from a second casino will stay in the city.

The main question, of course, is where it will go. At least two local developers have expressed interest, including Bart Blatstein, who recently bought the building in which this editorial is being written.

One difference between then and now is that in 2005, casinos were an untested concept in a city of our size. Fears that traffic and other factors would destroy surrounding neighborhoods dominated the debate; so did the fact that people with little stake in our city were making decisions — including zoning decisions — that could have a big impact on the city.

None of those concerns has changed. What we have now that we didn't then is money. The casinos are bringing in staggering amounts of it. As of yesterday, the state's casinos have generated close to $6 billion in total tax revenue. The state-tax portion that goes to property-tax relief for state homeowners (and wage-tax relief for Philadelphians) is more than $3 billion. Local municipalities hosting casinos have reaped $426 million.

In Philadelphia, SugarHouse has generated about $6 million a year for the city, with the schools getting most of that. In total tax revenue, SugarHouse ranks 10th out of the state's 11 casinos, though it has not been open as long as the others; Parx in Bensalem has generated more than a $1 billion in tax revenues, followed by Harrah's Philadelphia, with $898 million. (These figures are for slot machines only.)

We can't help pointing out a disconnect between this new major revenue stream and the crisis still facing the state, the cities and the schools. Consider Harrah's, which has generated more than $65 million in local share for Chester. Last we checked, the schools had run out of money in January and were facing state takeover. In Philadelphia, the school district is facing its own staggering financial crisis.

While the money being generated is certainly helpful, it tells only part of the story. The rest of the story is not so pretty. It's found in the gaming board revenue report under two lines,"wagers received" and "amount won." To date, gamblers have wagered $135 billion in the state's casinos, and won $123 billion. That means that they've lost $13 billion. That's almost three times the amount of tax revenue that has been generated.

That alone should keep the city from doing too many cartwheels.

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