07/01/2004 11:00PM

Senate passes slots bill


The Pennsylvania Senate passed a bill early Friday morning that would legalize slot machines at seven racetracks and seven other sites in the state. The bill was expected to be passed on Friday night or Saturday morning in the House, where it has bipartisan support.

The Senate was considered the largest hurdle for the bill, which will ultimately allow for 61,000 slot machines in the state. Under the legislation, horsemen will be guaranteed at least 12 percent of the gross revenue from the slots at racetracks, while receiving a subsidy from the casinos at five stand-alone sites and two resorts. Racetrack officials said that, under best-case estimates, the slots subsidies could push purses at Philadelphia Park to $500,000 a day, 200 days a year, more than any other track's daily purse distribution other than Keeneland.

The machines are not expected to be operational until late 2005, after a seven-person gambling committee has been appointed, written regulations, conducted background checks, and awarded licenses to the 14 sites. Supporters contend that the state's 34 percent share of the gambling revenue will raise $1 billion a year by 2006.

Pennsylvania has four existing racetracks, while two others have received racing licenses. Philadelphia Park and Penn National Race Course outside Harrisburg are the state's two Thoroughbred tracks. Pocono Downs outside Scranton and The Meadows outside Pittsburgh operate harness meets.

The tracks to receive licenses are Chester Downs, a proposed Thoroughbred track in southern Philadelphia, and Presque Isle Downs, a proposed harness track in Erie near the Ohio border. A bidding war has erupted over the final racetrack casino site.

Magna Entertainment, the racing conglomerate, owns The Meadows. Penn National Gaming Inc. owns both Penn National and Pocono Downs.

With the legislation, Pennsylvania is following the lead of neighboring states that have legalized slot machines at racetracks, including New York, West Virginia, and Delaware. Pennsylvania's structure, however, will be different in that the tracks in neighboring states were the only locations given the right to operate the machines, other than some Native American casinos within the states.

Pennsylvania's racetracks will face competition from stand-alone sites in the state's major cities and two proposed resorts in western Pennsylvania, which are expected to draw gamblers from Ohio. All sites in the state that receive the right to operate the machines will be required to pay a $50 million licensing fee up front.

Robert Green, the president of Philadelphia Park and one of the track's co-owners, said that competition from the sites - including two proposed for downtown Philadelphia - should not pose a major problem for the track.

"I don't think it's just a question of access to the immediate population and it's demographics," Green said. "It will be more a question of what kind of amenities each place offers and the type of facility you create."