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    Players Advantage: Casinos add $4.8 billion to state economy, study finds

    November 10, 2014

    Casinos add $4.8 billion a year to Pennsylvania’s economy and are directly responsible for 17,759 jobs in the state, says a new study sponsored by the American Gaming Association.

    The impact could grow with a greater “partnership” between policy makers and the industry, the group’s top executive says.

    “As competition emerges in neighboring states, it forces Pennsylvania to look at all policies it has in place,” AGA President and CEO Geoff Freeman says during a conference call Nov. 5, the day after Massachusetts voters soundly rejected a proposal to repeal a 2011 law allowing three casinos in the state. “Tax policy is one element of that; so too are regulatory policies, the shipping rules with machines, the types of games that can be played. All of those are things that need to be considered in this highly competitive marketplace.”

    The state takes 55 percent of gross slot-machine revenue from the 12 casinos. While that’s not the highest rate in the country, it helps Pennsylvania raise more money from gambling taxes than any other state, including Nevada.

    In 2013, Pennsylvania casinos made almost $3.4 billion, all but about $200 million of that from gambling winnings, according to an Oxford Economics study released Oct. 30. That puts Pennsylvania behind only Nevada in gambling revenue.

    Oxford Economics, an arm of Oxford University in England, did a nationwide study for the AGA about the casino industry’s economic impact as part of a “Get to Know Gaming” campaign. The Pennsylvania breakdown is the first for an individual state; findings for other states will be released later.

    In addition to their $3.4 billion revenue, Pennsylvania casinos generated $1.4 billion in spending as patrons visited establishments outside the casino, the Oxford study found. Casinos had more than 14,000 employees, and ancillary spending accounts for another 3,300 jobs.

    Pennsylvania casinos paid more than $2.4 billion in taxes, the study says. That includes $1.4 billion in gaming taxes; $531.7 million in other state and local taxes, such as property and sales tax; and $489.2 million in federal taxes, such as Social Security and income tax.

    Pennsylvania’s “robust” casino industry has room to grow but “it’s important to stay ahead of the competition,” says Chris Moyer, AGA’s director of media development and relations.

    Casinos everywhere are trying to attract younger customers through gambling options such as slot machines that appeal those who grew up with video games and through nongambling attractions such as restaurants, shows and clubs.

    Casino gambling is legal in 40 states, including every one bordering Pennsylvania.

    “States are competing against states,” Freeman says. “Is Pennsylvania as competitive as it needs to be? Is it as innovative as it needs to be to get out ahead of its neighboring markets? That’s the question right now.”

    He says Pennsylvania’s gambling-tax rate limits casinos’ ability to reinvest.

    “It’s time to have a real and true partnership between the policy makers and the industry to determine how we create flexibility and empower the industry to give the customer what it is that they’re looking for,” he says.

    Increased flexibility also was a recommendation in a casino industry analysis done for the Legislature and released in May.

    Streamlining rules about moving slot machines or other behind-the-scenes issues might be warranted, but flexibility must serve gamblers, as well. One instance of “flexibility” buried in the 203-page legislative report was a proposal to let casinos do away with the rule that blackjack dealers stand on Soft 17 (Ace-Six). That would increase the house advantage and open the door to changing other rules that benefit players.

    Other jurisdictions allow hitting Soft 17, but Pennsylvania regulators have given no hint of following the herd on that point. Let’s hope the newest call for flexibility doesn’t lead to a push to dilute Pennsylvania’s player-friendly blackjack rules.

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