VGT group frustrated by restrictions in Pennsylvania bill

Wednesday, November 1, 2017 12:36 PM
  • Mark Gruetze, CDC Gaming

After years of rancorous debate, Pennsylvania has legalized video gaming terminals outside casinos – sort of.

A far-reaching gaming expansion bill signed into law Monday by Gov. Tom Wolf limits VGTs to large truck stops, with no more than five machines per location. The law specifies that the truck stops must be on at least a 3-acre site, sell at least 50,000 gallons of diesel fuel per month, and have a convenience store and at least 20 parking spaces for commercial vehicles.

The facility may not be on land owned by the Pennsylvania Turnpike.

The VGT provision is part of a wide-ranging law that also includes legalization of online gaming and Daily Fantasy Sports wagering, provisions for up to 10 “satellite” casinos throughout the state and tablet gaming at airports for passengers.

Richard Teitelbaum, president of the Pennsylvania Video Gaming Association, said the VGT limitations mean little new money for the state and little help for small businesses.

“It’s unfortunate that the General Assembly left out small businesses in Pennsylvania, because they are the ones that need the revenue the most,” he said. Early versions of the bill would have allowed VGTs in any business with a liquor license, including neighborhood bars, restaurants and clubs. Backers estimated that 7,000 to 8,000 of the state’s 12,000 liquor license holders would have applied for VGTs. Proponents also cited State Police estimates that about 40,000 untaxed, unregulated machines operate across the state already.

It’s unclear how many truck stops would qualify for VGTs under the bill approved last week. Teitelbaum said it might be around 120.

He pointed to Illinois as an example of how much tax revenue VGTs can generate. The recently released “Wagering in Illinois” report, compiled by the Commission on Government Forecasting and Accountability, said VGTs generated $296 million in state gambling tax revenue in fiscal 2017, compared with $270 million from Illinois’ 10 riverboat casinos. This was the first year that VGTs outperformed casinos.

“I’ve been to Illinois and witnessed firsthand what the (VGT) program has done for the state and for small business,” Teitelbaum said. “It’s been a boon.”

The impact of VGTs goes beyond the machines and tax revenue, because businesses get a cut of the profits, add employees and improve their property, he said. “It’s a snowball effect.”

The Pennsylvania law allows counties with an existing casino to ban VGTs within their borders. State and local taxes on VGT revenue would total 52 percent, compared with 54 percent on casino slot machines.

Troy Stremming, executive vice president of government relations and public affairs for Pinnacle Entertainment, which operates Meadows Casino in southwest Pennsylvania, said VGTs cannot match the capital investment and job creation that casinos provide.

“If you absolutely had to have this (VGT legalization), which we were not supportive of, a limitation with very strict provisions as far as what locations are acceptable is probably the best way to go about it,” he said. Casinos are “very sensitive” about cannibalization and saturation in markets where they’ve invested heavily, he added.

Teitelbaum hopes Pennsylvania will expand VGT gambling at some point.

“It’s dangling a carrot with the hope of something bigger later,” he said of the gaming expansion bill. “I really do believe that many small bars and taverns, without something, will shutter over the next few years (without gaming.)”


Mark Gruetze is a veteran journalist from suburban Pittsburgh who covers casino gaming issues and personalities.