License applicants for tavern gaming less than expected

HARRISBURG – Is a $150 million hole already being blown into the hull of Gov. Tom Corbett’s 2014-15 budget proposal?

Given there have been only six applicants for tavern gaming licenses – after a series of seven informational seminars regarding the licenses was held across the state by various state agencies – of what was estimated to be 2,000 restaurant licensees that would take advantage of the new gaming license, the answer right now seems pretty clear to at least one state senator.

“This rollout is making Obamacare look robust,”

said Senate Appropriations Committee Majority Chairman Jake Corman, R-Centre, during two budget hearings Wednesday.

Corman said the agencies involved with the application process need to fix things – and he’s willing to help in any way he can – but without a solution “our budget is going to be way out of whack, which means less money for other things we want to accomplish around here.”

“We can make this easy, or we can make this hard,” continued Corman, who, at one point, held up each of the four applications that must be completed for the license. “We have a responsibility to live up our due diligence, but this [holding up all of the applications that must be filed for a license] seems a bit onerous to me.”

“We need to get to a point where these folks want to apply, otherwise the years we spent working on the statute were worthless,” said Corman. “… I think we need to get to a point where we make this a much more fluid process, and not an intimidating process that people are shying away from it.”

Liquor Control Board Chairman Joseph E. “Skip” Brion said two things came out of the informational seminars: concerns about the 60 percent tax and that the tavern gaming license would be tied to the establishment’s liquor license.

“The two comments that were made was, one, they were afraid [of] the 60 percent tax, that they were not going to make enough money to make it worthwhile, that’s the taverns talking,” said Brion. “And then if there’s a violation of tavern gaming, how does that affect their real livelihood, which is their liquor license” since it’s tied to the gaming license.

“It shocks us. We thought we would be inundated, and we’re not,” added board member Robert Marcus.

Signed into law on Nov. 27, Act 90 of 2013 allows the owners of most retail liquor licenses the ability to apply for a new Tavern Gaming License, which became available on Jan. 27. The new license grants owners the authority to offer tavern raffles for a charitable or public purpose, pull-tab games and tavern daily drawings.

Under the new law, retail alcohol beverage licensees may be eligible to apply for the license with the exception of eating place retail dispenser licenses, club and catering club licenses, grocery stores, casinos and venues that hold professional sporting events.

A fiscal analysis of the law indicated it could generate $156 million for state coffers the first year it’s in effect. The commonwealth would get 60 percent of all the new revenue generated (which results in $156 million in year one), while tavern owners would retain 35 percent, while the local host municipality would get 5 percent.

During the committee’s budget hearing for the Pennsylvania Gaming Control Board, Board Chairman Bill Ryan explained the background check his agency requires of applicants involves getting fingerprinted by a law enforcement agency, with those fingerprints then being forwarded to the Federal Bureau of Investigation, for an additional background check.

“To me, as an average citizen, that seems like a little bit of an intimidating process,” reacted Corman. “You have sole discretion for what the background check should be, but these are people who already have to have a liquor license, they can’t apply otherwise.

“To obtain the liquor license, they had to go through a background check” with both law enforcement and other state agencies “why did you feel it was so important to go through an additional” set of checks, asked Corman.

“It’s my understanding that was a requirement of the General Assembly,” said Ryan, to which Corman said, “No,” and then read the law which indicates the background check process is left up to the board.

“For an industry that lobbied hard to get this done whatever they’ve heard since we passed this law is making them hesitant, and what I’m trying to do is knock down that roadblock,” said Corman.

Ryan, reacting to Corman’s critique of the fingerprinting requirement, responded: “We can look into this, but my instinct from the beginning has been that this was necessary because this is gambling. It’s not liquor, and there is a difference, and you’re talking about giving people the ability to …”

“There is a difference, but it’s not slots. It’s not table gaming …” interjected Corman.

“But it’s gambling, and it’s gambling for a lot of money,” finished Ryan.

“I’m just asking that you review your process and make it less onerous,” said Corman.

“We will do that,” Ryan said.