Editor's note: Jeff Coy, of Shippensburg, Pa., left an 11-term career in the Pennsylvania House of Representatives to fulfill an appointment on the newly created Pennsylvania Gaming Board in 2004. Since then, the board has overseen the development and opening of the state's first seven slots facilities. A total of 14 licenses went up for grabs through the Pennsylvania Race Horse Development and Gaming Act, otherwise known as Act 71 of 2004.

Herald-Mail reporter Jennifer Fitch recently sat down with Coy and Doug Harbach, a Chambersburg, Pa., resident and communications director for the Pennsylvania Gaming Board. The pair addressed several issues, including table games, casino locations and the penalties recently imposed on many fraternal, veterans and social clubs in Franklin County.

Property tax relief

Coy: Now, property tax rebates are starting to flow and people are getting them. More are going to senior citizens and people who are on fixed incomes who are senior citizens.

Eventually they'll make their way down to other folks and they'll be getting rebates on their school property taxes. The sooner we get the other casinos up and running - so we get to the total of 14, seven at racetracks and seven not at racetracks - these property tax rebates will certainly increase.

I think property tax relief is going to go up. To talk about jobs for a minute, what we've been able to determine so far is that more than 6,500 persons, 95 percent of them Pennsylvania residents, are now employed in the new positions created by the casino industry. That's a pretty significant amount, and we expect to see some additional facilities come online and that figure will swell to about 15,000 jobs statewide. In addition, with the construction of the casinos, about 24,000 construction jobs are going to be included. These are big jobs that are very, very (good) jobs with carpenters, roofers, masons, electricians, jointers and everything that's involved in construction. Most of these places are built pretty good, too. They're not built with plywood.

Harbach: There are two different programs that gaming funds belong to. One is the rebate program, which was more than doubled, and that's for the seniors. They injected gaming funds into that to increase the program so that those previously eligible at $15,000 are now eligible up to $35,000 a year. Program 2, which is general property tax relief, is what was just authorized by the budget secretary. That will grow as more money goes into the gaming fund. It's not as much a rebate on that one as it is a reduction.

May was actually the highest month they had (in gaming revenues).

There were no revenues coming in a couple years ago from gaming because we didn't have it. Today there's $2.7 million a day of new taxes coming into the commonwealth. Some of these facilities are temporary facilities and don't even have all their slots machines. We're not even half way to the 14, and we're getting $2.7 million a day in taxes that would've gone out of the state.

Club closures

Coy: I guess I want to be really, really exact on this, so that readers can understand. The dollars that are earmarked in the gaming act are for grants that go to law enforcement agencies like police departments, district attorneys, whoever applies to us. The sole purpose of them is to cut down on and enforce illegal slot machines. It's not for targeting these veterans and social clubs that have fish bowls or the scratch tickets or fish-bowl type tickets.

Now, the gaming board is getting blamed for it, there's no doubt. But I can tell you that none of the dollars produced by gaming is going to shut down clubs in Franklin County or any other county in Pennsylvania unless they would be operating illegal slot machines. If they're not doing that and they're getting busted, it's because they're getting busted for things like they are only allowed to give jackpots away at a certain level and when they go over that, or if minors are involved or if they have a game that they shouldn't. That's being policed by the LCE, liquor code enforcement agencies, who are a division of the Liquor Control Board and Pennsylvania State Police who work together. Those funds going toward that have nothing to do with gaming.

When I was in the legislature from 1983 to 2004, this subject came up back then, way before we had slot machines and gaming in Pennsylvania. Clubs were getting busted because they had illegal jackpots or they had illegal games or they had minors or whatever. They were busted a long time before a casino was ever open or licensed in Pennsylvania, and that's still happening today.

Then they say to me, "Well, what do we do?" There are two things: One, don't disobey the law. Stay within the legal programs, stay within the legal jackpot limits, stay within the law. Or No. 2, go to your state senator or your state legislator and get the law changed so that you can have higher jackpots. There's no doubt these clubs do a lot of great community service. I used to see it. They do a lot of good, but they're going to have to stay within the law or get the law changed. Gaming and gaming dollars have nothing to do with it whatsoever.

To be candid, (the clubs) need to accept a little responsibility themselves. They need to deal with this thing. Listen, they know it's a hot topic right now, so you better obey the law and be strict in your adherence to the law. If they're looking for someone to blame, I guess gaming is as good as anybody to blame, but I don't think they need to look beyond themselves and other people in their communities.

Harbach: That's been a big issue, and it's been a little unfair to us because there's not a penny down here going toward (illegal slot machines). Most of the money has been dispersed in larger, more metropolitan areas. The only one even close to here was the money disbursed in Dauphin County.

At budget hearings, the state police commissioner reaffirmed that when asked whether the advent of slots gaming had led to a higher crackdown (at clubs) and he said no.

Bringing casinos online

Coy: Other states have taken more than two years after enactment of the legislation to get things rolling. We got it done in about 22 months from the time the law was signed, it took effect and the board got in place. I think we did it with a good degree of professionalism and professional investigations.

I think the remarkable thing is that we were able to get it done and get the first casino up and running, which was Mohegan Sun outside of Wilkes-Barre. They were a very good company. Mohegan Sun is run by The Tribe, which (has a casino) in Connecticut. They were a good company and knew what they were doing. You can tell in this industry the companies that have had experience. In other words, they seem to have less problems getting started than the companies who don't have as much experience. All in all, the big thing we did was get this thing rolling in less than two years.

Table games

Coy: My guess is the legislature will be typically cautious about this and that's OK. They'll say, "Let's let the board get the 14 (slots) licensed up and running." (Legislators) will say, "Let's walk before we run here. Let's see how the existing 14 (do)." After all, they're not all licensed yet and they're not all up and running yet.

Table games are much more labor intensive, and you need a lot more employees to deal cards and operate table games than you need for slot machines. They can afford to pay a higher tax rate on slot machine revenues because they're not as labor intensive, don't involve as many people as table games. My guess is if the legislature ever went down the road of legalizing table games, the industry would lobby very hard that the taxing rate would have to be less.

I'd say the next year or two is going to be spent on getting the ones open that are licensed but not opened.

Harbach: You'd have to ask your legislator about this, but of course they'll want to keep their revenues up and continually (keep up with) competition from outside. West Virginia - outside of Charles Town, which didn't approve it - has table games. Now, you have construction going on in New Jersey and the specter of Maryland, too. With all of those things going on and to keep ahead of the Joneses, these casinos will be looking at what to do.

You should know that they'll never operate table games in Pennsylvania at the rate of taxing they do now, 55 percent. The operators would never do it.

Challenges

Coy: I don't think there's any doubt that this business, like other businesses, is facing challenges right now because of the recession. Some people, public officers are worried to say that, but that's what we have: We have a recession right now. Every business is feeling it. A lot of these places that people have to drive to, the price of gasoline, I think they're weathering pretty well. They should start to reap more of the benefit this summer.

I think probably the gas prices have helped the bus trips. A lot of these buses used to be going to Atlantic City or West Virginia. Atlantic City admits an 11 percent (decrease) in their revenues since these facilities opened in Pennsylvania. Eleven percent is what they admit to, but my hunch is that it's more than that. I wouldn't be surprised if it was, in reality, 15, 16, 17 percent, but these people who were going there on buses, principally senior citizens for entertainment purposes, a lot of those buses now are going to the Pennsylvania sites and spending dollars there.

The biggest challenge is to make sure the agencies like the state police, gaming board and attorney general work together, that they share information and, when there is information that we should know before issuing the license, that we know it. So it's a challenge to make sure these agencies are working together.

It's also a challenge - I knew going into this - that this industry would need to be regulated. I guess I didn't know how much, but it requires a lot of regulation. Pennsylvania is probably, of all the states in the nation that have gaming now, Pennsylvania is probably the most regulated state. It has the largest amount of regulation of all the other states.

Possibility of slots opening closer to Franklin County

Coy: If I had to guess, I would have to say no, not only because these facilities tend to apply for licenses in more heavily populated areas like in Philadelphia, the Lehigh Valley, northeastern Pennsylvania, and the Pittsburgh and Erie areas. Anything could happen, but my guess is the closest folks from this area will see any Pennsylvania facilities is Penn National (near Harrisburg).

Harbach: They'd have to change the law to allow more at the same time. There are triggers within the law; there are triggers that current license holders could ask for money back. He's right in that what you see is what you get, but it's out of our hands. This agency has to adhere to the law the legislature passes.

The interview has been edited for length, but the entire interview, including the additional topic of background investigations, can be found at www.herald-mail.com.