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District Office
1555 Highlands Drive
Suite 110
Lititz, PA 17543
Phone:  (717) 626-1776
FAX:  (717) 626-4234

Capitol Office
51A East Wing
PO Box 202097
Harrisburg PA 17120-2097
Phone: (717) 787-1776

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smentzer@pahousegop.com

Expanded Gaming Is No Way to Finance a State
12/29/2016
By Rep. Steve Mentzer (R-Lititz)

With the governor and the General Assembly once again facing the need to get a state budget completed by the end of June, there are some members of the Legislature who once again want to look to expanding gaming to get the revenues needed for the spending they want.

Commonsense would tell you that when you find yourself in a hole that may be difficult to get out of, the first thing you should do is put down the shovel. In fiscal terms, that would mean only spending as much tax revenue as you can reliably take in each budget cycle. Case in point, last year we compromised with Gov. Tom Wolf’s spending demands and provided $640 million more for education than in the previous 2014-15 budget cycle, and the latest numbers show the state is $600 million short of expected revenues.

Yet, some members of the General Assembly are already calling for ways to raise more money to pay for more spending. One of the ideas being put forth is expanding gaming to taverns and social clubs.

While I am not a big fan of using gaming to raise revenues, there is no denying that casinos and gaming have brought additional revenues to Pennsylvania. However, it is not a zero-sum game: studies show that unlimited gaming expansion can lead to what is called “saturation,” which would actually cause the state to lose money.

When the Tavern Games law was passed in November, 2013, there was an expectation of $100 million to be paid to the state in taxes by licensees who secured and participated in tavern game permits. This act permitted taverns to operate a few small games of chance. In fiscal year 2015-16, only a total of $1.7 million was collected from the tavern games tax and deposited in the General Fund.

The future of gaming revenues in our region is not likely to improve anytime soon. At the end of November, Moody’s Investors Service reported that the addition of eight new casinos slated to open in the Northeast corridor over the next three years will increase competition among operators in the already oversaturated market, The report stated that “it will be more difficult for the new casinos entering overcrowded markets to gain a share as existing operators have been cutting costs and paying down debt in anticipation of the new supply, according to the report ‘Northeast Casinos Face Rising Tide of Competition.’”

We cannot just keep spending more and more money with the expectation that all we need to do is find another way for government to enact another tax, or another scheme, such as expanded gaming, to find more money.

History has shown us that when the economy is strong and people are working (currently there are nearly 100 million Americans out of the workforce and no longer counted in the unemployment numbers) then government tax revenues increase on their own. We need to focus on putting people back to work rather than get-rich-quick schemes that fail to produce the consistent revenue needed year after year.
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