Casino fiasco looms in Pennsylvania; A Trump by any other name

If you live in a Pennsylvania county with a casino, a local tax increase could be staring you in the face. That’s because lawmakers have until the close of business today (plus one pennsylvania_pa_state_capitolday in November) to fix the unconstitutional host-community fees but have shown no signs of reaching an accord. There are three factions at odds: A) lawmakers who want host-community fees to be part of a bigger package that includes Internet gambling; B) those who want any solution to be at least revenue-neutral; C) representatives of non-casino communities who see this as an opportunity to get a slice of the action. Getting to B will be hard enough, never mind reaching an elusive solution on A, and the C faction are just plain spoilers. Senate President Joe Scarnati (R) showed a mastery of understatement when he told The Morning Call, “Threading the needle on the local share is a little difficult.” We sympathize.

Noting that 47 counties don’t get any host-community money at present, House Gaming Oversight Committee Chairman John Payne said, “That’s the danger of
reopening the gaming law. Everyone who feels like they’ve been slighted for a decade wants a piece of the pie.” A percentage-based solution was tossed out for being unfavorable to the bigger players (5% of Parx Casino revenue is going to be a lot more than what Presque Isle Downs grosses). A flat, $12.5 million per year fee also got shot down, even though the idea was that the extra $2.5 million would go to the have-not communities, because some lawmakers think gaming taxes — 55% on slots are high enough as it is.

And two of the three casinos that started this whole magilla, Harrah’s Philadelphia and Rivers Casinos — have done an about-face and are asking the Lege to hold the line on taxes. “No one is looking for a windfall or to challenge the status quo,” they said in an implausible joint statement.” As an understandably vexed Senate Majority Leader Jake Corman (R) said, host communities “should be angry for the casinos that sued us in the first place.”

* If Donald Trump decides to build a second tower at Trump International on the Las Vegas Strip (instead of the mooted casino, a better idea), it probably won’t carry the Trump name. It will probably be branded “Scion,” a “four-star lifestyle brand,” not only trump-pic2because it is the progeny of Tower One but because that is the new hotel brand Trump is rolling out. Why? Because Trump himself is so toxic at present. During the International Monetary Fund conference in Washington, D.C., rooms at Trump International in Foggy Bottom went begging. Trump’s characterization of Mexican immigrants as “murderers and rapists” also cost him the services of two celebrity chefs. Data compiled by Hipmunk shows bookings at Trump hotels down 58% year to date. Ivanka Trump dismissed the reports, saying they were part of an anti-Trump conspiracy. Now where have we heard that before? As for the possible casino, the elder Trump should let partner Phil Ruffin handle it. Ruffin has the Midas touch in gaming and little that The Donald touches turns to gold.

* Speaking of Deja vu, casino legalization is “on” again in Japan. Prime Minister Shinzo Abe has handed cabinet portfolios to three pro-gaming ministers who say they want to have casino legislation on the docket by next month. Milken Institute fellow Kotaro Tamura told CNBC, “This time, it’s 100% happening.” We’ve heard that before, too. And Shinzo AbeAbe will have to sway the Diet by Nov. 30, when it adjourns. He’ll have to buck strong public opposition and an abnormally high incidence of problem gambling in Japan: 5% of the populace.

Casino megaresorts would serve Abe’s goals of increasing consumer consumption, currently weak, and of boosting tourism. Union Gaming Group analyst Grant Govertsen told CNBC that public opposition would lessen if it were clearly understood that only a small number of casinos are on the table (probably in Tokyo and Osaka). “While I don’t see Japan becoming the next Macao or Las Vegas, it could likely become the next Singapore,” said Steven Gallaway of Global Market Advisors. “Both countries are politically and economically stable, have diverse levels of international tourism” and are well separated from one another. Govertsen is more upbeat still, saying Japan “could quickly surpass the revenue story in Singapore.” We’ve had so many cases of premature optimism regarding Japan that we’ll believe this when we see it.

* Lawrence Ho‘s Tigre de Cristal casino near Vladivostok is a smash hit. Its third-quarter business doubled what it did in 2Q16, attracting 95,000 visitors, mainly from China and South Korea. Expect business to heat up further as competitors like NagaCorp follow Ho into the market.

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