Fool’s Gold: Legalized video poker wrong course for PA

Member Group : Lincoln Institute

Recent polling by Franklin & Marshall College shows a vast majority of Pennsylvanians support the expansion of gambling to include small games of chance, like video poker at bars; along with an expansion of casino gambling to include table games. This despite the record of mismanagement, abuse, and criminality that has accompanied the commonwealth’s foray into slots casinos.

The idea of legalizing video poker machines in bars and restaurants was floated by Governor Ed Rendell in his budget address to the General Assembly. Looking for a way to help Pennsylvanians deal with the ever rising costs of higher education, the governor has proposed tax revenue generated from legalized video poker be earmarked for college scholarships.

This has given rise to false hope among Pennsylvania families that more financial aid will soon be coming to a student near them. I say false hope because such dramatic changes in course take time in Harrisburg. And, if the state’s last venture into gambling is any predictor, much of the money will be siphoned away by the governor and the legislature for pet projects. Not to mention the fact that in order for gambling to generate a profit, other Pennsylvanians must lose big in the process.

During these tough economic times it is only human nature for people to be looking for quick and easy solutions to financial problems. Legalizing video poker is a tantalizing mirage of a free pot of gold to give relief to families struggling to cover education costs. That such a plan would gain widespread support is neither unexpected, nor unanticipated.

In January of 2007 the Lincoln Institute of Public Opinion Research conducted a statewide poll to gauge the reaction of Pennsylvanians to the then-pending onset of slot machine casino gambling. At the time 62% of Pennsylvanians approved of legalizing slots. But, they gave that approval while also believing casinos would generate increased crime and corruption. Voters were also supportive because they were promised significant property tax relief from the tax revenue generated by the legalization of slots. The property tax relief delivered fell far short of being significant, but the feared crime and corruption reared its ugly head.

Out of the chute former Erie Mayor Rick Filippi and others were indicted for a land scheme involving the locating of a slots casino in that city. Currently, the operator of the Mt. Airy Casino Resort, Lou DeNaples, faces a four count indictment for perjury. He stands accused of lying to state regulators about past ties to organized crime.

And there have been other problems as well. Don Barden and his Isle of Capri casino operation were initially selected by the Pennsylvania Gaming Control Board to build and operate a slots casino on Pittsburgh’s north shore. Assumptions that the board would screen developers for their financial ability to actually complete the project proved wrong. Barden went broke and another developer had to be found. And in Philadelphia, the Gaming Control Board has trampled the rights of local officials and assumed the power to override the city’s elected leadership on site decisions. To date controversy over where the casinos will be located has prevented any from actually being built.

Thus from inept regulators to alleged organized crime ties to financial failure Pennsylvania’s first steps into legalized gambling has been a disaster. Add in the fact property tax payers have not experienced any significant relief and millions of Pennsylvanians are losing hundreds of millions of dollars a year at casinos, and the whole exercise must be considered a failure.

So now, the governor wants to compound the problem by legalizing gambling in every neighborhood in the commonwealth. That means, among other things, an expanded state bureaucracy to administer, collect and enforce video poker laws. It means more crime, this time at thousands of venues scattered across the state rather than at a few casinos. And it means during this time of economic crisis Pennsylvanians will lose even more of their hard earned money to gambling operators. While that may be their individual choice, it doesn’t change the fact many will lose money they simply cannot afford to lose.

The allure of a new revenue stream to finance something as vital as higher education is certainly strong. But before Pennsylvania goes down that path it needs to take a hard look at recent past experience. That experience has not been good. And at the end of the rainbow, revenue from legalized video poker gambling will be nothing but a pot of fool’s gold.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected])

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