From Pennsylvania, a cautionary tale of casino profits trailed by corruption

September 25, 2011|By Noah Bierman, Globe Staff
  • Patrons played at the SugarHouse Casino. The Pennsylvania Legislature approved casinos in 2004, helping governor Ed Rendell fulfill a campaign promise of property tax relief.
Patrons played at the SugarHouse Casino. The Pennsylvania Legislature… (joseph kaczmarek for the…)

PHILADELPHIA - Few states have a more compelling story to tell about how casino gambling is helping to balance the government’s books than Pennsylvania. Just five years after its first slot parlor opened, Pennsylvania now has 10 full-scale casinos, paying an annual $1.3 billion in taxes. That’s more revenue than New Jersey, Nevada, or any other state in the country.

Yet Pennsylvania’s story is also about how badly things can go wrong within the halls of government when billions of dollars are at stake. The financial success of Pennsylvania’s casinos was built on the ambitious scope of the effort and the rich profitability of the industry, but also on a foundation of cronyism, patronage, and back-room deals, not to mention overlooked criminal histories and alleged mob ties, according to a grand jury report released earlier this year.

The report concluded that the Pennsylvania Gaming Control Board - which was created to protect taxpayers’ interests - had instead looked after the industry, that it had taken “the public policy objectives and essentially turned them on their head.’’

“It’s that kind of scandalous beginning that launched this experiment with casinos in Pennsylvania,’’ said state Representative Curt Schroder, a Republican who chairs the House Gaming Oversight Committee. “If you weren’t on the inside, you didn’t stand a chance.’’

As Massachusetts lawmakers prepare to embrace the riches that gambling venues can bring, the Pennsylvania experience could serve as a cautionary tale, a reminder of the vigilance necessary to protect the integrity of the casino development process. It’s a lesson that resonates in a state with its own rich history of patronage and public corruption, where just in recent weeks two former state officials were indicted and the former house speaker was sentenced to prison on corruption charges.

“The notion that somehow Massachusetts is going to do it differently is naive, and it’s not based in reality,’’ said Les Bernal, executive director of the Stop Predatory Gambling Foundation, which opposes the state’s casino legislation. Bernal points out that many of the casino operators in Pennsylvania have shown active interest in opening casinos in Massachusetts.

But lawmakers who crafted the Massachusetts bill say that they are cognizant of what happened in Pennsylvania and have taken steps to guard against the inevitable temptations that come when the government creates and begins regulating a multibillion dollar industry overnight.

In 2004, Pennsylvania’s Legislature - then led by Republicans - approved casinos, helping the Democratic governor, Ed Rendell, fulfill his top campaign promise: property tax relief through casino windfalls.

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