Sunday, April 16, 2006
No Gambling Fix in PA
You could take this post title two ways - and I will.
Let's start with the news report about the Fix not in - DeNaples license not a sure thing: "The chairman of the state Gaming Control Board admitted Friday the agency has an image problem rooted in a widespread belief that the awarding of slot-machine licenses is rigged. ..... His remarks came a day after Greg Matzel, a New Jersey developer who leads a group planning a $1.2 billion investment in Pocono Manor Resort & Casino in Monroe County, raised concerns about Dunmore businessman Louis DeNaples’ connection to Lackawanna College President Raymond Angeli, the newest member of the gaming board.
Mr. DeNaples is investing $360 million in Mount Airy Lodge in Paradise Township, and he and Mr. Matzel are competing for standalone licenses that would allow up to 5,000 slot machines.
Mr. DeNaples’s, brother, Dominic, is chairman of the college’s board. On Thursday, Mr. Matzel voiced concerns about the connection between Dominic DeNaples and Mr. Angeli."
The article talks on about perceptions of corruption on the gaming board, the need for the state to be sure casino licensees have deep pockets so they won't go out of business and that the board, and its newest member, will be fair. It also notes that : "The arrests of three gaming board staff members since September also has darkened the agency’s image. Among them was former Scranton resident Kevin Eckenrode, who is awaiting trial on a homicide charge after he allegedly dropped his girlfriend from a 23-story window of a Harrisburg high-rise.
The incidents all involved alcohol but were distinct, Mr. Decker said, admitting it created a sense that the commission lacked control."
I don't know any of these folks and have no opinion about their integrity or fairness. If State Gaming Control Board Chairman Decker says there is no fix, I'll accept that. In fact, I'll go further and argue that the whole licensing process is lacking a badly needed Fix.
Mr. Decker is worried about the depth of pockets of license applicants. That is an odd worry about two contestants that are offering to put up $350 to $1200 Million to develop their casinos in addition to the $50 Million fee for the license. Also, the article isn't clear whether those development costs include or are in addition to an inflated price for the underlying real estate.
Remember that, as I posted before here , the ability to have slots increased the real estate value of Pocono Downs by $260 Million. Since a very savvy casino operator bought the track with the intention of paying another $50 Million for the license, it's reasonable to say that the total increased value of Pocono Downs, due solely to the ability to operate gambling there, was at least $310 Million. I wonder how much monetary value is created in these two real estate property developments by the ability to get a gambling license? Probably a great deal more than the $50 Million that the State will get.
Giving away a license for a fixed $50 Million fee via Gaming Control Board decision, when the real value of the license may well be 5 or 6 times that amount, is a prescription for the perception of corruption if not the actuality. It certainly greatly reduces the funds that the State could recieve from an auction or other competitive bidding process. The only sure thing in this game is that the taxpayer loses.
There may not be a "Fix" in for the DeNaples - Matzel license decision; but the State definetly needs a Fix to its licensing process.
Let's start with the news report about the Fix not in - DeNaples license not a sure thing: "The chairman of the state Gaming Control Board admitted Friday the agency has an image problem rooted in a widespread belief that the awarding of slot-machine licenses is rigged. ..... His remarks came a day after Greg Matzel, a New Jersey developer who leads a group planning a $1.2 billion investment in Pocono Manor Resort & Casino in Monroe County, raised concerns about Dunmore businessman Louis DeNaples’ connection to Lackawanna College President Raymond Angeli, the newest member of the gaming board.
Mr. DeNaples is investing $360 million in Mount Airy Lodge in Paradise Township, and he and Mr. Matzel are competing for standalone licenses that would allow up to 5,000 slot machines.
Mr. DeNaples’s, brother, Dominic, is chairman of the college’s board. On Thursday, Mr. Matzel voiced concerns about the connection between Dominic DeNaples and Mr. Angeli."
The article talks on about perceptions of corruption on the gaming board, the need for the state to be sure casino licensees have deep pockets so they won't go out of business and that the board, and its newest member, will be fair. It also notes that : "The arrests of three gaming board staff members since September also has darkened the agency’s image. Among them was former Scranton resident Kevin Eckenrode, who is awaiting trial on a homicide charge after he allegedly dropped his girlfriend from a 23-story window of a Harrisburg high-rise.
The incidents all involved alcohol but were distinct, Mr. Decker said, admitting it created a sense that the commission lacked control."
I don't know any of these folks and have no opinion about their integrity or fairness. If State Gaming Control Board Chairman Decker says there is no fix, I'll accept that. In fact, I'll go further and argue that the whole licensing process is lacking a badly needed Fix.
Mr. Decker is worried about the depth of pockets of license applicants. That is an odd worry about two contestants that are offering to put up $350 to $1200 Million to develop their casinos in addition to the $50 Million fee for the license. Also, the article isn't clear whether those development costs include or are in addition to an inflated price for the underlying real estate.
Remember that, as I posted before here , the ability to have slots increased the real estate value of Pocono Downs by $260 Million. Since a very savvy casino operator bought the track with the intention of paying another $50 Million for the license, it's reasonable to say that the total increased value of Pocono Downs, due solely to the ability to operate gambling there, was at least $310 Million. I wonder how much monetary value is created in these two real estate property developments by the ability to get a gambling license? Probably a great deal more than the $50 Million that the State will get.
Giving away a license for a fixed $50 Million fee via Gaming Control Board decision, when the real value of the license may well be 5 or 6 times that amount, is a prescription for the perception of corruption if not the actuality. It certainly greatly reduces the funds that the State could recieve from an auction or other competitive bidding process. The only sure thing in this game is that the taxpayer loses.
There may not be a "Fix" in for the DeNaples - Matzel license decision; but the State definetly needs a Fix to its licensing process.
