Pa. legislators worry bar gaming licenses may be losing bet

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HARRISBURG -- When lawmakers authorized taverns to offer raffles and other games of chance, budget officials estimated the taxes would generate millions for state coffers.

But with only a handful of applicants in the first few weeks, at least one prominent player in the state budget is asking if projections for the coming year are a safe bet.

Since applications became available Jan. 27, the state Liquor Control Board has received only six, including one Friday, said spokeswoman Stacy Kriedeman. Gov. Tom Corbett's budget office based its projection of $102 million in revenue in the fiscal year beginning July 1 on an expectation that 1,000 to 2,000 taverns would participate.

"This rollout is worse than Obamacare," Senate Appropriations Committee Chairman Jake Corman, R-Centre, said at a hearing last week. "More people signed up for Obamacare than we're signing up for this small games of chance, from an industry who begged for this."

Mr. Corman suggested that requiring a federal background check, complete with fingerprinting, has dissuaded tavern owners who otherwise would be eager to offer the pull-tabs, daily drawings and raffles allowed under the new law. Potential applicants already would have passed a state background check to acquire their liquor licenses, he noted.

"I'm just trying to say are we going to make this easy, or are we going to make this hard?" Mr. Corman said.

Leaders of the state Gaming Control Board, which is responsible for conducting background checks, responded that they believed the law requires such an investigation. The board elaborated in a statement that the state must determine if an applicant has been convicted of a felony or a gambling-related misdemeanor anywhere in the country in the past 15 years.

"The only way for [the board's Bureau of Investigations and Enforcement] to effectively ensure this statutory requirement is met is through a federal fingerprint analysis," it said.

Jay Pagni, press secretary for Mr. Corbett, said the administration recognized there would be a "ramp-up period" and so booked slightly less than $5 million in revenue for the current year.

"We're early in the process," Mr. Pagni said. "We have every expectation that the taverns will come online over the next several months and have this offering for their customers."

The Pennsylvania Licensed Beverage Association, which represents independent bars, celebrated the passage of the law, noting after House approval that it has pushed for 25 years for its members to join social and veterans clubs in offering games of chance. Bar owners have shown interest, with 1,700 representatives attending seven information sessions across the state in the weeks before applications became available.

One of the few applicants so far, Jerry McArdle, president of the company that owns Jack's Tavern in Delaware County, said he completed the forms in about four hours and used a third-party business to facilitate his background check. With 35 years in the bar business, Mr. McArdle said he has looked forward to the ability compete with clubs -- and with Harrah's casino down the road -- by offering games of chance.

"Out in the Pittsburgh area pull-tabs and things have been very popular," he said. "I hope they become as popular here as they are in the western part of the state."

But he said he expects the price of applying -- $2,000 up front and another $2,000 upon approval -- combined with the cost of materials for the games would keep some businesses away.

"You're looking at an initial outlay of minimum six thousand bucks before you get a dime back," he said. "I think that there's a lot of small taverns across the state that just can't afford this."

On East Carson Street, Frank Vetere of the Carson City Saloon said he had been excited at the prospect of gaming -- until he realized taverns could not offer slots. And both the licensing fees and the 65 percent tax rate seemed too high.

"I don't see it being very profitable or worth our time," he said, adding: "All the fees and the headache to do it, it didn't seem worth it."

Howard Ives, owner of Howard's Park Place Pub, said he plans to apply, though he wants more information.

"Anything that I can do to increase revenue is a bonus," Mr. Ives said. "It's like a gift to small bar owners, who have to compete with private clubs around Pittsburgh, to have the opportunity to get a license to have small games of chance, as the clubs do. It puts me on a level playing field with them."

Karen Langley:, 717-787-2141 or on Twitter @karen_langley.

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