HARRISBURG -- The Pennsylvania Gaming Control Board yesterday took the historic step of licensing the first gambling casinos in the state when it approved slots permits for five racetracks, including The Meadows in Washington County.

The decision means some slot machines will likely be operating by year's end.

Pocono Downs, a racetrack/casino near Wilkes-Barre, will probably be the first to open, by late November, with another at Philadelphia Park in Bucks County, north of Philadelphia, to open in December.

The Meadows parlor won't open that quickly. It expects to start construction this fall on a temporary $40 million casino with 1,800 slots. That is to open by May, with a permanent $135 million casino with 3,000 slot machines likely by mid-2008.

The other racetracks that won licenses yesterday are Harrah's Chester Casino and Racetrack at Chester Downs in Delaware County, south of Philadelphia, and Penn National racetrack in Dauphin County, near Harrisburg.

The board delayed approval for at least a month on a sixth racetrack license, for a new $250 million facility in Erie called Presque Isle Downs.

Yesterday's action was the biggest step toward casino gambling since the Legislature, in July 2004, legalized as many as 61,000 slot machines at 14 locations statewide. The law stipulated that licenses for seven racetracks would come first, but groups in Lawrence and Beaver counties are competing for the seventh track.

"Today's vote on licensing is a historic event and a historic moment for Pennsylvania and its residents," said gaming board Chairman Tad Decker.

Gov. Ed Rendell, who strongly pushed for slots, said the board's action "is a major milestone in the implementation of the slots law, and is a clear sign to all homeowners that property tax relief is on the way."

State Rep. Tim Solobay, D-Canonsburg, who's been eager for the state to sanction casinos, anticipates slots at The Meadows will generate more tourism and spin-off retail and residential developments.

"It's been frustrating that it's taken so much time to get to this point, but I'm glad it's here," he said.

Washington County Commissioner Bracken Burns is also glad about the board's action, because now he'll have something definite to tell senior citizens.

The casino anticipation "has been incredible," he said yesterday. "I can't go into a senior citizen center or a bingo hall without being inundated by people asking 'When are we getting slots?' They hear on the news that slots are coming and they expect them to be here the next morning."

Bill Paulos, co-owner of Las Vegas-based Millennium Gaming Inc., which bought The Meadows for $200 million in July, welcomed the slots license.

"We were confident," he said. "We worked very diligently with the gaming board and its staff to get this done and we are extremely happy about it. This will be good for Washington County."

Mr. Decker said the slots law will have three major benefits. Besides property tax reductions in two to three years, it will "revive our horse-racing industry" and create or preserve hundreds of jobs around the state.

Each track must pay the state a one-time $50 million licensing fee within four months.

The board issued the license to The Meadows despite concerns that the owners' estimates of how much money the casino will make are too high.

The gaming board staff has estimated The Meadows will get $118 million a year in gross terminal revenue, which is the amount of money a casino has left after winners have been paid. The casino uses that revenue to pay its taxes, debt service, labor contracts and other costs, and whatever is left is profit.

Millennium estimated its revenue at $236 million a year, or twice what the board staff had projected.

Because of its concerns, the gaming board attached two conditions to the license: Millennium must provide further details of the financing for the $135 million permanent casino, and it must give the board regular reports on its finances and expenses "so we can monitor them," said Denise Miskin, a financial official with the gaming board.

Mr. Paulos said his company "gives a lot of reports" so the second condition is no problem. He wouldn't comment on the first one, but with a $275 million loan from Bank of America/Merrill Lynch Capital, another $30 million loan from Bank of America, $50 million from Millennium and additional funds from Oak Tree Capital, another investor in the project, Mr. Paulos said his capital is sufficient.

The gaming board staff and Millennium have widely different estimates of how many patrons the casino would get, how far they would travel to get there, how much The Meadows will be hurt by competition from two existing West Virginia casinos and a new casino planned for Downtown Pittsburgh, how many people live within 100 miles of The Meadows and how much disposable income they have.

Mr. Paulos said he is confident his casino will produce more than $118 million a year in revenue, but even if it doesn't, he said he's not going to fold and the state won't suffer.

"They will still get their $50 million licensing fee, they will still get their 54 percent in taxes," he said.

Mr. Paulos thinks the temporary casino will be profitable, but the permanent facility will be even more so. It will have two stories, with 250,000 square feet of space, holding 3,000 machines, plus restaurants, bars and a theater.

Washington County officials are optimistic that the casino will be a significant spur for other development.

"The Meadows slots license is an overall positive for tourism, economic development and continued growth of Washington County," said Jeff Kotula, executive director of the Washington County Chamber of Commerce. "It will focus attention on the county."

"I know some developers were waiting for this license to be granted," Mr. Solobay. "This will start a wildfire of opportunity for the county."

A Greensboro, N.C., company plans to build a large shopping development, Tanger Factory Outlet Center, across Racetrack Road from The Meadows. A Bass Pro Shop is planned next door to the outlets, and there is another 100 acres available for more retail. The Holiday Inn near The Meadows has just been completely refurbished, and another hotel, a Hampton Inn, is planned nearby.

"There's also interest in cross-market development," with new homes and townhouses along Route 19 as well as additional retail, said Mark Tallarico of the Washington County Tourism Promotion Agency.

Gaming board officials said they might award the slots license for Presque Isle Downs at their meeting on Oct. 25, after they do more investigation into the background of some vendors doing business at the casino.

After that, the next big step will come Dec. 20, when slots licenses for up to five stand-alone casinos, including the one in Pittsburgh, will be issued. That competition is expected to be more heated than that for the racetracks, because there are more applicants than licenses.