State law enforcement officials are touting how they saved the public from a “corrupt” gambling organization with the arrest of a Washington County vending machine operator who had video poker machines in 33 bars and clubs in four Southwestern Pennsylvania counties.
Tony Zenner of East Washington is accused of making more than $7 million in “illegal profits” off 147 machines. Zenner shared his profits 50-50 with those bar and club owners, authorities say; winning patrons also received payouts.
Said state Attorney General Josh Shapiro in announcing Zenner’s arrest:
“This defendant raked in millions of dollars in illegal proceeds, draining money from Pennsylvanians – and the Commonwealth of Pennsylvania – over the last decade. These video poker machines – with the lure of the cash payout – are illegal gambling devices. We’ve taken action with the state police to shut this enterprise down.”
The only thing missing from the announcement was a listing of the operation hours for The Meadows and Rivers casinos.
Gambling, of course, is just peachy — as long as the state sanctions how, where and when it takes place and how the money “The State” drains from gamblers is redirected.
Gambling is a vice when practiced in the private sector but a virtue when operated by the government, is that it? Call this what it is and has long been – public policy hypocrisy.
Speaking of gambling, the Pennsylvania Legislature might have just cut off its nose to spite its two faces.
The Philadelphia Inquirer reports that the General Assembly-set fees and taxes for operators to offer sports betting – said to be the highest in the nation – have proven to be a huge impediment to starting up such betting.
The commonwealth wants a $10 million license fee to start. Then it would tax proceeds at 36 percent (assessed on “gross sports gaming revenue” – the amount of money placed in bets minus cash paid back to winners) with 34 percent going to the state and 2 percent going to the host community.
As of this month, The Inquirer reminds that none of Pennsylvania’s 12 casinos has yet to apply for a license to cash in on what was sold as a multibillion-dollar bonanza.
In fact, the newspaper reports, an official of one potential operator – the Hollywood Casino at Penn National Race Course near Harrisburg – claims in a letter to the state Gaming Control Board that his operation would lose 40 cents on every $100 bet.
A sports betting expert tells the newspaper that, indeed, “it’s expected for (the) industry to complain about high taxes.” But, says Chris Grove, the Pennsylvania tax rate is “so much of an outlier that it may distort the markets in terms of who participates in it, how competitive it is and how able it is to take a share away from the existing black markets.”
Of course, the more you tax something, the less you get of it. And time will tell when it comes to sports betting in Pennsylvania if the greed of “The State” has gotten the worst of itself.
And speaking of how onerous taxation leads to diminishing returns, Pittsburgh City Controller Michael Lamb says February’s half-percentage point increase in the city’s reality transfer tax – from 4 percent to 4.5 percent – has contributed to a 25 percent decline in revenues from the tax. Rising interest rates likely are a lesser part of the equation, he says.
City officials pooh-pooh Lamb’s contention.
You might recall that the stated reason to raise the impost – which will rise another half-percent to 5 percent in 2020 – was to create an affordable housing fund to make city housing less costly.
As thinking people should be wont to note: What, by making housing less affordable?
Ahem. Bureaucratic perversions in public policy know no bounds.
Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
