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Taxpayers have a right to know slots-legislation details

A bill legalizing slot machines in Pennsylvania is expected to be voted on next week in Harrisburg and passage is considered likely. The debate over expanded gambling in Pennsylvania has been going on for decades and the latest variation proposes slot machines at up to 14 locations, including horse racing tracks, across the state.

While state lawmakers are arguing over details and trying to shift colleagues' votes to one side or the other, the public has been shut out of important issues.

Setting aside ultimate feelings about whether slot machines are good or bad - economically or socially - some details of the debate should raise eyebrows.

State Rep. Frank LaGrotta, D-10th, wrote a letter to the editor earlier this month praising the slot machines bill. In his letter, LaGrotta said, "The plan is simple. All we have to do is stop $3 billion of Pennsylvania money from leaving our state every year, and create almost 8,000 new jobs in the process, by legalizing strictly regulated slot machines at select locations throughout the state. Every penny the state gets from the plan would go to reducing school taxes."

It sounds almost too good to be true. According to proponents, slot machines are a win-win situation: good-paying jobs are created and property taxes are cut. The only people who lose are the poor souls who play slot machines, which are programmed to make players losers and casino operators big winners.

Boasting the estimated $1 billion in new slots-related revenue coming to the state, advocates of slot machines have glossed over several issues that should receive more public debate.

The 12 of the 14 slots licenses are proposed to be sold for a one-time $50 million fee, for a total of $600 million. But Jeff Hooke, a Maryland-based investment banker, says the state is essentially giving away the slots licenses for far less than they are worth. Hook, who also is director of the Maryland Tax Education Foundation, has looked at prices offered for comparable casino licenses outside Chicago and Detroit, and concluded the Pennsylvania licenses could bring in close to $2 billion.

Why are state lawmakers willing to forgo so much money in licensing fees? Hooke has suggested an auction to yield the highest prices for state taxpayers. Who decided $50 million was a fair price for a slots license? What role did gambling or horse-racing interests play in setting the $50 million price tag?

Voters don't know the answers to those questions because these details have been worked out behind closed doors in Harrisburg. With slots licenses considered a license to print money, the entire process should be more open to public view.

LaGrotta boasts that "every penny the state gets from the plan would go into reducing school property taxes." Voters might like to know how lawmakers decided that casino operators will get 48 percent of the revenue while the state will get just 34 percent. Horse owners, breeders and trainers will share 9 percent. Another nine percent goes to economic development, tourism and the local municipalities where the slot machines are located.

Who set these percentages? How were the figures negotiated? Did Pennsylvania lawmakers look at distributions in other states?

According to a March 2004 commentary by the Commonwealth Foundation, a Harrisburg-based public policy group, the percentages are a gift to gambling interests. According to the foundation, the percentage going to gambling interests in New York State is 20 percent. The Commonwealth Foundation notes that Pennsylvania slots operators stand to make more than twice the profit margin than operators in our northern neighbor. The foundation also noted that a higher percentage for gambling interests means less money for Pennsylvania taxpayers in terms of property tax relief.

Again, voters should know how the percentage takes for the state and gambling interests were derived. How does the percentage going to Pennsylvania compare with other states' takes? If there is a discrepancy, what is the reason for it?

The are enough unanswered questions to raise more questions, if not suspicions.

Still more questions are raised by the so-called public protections written into the bill.

One provision includes a ban on gaming (the industry's preferred term over gambling) companies, their officers and key employees to campaign committees or political parties.

How can this provision be monitored when Pennsylvania currently has no law in place too track lobbyists or their contributions? Once the slots bill is passed, such a provision appears to be a case of "too little, too late."

The next safeguard for the public bars state officials from taking a job with gambling companies within one year of leaving office. To minimize voter suspicion, this time frame should be extended to five years, or longer.

Another provision prohibits elected or appointed officials from holding more than a 5 percent interest in a gambling company. With the amount of money involved and the apparently massive profits expected to flow from slot machines in Pennsylvania, why should a lawmaker be permitted to own even a 1 percent of a gambling company? The potential for conflict of interest and improper personal enrichment is such that any ownership by lawmakers should be prohibited - period.

These issues only scratch the surface. The question most people are pondering is nothing more than "slots - yes or no." There has been too little discussion of the social costs, the competitive impact of slots on the state lottery or on how details of the licensing deal were established. Too much of the slot machines legislation has been assembled behind closed doors.

Support for expanded gambling in exchange for property tax relief might have enough momentum to finally pass. But the more people look at details of the pending deal, the more questions they should be asking.

Lawmakers in Harrisburg chose to do it without public involvement either because they think the public doesn't care, or because they don't want the public to know the details behind this billion-dollar bonanza. Slots supporters in the legislature should come forward to defend the proposal and prove they are not giving away the store to gambling interests at the expense of taxpayers.

- J.L.W.III

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