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COMMONWEALTH OF HOUSE OF REPRESENTATIVES

APPROPRIATIONS COMMITTEE BUDGET HEARING

GAMING CONTROL BOARD

STATE CAPITOL HARRISBURG, PENNSYLVANIA ROOM 140, MAJORITY CAUCUS ROOM

THURSDAY, MARCH 12, 2015 9:30 A.M.

BEFORE:

HONORABLE WILLIAM ADOLPH, MAJORITY CHAIRMAN HONORABLE JOSEPH MARKOSEK, MINORITY CHAIRMAN HONORABLE HONORABLE HONORABLE GEORGE DUNBAR HONORABLE HONORABLE HONORABLE HONORABLE WARREN KAMPF HONORABLE FRED KELLER HONORABLE TOM KILLION HONORABLE JIM MARSHALL HONORABLE HONORABLE DAVID MILLARD HONORABLE HONORABLE MIKE PEIFER HONORABLE JEFFREY PYLE HONORABLE MARGUERITE QUINN HONORABLE HONORABLE MIKE VEREB HONORABLE HONORABLE HONORABLE MICHELLE BROWNLEE HONORABLE MIKE CARROLL HONORABLE SCOTT CONKLIN 2

1 HONORABLE HONORABLE MADELEINE DEAN 2 HONORABLE MARIA DONATUCCI HONORABLE EDWARD GAINEY 3 HONORABLE JOHN GALLOWAY HONORABLE 4 HONORABLE MICHAEL O'BRIEN

5 NON-COMMITTEE MEMBERS:

6 REPRESENTATIVE REPRESENTATIVE MARK COHEN 7 REPRESENTATIVE PAM DELISSIO REPRESENTATIVE VANESSA LOWERY BROWN 8

9 COMMITTEE STAFF:

10 DAVID DONLEY, EXECUTIVE DIRECTOR (R) RITCHIE LAFAVER, DEPUTY EXECUTIVE DIRECTOR (R) 11 CURT SCHRODER, CHIEF COUNSEL MIRIAM FOX, EXECUTIVE DIRECTOR (D) 12 ANNE BALOGA, CHIEF COUNSEL (D)

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14 TRACY L. MARKLE, COURT REPORTER/NOTARY PUBLIC 15

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1 INDEX TO TESTIFIERS NAME PAGE 2 WILLIAM H. RYAN, JR, CHAIRMAN 5 3 GAMING CONTROL BOARD

4 KEVIN O'TOOLE, EXECUTIVE DIRECTOR 22 GAMING CONTROL BOARD 5

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1 ---oOo---

2 MAJORITY CHAIRMAN ADOLPH: Thank you, and

3 good morning. I'd like to reconvene the House

4 Appropriations Budget Hearing. Today's hearing is on

5 the Pennsylvania Gaming Control Board.

6 As is customary, we'll just take a few

7 moments for introductions and some ground rules. I'd

8 ask everybody, including the committee members, to turn

9 off their iPhones and iPads and all that electronic

10 equipment. It interferes with the hearings.

11 My name is . I'm the House

12 Republican Appropriations Chairman, and we'll take a

13 couple minutes to introduce the members of the Board,

14 starting to my right.

15 (INTRODUCTION OF MEMBERS.)

16 MAJORITY CHAIRMAN ADOLPH: Thank you. I'd

17 like to welcome the Pennsylvania Gaming Control Board.

18 Obviously, this Board, the members are very familiar.

19 They have distinguished careers in their own right, and

20 they have a very tough job that they deal with on a

21 daily basis.

22 And just for background, the Chairman of the

23 Board is a constituent of mine; so he's well represented

24 here in Harrisburg. But Bill Ryan was a former

25 District Attorney in Delaware County and served in the 5

1 Pennsylvania Attorney General's Office for many years,

2 and he's doing an outstanding job as the Chairman of

3 this Committee, as is the other members of this Board.

4 What we're here to talk about today is your

5 budget request, obviously; but what the members would

6 like to know and the viewers would like to know is the

7 state of our casinos, how they're doing. I always like

8 to know how much revenue they are putting into the

9 Pennsylvania economy, the number of jobs, the number of

10 taxes paid, okay, the big picture, which sometimes, you

11 know, you start picking apart one program versus the

12 other.

13 But this was a big step for Pennsylvania,

14 not too long ago, when gaming became legal in

15 Pennsylvania. And you have a law-enforcement part of

16 this and also overseeing the operation, so it's always

17 been a very interesting hearing. We'll see some

18 interesting questions from the Committee.

19 So without further ado, Bill, if you would

20 give us a brief update and then I'm going to turn it

21 over to Chairman Markosek for opening comments.

22 MR. RYAN: Thank you. Good morning,

23 Chairman Adolph, Chairman Markosek, and members of the

24 Committee. My name is Bill Ryan, Chairman of the Gaming

25 Control Board. 6

1 Joining me today is Kevin O'Toole, the

2 gentleman to my left. Kevin is our Executive Director.

3 Also with us today are my colleagues on the Board, or a

4 couple of them: John McNally, Keith McCall, Annmarie

5 Kaiser, and Dave Woods, who are seated in the room

6 behind me.

7 For fiscal year 2015-16, the Board's budget

8 request as recommended by the Governor is 39,900,000.

9 This represents an increase of $1.91 million or five

10 percent over our current fiscal year appropriation, with

11 the largest cost drivers being increases in pension

12 rates, which are up 24.6, and employee rates increasing

13 10.6 percent.

14 The Board's budget request includes $34.5

15 million for personnel and benefits and $5.4 million for

16 operating and fixed asset expenses. The PGCB has not

17 budgeted specifically for any new salary increases for

18 employees for fiscal year 2015-2016.

19 However, the Board has budgeted an

20 additional 1.125 percent plus associated benefits to

21 cover the full year cost of the 2.25 increase for union

22 employees that was implemented in January 2015 pursuant

23 to the Commonwealth's collective bargaining agreement.

24 The full-year cost of this increase is

25 approximately $400,000. However, only $200,000 needs to 7

1 be budgeted in '14-15 because the increase took effect

2 at mid-year; so an additional $200,000 is requested in

3 '15-16 to pay for the rest of that 12-month

4 bargained-for increase.

5 The personnel budget supports 310 positions,

6 down from 326 positions at the end of 2011, despite the

7 opening of two casinos since that time; and each of

8 those two casinos required that the Board staff them

9 with seven personnel, for a total of 14.

10 In spite of this reduction in staff, the

11 Board anticipates benefit costs being $6.2 million

12 higher compared to fiscal year 2010-2011. Put another

13 way, the cost of benefits in 2011 were about 40 percent

14 of salary. For the next fiscal year, they'll be 68

15 percent of salary.

16 While reducing complement has played a very

17 important role in keeping our budget increases to a

18 minimum, lower operating costs have also helped achieve

19 this goal. In fact, the Board anticipates that

20 operating costs for fiscal year 2015-16 will be at their

21 lowest levels since fiscal year 2005-2006.

22 As you know, the operations of the Board are

23 not funded by general tax revenue. In fact, the Board's

24 budget is funded from assessments on the casino industry

25 required to be made pursuant to Section 1401 of the 8

1 Gaming Act and from fees and expenses billed to

2 applicants, licensees, and slot manufacturers.

3 That being said, the Board is very cognizant

4 of the need to regulate strictly but efficiently; and

5 our fiscal year '15-16 budget request reflects that

6 commitment.

7 We have provided the Committee with a

8 handout containing additional information on our budget

9 request, how Pennsylvania has benefitted from the gaming

10 industry and historical casino gaming revenue and tax

11 revenue on a fiscal-year basis.

12 Finally, as I realize that the Committee may

13 be interested in how Pennsylvania fared on a

14 calendar-year/over-year basis, looking at calendar year

15 2014, combined gaming revenue dropped to 1.44 percent

16 from 2013, but still marked the fourth straight year in

17 which the revenue figure topped $3 billion.

18 Slot machine gaming revenue for the 2014

19 calendar year remained above $2.3 billion but dropped

20 2.8 percent below calendar year 2013. In 2014, gross

21 table games revenue continued to increase and reported a

22 gain of 2.7 percent above 2013 revenues.

23 Tax revenue in 2014 from the combined play

24 of slot machines and table games was over $1.3 billion.

25 Pennsylvania continues to bring in more tax revenue than 9

1 any other state, annually funding important items such

2 as property tax relief and the Pennsylvania Volunteer

3 Fire Company Grant Program.

4 Thank you for allowing me to provide this

5 testimony. We appreciate the Committee's consideration

6 of our budget request. Kevin and I would be happy to

7 answer any questions you have.

8 MAJORITY CHAIRMAN ADOLPH: Thank you,

9 Chairman Ryan. Chairman Markosek.

10 MINORITY CHAIRMAN MARKOSEK: Thank you,

11 Chairman Adolph. Chairman Ryan, welcome. Welcome,

12 Mr. O'Toole, the Executive Director. I want to welcome

13 you and your other board members who are here today.

14 The members of the Appropriations Committee

15 know how much in high regard I consider not only the

16 current members of the House of Representatives but

17 former members of the House of Representatives, and I'd

18 be remiss without recognizing one who's before us today,

19 a good friend of mine who got elected the same year I

20 did back in 1982 and became Speaker of the House, Keith

21 McCall, who's here as well today; and I want, certainly,

22 the current members of the House to understand how

23 important and how great it is to be a member of the

24 House of Representatives. So I never try to miss a

25 chance to do that. 10

1 But, nevertheless, thank you for your

2 testimony. I just have a brief question, and I think

3 it's important that the public understands that you get

4 no tax money. The money that you operate from is money

5 that is derived through fees of the casinos and of the

6 people who you regulate, etc.

7 But you are requesting an increase, that you

8 mentioned. And can you delve in a little bit for us

9 here today relative to how you are controlling the costs

10 of your operation to keep, you know, whatever increases

11 you may be asking for at a minimum?

12 MR. RYAN: Yes. Mr. Chairman, as we have

13 done for the entire time I've been on the Board and I'm

14 sure it was being done before me, what we attempt to do

15 is make sure we don't increase our costs unless we

16 absolutely have to.

17 As you can see, our biggest cost item is

18 personnel. Whenever we get a vacancy, the Board looks

19 at it very closely, do we have to fill this vacancy?

20 And, in fact, in the last three years, we have decided

21 not to fill 30 vacancies, which has represented a

22 considerable savings for the Board.

23 We also look closely at all of our operating

24 expenses. We have changed the buildings we lease in now

25 two situations because we got markedly lower lease 11

1 payments. We are cutting the number of telephones. In

2 fact, in this budget, the number of cell phones will be

3 cut 24 percent. The number of vehicles in the last two

4 years has been cut dramatically, and I think I can say

5 to you and to the people of Pennsylvania that in every

6 single area where we have an appropriation, a line item,

7 we look at it.

8 And personnel costs are a problem, as I just

9 told you. Despite declining numbers of employees, we

10 have a 24.6 percent increase in our contribution for

11 pension and a 10.6 percent increase for health benefits.

12 They're huge numbers, and they've been going on for

13 quite awhile; so they're tough to get around.

14 On the other hand, the rest of our budget,

15 which is basically operating, we are cutting the

16 appropriation by $159,000 this year from last; and as I

17 indicated, that puts us back ten years when it comes to

18 the operating expenses at the Gaming Board, which I

19 think every Pennsylvanian should understand is a major

20 accomplishment.

21 MINORITY CHAIRMAN MARKOSEK: Thank you. And

22 again, you're not getting state money; but I think it's

23 fair to, you know, ask you about controlling some of

24 your costs. What about your -- I know you're a

25 personnel-intensive type of organization, but what 12

1 about your IT situation, your use of technology or your

2 betterment of the technology that you have in terms of

3 helping you to be more productive? Can you comment on

4 that? Are you sufficient in that area, or do you need

5 more help there?

6 MR. RYAN: We are making great strides. We

7 kind of reconfigured our IT department two years ago.

8 It wasn't as strong as we wanted it to be. The Board

9 reconfigured it, put it under the leadership of a very

10 skilled IT director; and we have been able to make

11 purchases of new better software, even better hardware;

12 and I think throughout the Agency, the people who work

13 and need it, as you all over here know how much we need

14 technology today, are definitely pleased with the

15 improvement.

16 Are we finished with the upgrade? No. But

17 we seem right now to have the resources we need to do

18 the upgrade in a way that makes sense and that prevents

19 us from getting too far ahead of ourselves.

20 MINORITY CHAIRMAN MARKOSEK: Okay. Thank

21 you very much, Mr. Chairman.

22 MAJORITY CHAIRMAN ADOLPH: Thank you,

23 Chairman. The first question will be asked by

24 Representative Kurt Masser.

25 REPRESENTATIVE MASSER: Good morning, 13

1 Chairman, members of the Board. I'm over here. Your

2 budget includes $100,000 in revenues from a restricted

3 account for tavern games investigations. It's my

4 understanding that the funds in this account are paid by

5 the applicants and used by the Board to perform the

6 required background investigation?

7 MR. RYAN: That's correct, sir.

8 REPRESENTATIVE MASSER: How many

9 applications have been filed for tavern games licenses?

10 MR. RYAN: I think we have reviewed, since

11 its inception, 40. I don't believe we have any right

12 now.

13 REPRESENTATIVE O'TOOLE: There are none

14 pending.

15 MR. RYAN: We don't have any pending.

16 REPRESENTATIVE MASSER: And there's only 40?

17 MR. RYAN: Yes.

18 REPRESENTATIVE MASSER: What's your thoughts

19 on the reasoning behind the small number of applicants?

20 MR. RYAN: Well, Representative, none of us

21 are experts in this. But you can't help but talk to

22 people in our agency who talk to the people who are out

23 in the street and who they deal with; and it appears

24 that, quite honestly, the costs are extremely high. It

25 costs a thousand dollars to file an application, another 14

1 thousand dollars for the investigation. If you get the

2 license, it's 500 more, and then you have to renew it

3 for a thousand dollars every year.

4 But I think the big problem for a lot of

5 tavern owners is that whatever revenue you get is taxed

6 at 65 percent. From what I hear, and I think members of

7 the Board and employees of the Agency would agree, that

8 that may be the biggest problem as far as discouraging

9 interest.

10 REPRESENTATIVE MASSER: It's my

11 understanding, too, that the application itself is quite

12 lengthy and --

13 MR. RYAN: The application is somewhat

14 lengthy. Unfortunately, it has to be given the mandate

15 and the statute. We have made it easier; but I do have

16 to tell you, Representative, they're not the complaints

17 we get as to what the real burdens are among the tavern

18 owners. It's the bottom line, the dollars and cents.

19 What am I going to get out of this for all the extra

20 effort, the reporting I have to do? And what's my

21 bottom line going to be?

22 REPRESENTATIVE MASSER: And that 65 percent

23 was set in the statute?

24 MR. RYAN: That's correct.

25 REPRESENTATIVE MASSER: How many new 15

1 applications are you expecting to receive in 2015-2016?

2 MR. RYAN: I really couldn't tell you. I'm

3 not sure.

4 REPRESENTATIVE MASSER: But that thousand

5 dollars wasn't based on those numbers?

6 MR. RYAN: I think it was an estimate based

7 on the past and everybody's hope that things will

8 improve, more interest will build up; but I can't tell

9 you what number in this next fiscal year will be the

10 magic number. I wish I could.

11 REPRESENTATIVE MASSER: And one last

12 question: Has the Board rejected any applications?

13 MR. RYAN: We don't reject applications. We

14 just make recommendations to the Liquor Control Board.

15 What we do is the background and then refer it over to

16 the Liquor Control Board.

17 REPRESENTATIVE MASSER: Okay. Thank you.

18 Thank you, Mr. Chairman.

19 MAJORITY CHAIRMAN ADOLPH: Thank you,

20 Representative. Representative Mike O'Brien.

21 REPRESENTATIVE O'BRIEN: Thank you, Mr.

22 Chairman. Good morning, and welcome. Certainly

23 whenever the Board issues a license, it sets off

24 controversy, no different than a recent issuance of a

25 license in Philadelphia. 16

1 Now, it's my understanding that some of the

2 applicants and the existing Philadelphia casinos are in

3 the process of suing the Board on the issuance of those

4 licenses. What's their cause of action?

5 MR. RYAN: Well, I think mainly, sir,

6 they're appealing the decision. SugarHouse was an

7 intervenor, as you know. They're appealing, and then

8 two of the applicants are appealing. And I think the

9 major issue from SugarHouse is saturation, and there are

10 various and sundry issues raised in the other two

11 complaints.

12 The other major issue was, I guess, the

13 concentration of the gambling entities in that area.

14 That's my understanding.

15 REPRESENTATIVE O'BRIEN: So in all the

16 issues, they come back to saturation? Yes, in some

17 form?

18 MR. RYAN: I would expect that saturation

19 would be the major issue that is pushed on appeal.

20 REPRESENTATIVE O'BRIEN: And what was the

21 Board's response to this?

22 MR. RYAN: Well, all I can tell you, and

23 you'll have to remember, we cannot comment really about

24 what --

25 REPRESENTATIVE O'BRIEN: I'm not asking for 17

1 a comment. I'm simply asking for your response, which

2 is a matter of the public record.

3 MR. RYAN: Well, we haven't responded yet,

4 formally. What our response is, what we said in our

5 memorandum at the time we issued the decision, was that

6 we thoroughly reviewed the issue of saturation and we

7 did not feel that the proponents of that issue proved by

8 a preponderance of the evidence that the market is

9 saturated.

10 There is no question that the market is

11 competitive, but there's a difference between a

12 competitive market and a saturated market. And, indeed,

13 there were originally six applicants who spent a lot of

14 money preparing and in the filing process, and we

15 presume wanted a license in the City of Philadelphia

16 where it had to be.

17 And the Board's decision was based on the

18 facts and the law, and the facts were those who pushed

19 the issue of saturation did not prove it by a

20 preponderance of the evidence.

21 REPRESENTATIVE O'BRIEN: In the Board's

22 consideration, it's my understanding that industry

23 analysts have pointed to that issue of saturation in the

24 area, you know, have made recommendations, which we can

25 do statutorily, that a license would better be issued 18

1 someplace else.

2 Did you take these commentary from industry

3 analysts into consideration?

4 MR. RYAN: We reviewed the evidence that was

5 presented, all of us, and considered it and considered

6 along with it our obligation to, as best we could, make

7 sure that the will of the General Assembly was realized;

8 and that will was clearly stated that there should be

9 two casinos in the City of Philadelphia.

10 So did we consider all the evidence

11 presented? Yes. And we were always mindful, also, of

12 our obligation to, as best we could, adhere to the

13 requirements of the Gaming Act.

14 REPRESENTATIVE O'BRIEN: My final

15 Philadelphia question: So does the Act require you to

16 issue a second license, or is it at the discretion of

17 the Board not to issue a license or to issue a license

18 sometime in the future?

19 MR. RYAN: It was our decision that the

20 statute did not require that the Board issue a license

21 at the time we did it. That's correct. The language

22 was not so defined that it could be argued that we had

23 to do it when we did it.

24 REPRESENTATIVE O'BRIEN: Let's move across

25 the state for a moment. Lawrence County. 19

1 MR. RYAN: Yes, sir.

2 REPRESENTATIVE O'BRIEN: That license has

3 been out there for quite a while. One could make the

4 argument it's withering on the vine. Where do we stand

5 with that and when can the Commonwealth expect to derive

6 some revenue from that site?

7 MR. RYAN: Well, as I'm sure you know,

8 Representative, a lot of time is spent because of

9 problems of prior investors going back to, I guess, '06-

10 '07, having difficulty meeting certain requirements with

11 respect to investing.

12 I believe this is the third investor group.

13 Endeka is the third investor group. And this group does

14 have the provisional harness-racing license, and it's

15 provisional on the group also getting a slots license.

16 The group has filed with the Board for a

17 slots license. As you know very well, we members of the

18 Board do not make the decisions on investigation issues.

19 In fact, we are prohibited by law to do that. We have a

20 Department of License. We have a Bureau of License --

21 excuse me -- and the Office of Enforcement counsel and

22 the Bureau of Investigation Enforcement, they review all

23 the matters and all the material submitted.

24 That process, that is the vetting of the

25 applicants, all of them, and the very difficult, very 20

1 involved job of making sure that all the regulations are

2 met and the law is being adhered to, that is all in the

3 process.

4 There is, as I understand -- that OEC is

5 still trying to get some more information from some of

6 the applicants. I will also tell you that the Board is

7 hopeful we can make a decision by the end of this

8 calendar year.

9 REPRESENTATIVE O'BRIEN: In the category of

10 musing, not dissimilar from the situation we found in

11 the Foxwood incident. But, nonetheless, thank you for

12 your testimony this morning. I appreciate it.

13 Thank you, Mr. Chairman.

14 MAJORITY CHAIRMAN ADOLPH: Thank you. The

15 Chairman, you know, had latitude with Representative

16 O'Brien. This has been one of his passionate issues at

17 the casinos. He treats every casino like it's in his

18 back yard, and he's representing his constituency there

19 in Philadelphia.

20 Representative George Dunbar.

21 REPRESENTATIVE DUNBAR: Thank you, Mr.

22 Chairman. Chairman Ryan, Mr. O'Toole, Commissioners,

23 good to see you all again. We have had all kind of

24 discussions here about all our expenditures. I'd like

25 to shift a little bit and talk about potential revenues. 21

1 As you know, New Jersey, Delaware, Nevada

2 all have internet gaming. I think that's correct. I

3 don't know if there's any other ones other than those

4 three.

5 And there are bills circulated throughout

6 the legislature right now to legalize internet gaming

7 and poker in Pennsylvania. I'd like to get your

8 thoughts on those. The present bill that I believe

9 Representative Payne has makes our existing licensees

10 the gateway to housing the internet gaming and puts the

11 regulations and control in your hands. And I want to

12 know if you feel that's the appropriate place for

13 oversight.

14 MR. RYAN: I think it would be, yes.

15 REPRESENTATIVE DUNBAR: I do, as well. I

16 agree. Have you had any discussions about potential

17 revenue? I mean, I've heard numbers anywhere from 50

18 million to 200 million.

19 MR. RYAN: To my knowledge, we have not,

20 Representative. I think this is an area which is the

21 area of policy that is one we are, I think, correctly

22 leaving to the General Assembly and to the Governor.

23 Everybody knows about the revenue projections in New

24 Jersey when it first started.

25 It turns out that the projections may have 22

1 been somewhat high, maybe very high. I think Nevada and

2 Delaware are finding somewhat the same experience.

3 Although, revenue does seem to be increasing as time

4 goes by; so I think it's an area where there may be a

5 lot of educated guesses about what the revenue will be.

6 But getting the exact estimates just probably won't

7 happen.

8 REPRESENTATIVE DUNBAR: And in New Jersey

9 the last year, do you know what the revenues were? Was

10 it 140 million? Is that --

11 MR. O'TOOLE: Representative, it ranges

12 between 9 million and 11 million per month.

13 REPRESENTATIVE DUNBAR: Per month. Very

14 good. Thank you. And after enactment of internet

15 gaming in these other states, has there been any impact

16 on their brick-and-mortar casinos?

17 MR. O'TOOLE: There's been an awful lot of

18 other factors that have impacted New Jersey's

19 brick-and-mortar casinos that I don't think you could

20 really analyze what effect internet has had on the brick

21 and mortar.

22 REPRESENTATIVE DUNBAR: And if something

23 like this would transpire in Pennsylvania, do you have

24 any estimate of what type of time frame it would take

25 the Gaming Control Board to come up with the regulations 23

1 and if you would have to incur any additional costs, any

2 additional staffing?

3 MR. O'TOOLE: Yes. We think it could take

4 up to, potentially, a 12-month period to get all of the

5 required licensing, to get regulations in place, to test

6 equipment, and to bring in some additional personnel,

7 particularly in the IT area, which is, you know -- we've

8 conferred with these other jurisdictions that have

9 legalized internet gambling to see how it has rolled out

10 in those jurisdictions in the event that we experience

11 that; and, generally, it's in the IT area. Four to six

12 people would probably be the appropriate number.

13 If it's intrastate online gambling, you have

14 to incorporate geolocation requirements to have a way to

15 ensure that the gamblers are gambling from inside the

16 boundaries of Pennsylvania.

17 REPRESENTATIVE DUNBAR: Uh-huh. Are you

18 familiar with the federal legislation, I think it's HR

19 707, I want to say Chaffetz or something, a congressman

20 from Utah, to repeal the Wire Transfer Act?

21 MR. RYAN: Yeah, I believe that's what would

22 reinstate the law to what everybody thought it was

23 before 2011 when the Justice Department issued its

24 memorandum.

25 REPRESENTATIVE DUNBAR: Uh-huh. And if this 24

1 would pass -- federal legislation would pass into law,

2 it would essentially eliminate any opportunities

3 Pennsylvania would have for internet gaming; is that

4 correct?

5 MR. RYAN: I think that's the understanding

6 people give it. Kevin.

7 MR. O'TOOLE: Yes, I agree with that.

8 REPRESENTATIVE DUNBAR: And do you have any

9 idea about the potential for passage?

10 MR. RYAN: No idea. Absolutely none.

11 REPRESENTATIVE DUNBAR: Okay. And one last

12 question. We've, also, in the Gaming Oversight

13 Committee in the House, recently had a hearing on video

14 gaming. Can you elaborate on the difference between

15 video gaming and internet gaming?

16 MR. O'TOOLE: Well, video gaming, as it has

17 been presented, is slot-machine gambling. It's not a

18 computer-based or an online-based activity. It's an

19 activity based upon playing slot machines.

20 REPRESENTATIVE DUNBAR: So, essentially,

21 it's a stand-alone machine at an establishment outside

22 of a casino?

23 MR. O'TOOLE: That is correct. Yes.

24 REPRESENTATIVE DUNBAR: And that's legal in

25 Illinois? 25

1 MR. O'TOOLE: It is legal in Illinois. It

2 was passed, I believe, in mid-2012; so they've had about

3 two-and-a-half years' experience in that activity.

4 REPRESENTATIVE DUNBAR: And do you have any

5 idea the results of that?

6 MR. O'TOOLE: Well, in looking at it fairly

7 recently, because we know that it's a topic that the

8 House Gaming Oversight Committee has looked at,

9 presently there's approximately 19,000 slot machines

10 that are located in these establishments outside of a

11 casino.

12 Illinois also has ten licensed casinos.

13 Those 19 slot machines are located in about 4,500

14 different establishments. There's a statutory limit of

15 five machines per establishment.

16 That is still a growing market in Illinois,

17 so it's hard to project where it will get when it's

18 mature. But the 10 operating casinos have also incurred

19 a loss in revenue during calendar year 2014 of

20 approximately $87 million.

21 REPRESENTATIVE DUNBAR: Okay. So the

22 assumption is that the video gaming may have contributed

23 to that?

24 MR. O'TOOLE: That is the assumption, yes.

25 REPRESENTATIVE DUNBAR: And one last 26

1 question. I'm sorry, Mr. Chairman. When internet

2 gaming came out in other states outside of New Jersey,

3 which there were a lot of other factors in New Jersey,

4 did their casinos see any negative effect in their

5 revenues of brick and mortars?

6 MR. O'TOOLE: I can represent that the

7 executives at the Atlantic City properties have done as

8 good a job as possible to develop what they call

9 convergence, and that is using your player base on the

10 internet side to encourage them and entice them to

11 patronize the brick-and-mortar casino. That's the

12 objective.

13 I can't say whether that objective has been

14 fully met, but at least they are trying to maintain, you

15 know, a convergence between their online database and

16 their brick-and-mortar database.

17 REPRESENTATIVE DUNBAR: Thank you for your

18 latitude, Chairman.

19 MAJORITY CHAIRMAN ADOLPH: Thank you,

20 Representative. Representative Kinsey.

21 REPRESENTATIVE KINSEY: Thank you, Mr.

22 Chairman. Good morning, Chairman Ryan and Executive

23 Director O'Toole.

24 I represent Philadelphia County, and my

25 office has been bombarded with calls and also visits 27

1 and letters of individuals and organizations that oppose

2 the awarding of the second casino being established in

3 the City of Philadelphia.

4 And, again, many of the folks that come in

5 my office, they come in there for various reasons why

6 they don't think another casino should be built in the

7 City of Philadelphia.

8 But one of the major reasons, at least that

9 has been shared with me, is related to compulsive

10 gambling. And I think most recently we've read in

11 newspapers, an individual adult leaves a child in a car,

12 goes to a casino to gamble, and something happens that

13 the police, thank God, are there to sort of help get the

14 kid out of the vehicle.

15 But I guess my question is, and I'm looking

16 over the information that was shared with us this

17 morning, the Office of Compulsive and Problem Gambling,

18 is that the office that deals with -- I mean, I guess by

19 virtue of its name -- but that deals with the compulsive

20 gambling, the issues related to that?

21 MR. RYAN: That's correct, sir.

22 REPRESENTATIVE KINSEY: Okay. I guess my

23 question is: In that particular office, can you give an

24 idea in regards to how much is set aside to deal with

25 compulsive gambling and then also what is it used for? 28

1 Is it used in part -- is there an education component,

2 or is there a treatment component, or like what does

3 that actually do, that particular office?

4 MR. RYAN: Well, I guess, first of all, I

5 should say that the casinos pay 4.8 million this

6 budgeted year from GTR and half of that money is

7 distributed from the Department of Health to the

8 Department of Drug and Alcohol Programs. And then

9 through single-county authorities through needs

10 assessment, prevention outreach education and other DDAP

11 approved services at a local level.

12 And as I understand it, sir, there are about

13 102 locations throughout the state where people now can

14 go to get this kind of help, including some sort of

15 therapy that is treatment to deal with their problem.

16 The other half is used by the Department of

17 Drug and Alcohol Programs for problem gambling

18 treatment, problem gambling training outreach,

19 mini-grants, and to pay for a statewide problem gambling

20 helpline.

21 And then there is another $3 million that is

22 also paid by the industry every year. That goes to the

23 Department of Drug and Alcohol Programs. That money

24 goes from them to the single-county authorities for drug

25 and alcohol addiction assessments and treatment, 29

1 including drug and alcohol addiction related to problem

2 gambling.

3 So right there, there's about $8 million

4 dedicated every year to deal with the problem of problem

5 gambling. Our office does a lot of outreach in the

6 communities to make people aware of the problem, and I

7 think most importantly what our office does is, we staff

8 the program that allows people to voluntarily exclude

9 themselves from all the casinos in Pennsylvania. So a

10 person who thinks he or she has a gambling problem in

11 Pennsylvania can go into any of the casinos where we

12 have staff present 24/7 or to any of our other four

13 buildings located throughout the state: Wilkes Barre,

14 Pittsburgh, Conshohocken and near Harrisburg, and ask to

15 be placed on the exclusion list for one year, for five

16 years, or for life.

17 REPRESENTATIVE KINSEY: Great. I notice

18 that over 8,000 individuals had enrolled in the

19 self-exclusion program, but throughout -- regardless of

20 treatment throughout the Commonwealth, do we have any

21 idea in regards to how many additional folks besides

22 this 8,000 that have entered programs to either seek

23 help or seek treatment to deal with compulsive gambling?

24 MR. RYAN: I don't have those figures in

25 front of me, sir. I'm sure the Department of Health or 30

1 perhaps DDAP can get them or our office can do what we

2 can go to find out as much information as there is out

3 there.

4 REPRESENTATIVE KINSEY: All right. We'll

5 reach out to the Department of Health. But thank you

6 very much, Mr. Chairman.

7 MAJORITY CHAIRMAN ADOLPH: Thank you,

8 Representative. Representative Keith Greiner.

9 REPRESENTATIVE GREINER: Thank you, Mr.

10 Chairman. And thank you, Chairman, for being here

11 today. I'm going to switch gears a little bit. I'm

12 from Lancaster County, so usually there isn't a whole

13 lot of talk from a lot of people concerning casinos.

14 However, there is a discussion on property tax relief

15 and looking at the property tax relief reserve fund.

16 And through reviewing the records and

17 looking at this year's budget, the 2014-2015 budget, and

18 you provided some information in your packet, too, you

19 had made a comment that there's nearly $783 million

20 that are made available for property tax relief -- or

21 actually that's what's coming up in the new year.

22 What we're saying though is, we have $595

23 million currently that goes towards general property tax

24 relief. That's what my records indicate for the current

25 year; is that correct, sir? 31

1 MR. RYAN: That's correct.

2 REPRESENTATIVE GREINER: And what I was

3 wondering is, that's been consistent for about, well,

4 since the 2008-2009 area. And I'm wondering with the

5 declining of receipts over the last couple of years, how

6 has this amount of relief been sustained in our budget?

7 How are you able to do that?

8 MR. RYAN: Well, it's been sustained because

9 slot revenue has -- first, it took off, as you know, as

10 more and more casinos went online. And, fortunately,

11 with the exception of the property Presque Isle up in

12 Erie, slot revenue has been pretty consistent. We've

13 had a decline; I think, slot revenue declined

14 two-and-a-half or three percent in 2013, which was the

15 first decline we had had; and I think another 2 percent

16 or so this year.

17 But overall, slot revenue has maintained a

18 stable level; and that's enabled the revenue produced to

19 keep the fund where it is.

20 REPRESENTATIVE GREINER: I appreciate that.

21 I was kind of curious, are we borrowing at all from the

22 Property Tax Relief Reserve Fund? I mean, are we doing

23 any borrowings at all, to the best of your knowledge?

24 MR. RYAN: I don't believe so, sir. No. I

25 think what we're seeing is that the revenue that's 32

1 generated is sufficient to make the payment.

2 REPRESENTATIVE GREINER: One thing that I do

3 just kind of want to follow up, because I know that part

4 of the Governor's budget is, he's tauting, you know,

5 $3.8 billion going back to property tax owners.

6 And when looking at his budget, I know we're

7 looking at about a 20-percent increase in PIT,

8 40-percent effective rate in sales tax. I think it's

9 pretty onerous increases. And while looking at it -- I

10 know he's talking 3.8 billion -- the reality is, $600

11 million is already being part of that 3.8. The 600

12 million's already being given out. Am I correct in that

13 analysis or not?

14 MR. RYAN: I'm not sure what -- are you

15 talking about the --

16 REPRESENTATIVE GREINER: In this year's

17 budget, he's talking about distributing $3.8 million for

18 property tax relief. And my point is, when he mentions

19 that number, $600 million of that's already currently

20 being distributed.

21 MR. RYAN: If you've included the 595

22 million, right?

23 REPRESENTATIVE GREINER: Correct. Correct.

24 600 million. All right. I just wanted to clarify that.

25 Thank you, sir, for your time. Thank you, Mr. Chairman. 33

1 MAJORITY CHAIRMAN ADOLPH: Thank you,

2 Representative. Representative Dean.

3 REPRESENTATIVE DEAN: Thank you, Mr.

4 Chairman. Good morning, gentlemen. Thank you for being

5 here, other members of the Board, also.

6 I'm Madeleine Dean from Montgomery County.

7 I wanted to -- I think it's worth repeating that the

8 Board receives no general fund dollars for your

9 operation. I think the public needs to understand that.

10 And yet you perform a really important oversight

11 function, and I guess we have some oversight of you. It

12 goes back and forth.

13 Another thing that I think is somewhat

14 unseen or not really tangible to us is the massive

15 amounts of property tax relief that Gaming provides

16 Pennsylvanians. Could you just flesh that out a little

17 bit more?

18 MR. RYAN: Well, the property tax relief is

19 mainly the 595 million, as we just discussed. That goes

20 to general property tax relief, and it's school real

21 estate tax relief; and it is distributed throughout the

22 State of Pennsylvania, not by us, we don't have anything

23 to do with that. But there is an additional, I believe,

24 $23 million of Gaming revenue that is also distributed

25 under the Sterling Act to communities in the area of 34

1 Philadelphia to assist them because of the loss of

2 revenue; because people who live in their communities

3 work in the City of Philadelphia, and the wage tax is so

4 onerous that the people who work don't pay their share

5 back home.

6 This is an assistance to those communities.

7 Another $166 million goes to the lottery fund to assist

8 in providing rent assistance and also mortgage

9 assistance to senior citizens who are low income and

10 also to disabled people over the age of 18.

11 So the total amount above the 595, if you

12 add it up, it comes to the $758 million if you put in

13 all the other factors that you can find in the

14 Governor's budget.

15 REPRESENTATIVE DEAN: And also these funds

16 support other important programs. One that's very near

17 and dear to my community is the assistance to fire

18 companies through grants.

19 MR. RYAN: And that's true. $30 million

20 comes out of Gaming every year, and the director of PEMA

21 can distribute grants to all the volunteer fire

22 companies.

23 REPRESENTATIVE DEAN: If I could shift gears

24 just for a moment. I think we're very fortunate to have

25 you here to give us some of your assessment of the state 35

1 of Gaming in Pennsylvania; and I say that with a couple

2 of things in mind, some mentioned already by my

3 colleagues.

4 Number one, the issue of saturation. I

5 wonder what you experts, people who are steeped in this,

6 really think about the question of saturation. I know

7 you said, obviously, our revenues are high, even though

8 there's a small one-percent loss this year; but still

9 we're gathering a lot of revenues.

10 But where are we on saturation, also noting

11 that the Governor signed a proclamation declaring March

12 Problem Gambling Awareness month? Like my colleague

13 from Philadelphia County, I worry very much about that.

14 And I wonder when you detail some of the important

15 programs for problem gamblers or families who are

16 suffering from that, you know, the $3 billion industry,

17 is $8 million a year really sufficient? So if you could

18 make a comment on the state of gambling to those points.

19 MR. RYAN: Well, the state of gambling in

20 Pennsylvania, I think, is stable. That's the best you

21 can say about it, especially when you consider the

22 competition that has confronted Pennsylvania since

23 probably 2012. We have casinos in Maryland now, and

24 we're told that those casinos, except for some small

25 impact competition-wise, perhaps, vis-a-vis Hollywood in 36

1 Grantville here, those casinos haven't really impacted

2 that much here in Pennsylvania.

3 The casinos out in Ohio which have all

4 opened up in the last couple of years, they haven't had

5 much impact apparently on Pennsylvania casinos in

6 southwestern Pennsylvania, but especially, apparently,

7 the casino in Cleveland has had a significant impact on

8 Presque Isle up in Erie.

9 2011 was the last year before the Cleveland

10 casino opened. And if you compare slot revenue in 2014

11 for Presque Isle with slot revenue in 2011, slot

12 revenue's down about 28 percent. If you compare table

13 games revenue, it's worse. In '14, it's down about 37

14 percent from 2011.

15 And the people who run Presque Isle had

16 said, back at the time Cleveland was opened, that, they,

17 Presque Isle, looked to the Cleveland area for about 30

18 percent of their base, the customer base; so there has

19 been an impact in other areas of the state, New York not

20 so much.

21 The casinos they're planning are farther

22 north, may not be much; and New Jersey, obviously, is

23 what it is. Pennsylvania did, I guess, the greatest

24 damage to the competitive ability of Atlantic City when

25 we started opening casinos in 2006. 37

1 So as far as competition goes, it's there.

2 We're very reluctant to talk about the issue of

3 saturation because it was an issue in the Philadelphia

4 license decision. We made the decision, and I can talk

5 about that, unanimously that the proponents did not

6 prove by a preponderance of the evidence that there was

7 saturation.

8 Out west, with the Cat 1 proposal, I would

9 hesitate to comment because I'm sure saturation's going

10 to be raised by somebody in the awarding of that

11 license. But speaking generically, the competition's

12 definitely there; but I'm surprised and we're pleased

13 that Pennsylvania's holding its own with the exception

14 of Erie.

15 Do you have anything to add to that?

16 MR. O'TOOLE: No. That was an excellent

17 summary. But from a commercial standpoint, the

18 operators understand that they're challenged to keep

19 their properties fresh and attractive to their existing

20 client base and hopefully attracting some additional

21 client base.

22 So if you have an opportunity to go to

23 Bethlehem and see the Sands, they have a hotel, a

24 shopping mall, outstanding food and beverage outlets.

25 Mohegan Sun in Wilkes-Barre opened up a hotel a year ago 38

1 with convention and conference space and a spa. The

2 Meadows will be opening up a motel this spring. There

3 will be an enclosed walkway from that hotel to the

4 casino property.

5 And pretty much all 12 of our properties in

6 Pennsylvania, on an annual basis, look to how they can

7 improve their property to meet the challenge of that

8 competition.

9 REPRESENTATIVE DEAN: And if I could just

10 ask you to comment on my question about the balance of

11 resources put toward problem gambling. With such a

12 large industry and the things you're boasting of, the

13 competitive nature and the very nice assets that these

14 properties provide, do you think we have it right?

15 Would you wish that we would put more resources towards

16 problem gambling?

17 MR. RYAN: I think what we have is adequate,

18 I really do, at this point. I can't say that any more

19 resources at this point would help anymore. That may

20 change as time goes by and people in Pennsylvania know

21 more about a very difficult issue, and it is difficult.

22 The biggest flip side, the biggest negative side of

23 gaming, legal or illegal, we all know, is the person who

24 just gets caught and can't stop.

25 But at this point, I think sufficient 39

1 resources are being directed; and I think a lot of

2 effort by a lot of people who have the best of

3 intentions is being directed at it. And I have to say

4 the industry takes the issue seriously. They know the

5 problem gambler is not somebody they want. It's just

6 not worth it to them.

7 REPRESENTATIVE DEAN: Thank you very much.

8 Thank you, Mr. Chairman.

9 MAJORITY CHAIRMAN ADOLPH: Representative

10 Karen Boback.

11 REPRESENTATIVE BOBACK: Thank you, Mr.

12 Chairman. Chairman Ryan, I'm interested in the Gaming

13 loans from the Property Tax Relief Reserve Fund. It's

14 my understanding that the repayment of these loans

15 started January 2012 and that the repayment schedule is

16 spread out over ten years; is that correct?

17 MR. RYAN: Yes, Representative, as far as

18 the second loan. There are two loans, as I understand

19 it. There's a first loan of $36 million. That is still

20 outstanding, and the casinos do not have to begin to pay

21 that back until all 14 casinos are open and operating;

22 so that is dormant at this point, for lack of a better

23 word.

24 The $63 million which were borrowed to fund

25 our board's budget for '07, '08, '09 or maybe -- I think 40

1 those were the fiscal years -- that amounts to $63

2 million. And the casinos began to repay that loan

3 pursuant to an agreement in January of 2012. All the

4 casinos that are open pay quarterly, and the balance is

5 down to about $43 million. No casino has missed a

6 payment. And right now, the loan payback is on schedule

7 to fully pay off the $63 million within the agreed-to

8 period, which was ten years.

9 REPRESENTATIVE BOBACK: Well, then if I may

10 clarify. Are the casinos that opened -- will open after

11 the commencement of the loan, will they also be

12 responsible for paying back the loan since they were not

13 operating when this agreement was set?

14 MR. RYAN: Yes, they will. Once a new

15 casino comes online, it has an obligation to also pay in

16 to the fund based on the formula that the agreement sets

17 out.

18 REPRESENTATIVE BOBACK: Thank you,

19 Mr. Chairman.

20 MAJORITY CHAIRMAN ADOLPH: Thank you.

21 Representative Gainey.

22 REPRESENTATIVE GAINEY: Good morning,

23 Chairman. Good morning, Executive Director. Thank you

24 for being here today. Just had a couple of quick

25 questions on the 599 million in regards to property tax 41

1 relief. We talked about how that would impact the

2 schools, school districts relief. Do we have a

3 breakdown of what the school districts save due to the

4 gaming?

5 MR. RYAN: I'm not sure how much each school

6 district gets.

7 REPRESENTATIVE GAINEY: Yeah, how much they

8 get and how much they save. Because I think it would be

9 good for the public because I get a lot of calls about,

10 how has it impacted my taxes? So if we had a breakdown

11 of exactly how it impacted school district taxes, I

12 think that would be great in order to give it to the

13 public to say, here's your return on your investment.

14 MR. RYAN: Okay. Well, as you know, sir,

15 everybody who gets a tax bill should have the amount

16 that gaming saves them on the tax bill; and it's, I

17 think, called the Homestead Exclusion. It's not

18 specifically stated that it's because of the casinos,

19 but it is on every person's tax bill, as long as that

20 person filed for the exclusion.

21 REPRESENTATIVE GAINEY: Right. And just for

22 the general public, when we're talking about the

23 Homestead Exclusion, that exactly impacts from the

24 gaming your taxes, correct?

25 MR. RYAN: Yes. 42

1 REPRESENTATIVE GAINEY: Okay. I think

2 that's something that the general public should know;

3 because, again, a lot of times when people read their

4 tax bill, you and I both know they wouldn't know that

5 because it doesn't say, Gaming.

6 So I was just curious if we had something

7 that talked about from the school district how much was

8 actually saved. I just think it would go far in giving

9 the general public -- letting them know the return on

10 their investment.

11 And my next question is, we talked about, as

12 my colleagues have, gaming addiction. Do we know in

13 regards to where the casinos are located how many people

14 have taken part in your program to help them relieve

15 their gaming addiction?

16 MR. RYAN: I don't have those figures. We

17 could probably look to the Department of Health for a

18 source. Do you think, Kevin?

19 MR. O'TOOLE: We do try and maintain people.

20 We don't try, but if you put yourself on the

21 self-exclusion program, we maintain confidentiality over

22 that.

23 REPRESENTATIVE GAINEY: Sure. Sure.

24 MR. O'TOOLE: A person would certainly feel

25 stigmatized if they were branded as being self-excluded. 43

1 REPRESENTATIVE GAINEY: Right. I didn't

2 want to know names. I was just wondering if we had a

3 number that people would be utilizing the program,

4 because I think that's great that that's offered, that

5 the offers out there and people are actually utilizing

6 it. I think people would want to know that, that you're

7 helping people remove their self from addiction.

8 So just going forward, I think that's a

9 great program to talk about, how you're helping people.

10 And then my last one, you may not be able to answer this

11 and I may be asking the wrong panel. And if I am,

12 forgive me. Have you seen an increase in hotel revenue

13 or you've talked to the gaming owners, that they have

14 seen an increase due to hotels around the gaming sites,

15 that people are coming and are using hotels to do gaming

16 and other things?

17 MR. O'TOOLE: Well, the illustration that we

18 feel is particularly relevant is the Meadows, when the

19 Meadows opened up in 2007, and subsequently there's been

20 an enormous amount of commercial development in that

21 area along Racehorse Road where the casino is located

22 and there's an outlet mall across the street. There's

23 been four or five hotels have popped up along with

24 restaurants, and even though Meadows is going to have

25 their own hotel, there's enough market in that area to 44

1 benefit all of those establishments.

2 REPRESENTATIVE GAINEY: So it brought in a

3 lot of complementary businesses?

4 MR. O'TOOLE: Yes, sir.

5 REPRESENTATIVE GAINEY: Thank you.

6 MAJORITY CHAIRMAN ADOLPH: Thank you,

7 Representative. Representative David Millard.

8 REPRESENTATIVE MILLARD: Thank you, Mr.

9 Chairman. Gentlemen, welcome; appreciate your testimony

10 this morning. I'd like to talk to you about the

11 Racehorse Development Fund.

12 This year, Governor Wolf is following a

13 pattern of Governor Corbett in proposing to redirect

14 some funds from the Racehorse Development Fund to fund

15 the Animal Health and Diagnostic Commission 5.35 million

16 and the Pennsylvania Veterinary Lab 5.3 million, which

17 is no change from the prior year.

18 Furthermore, it proposes to transfer to the

19 Farm Product Show Fund 5 million and a transfer to the

20 Pennsylvania -- the fairs located in the Commonwealth, 3

21 million.

22 While the payment to the fairs located in

23 the Commonwealth is no change from the prior year, I'm

24 curious to know what the effort behind the proposal to

25 increase the amount of the transfer to the Farm Product 45

1 Show from 1 million additionally from 4 to 5 is. Can

2 you answer that?

3 MR. RYAN: I can't. Perhaps my colleague

4 can. But what we do is, we regulate casinos and we make

5 sure, along with revenue, that the money is being

6 collected, Representative. As far as what the General

7 Assembly and the Governor may do with the funds at any

8 given time, that is up to them. And as you have

9 indicated, this has been going on for at least four or

10 five years now.

11 And, Kevin, do you have anything to add to

12 that?

13 MR. O'TOOLE: No, I don't, Chairman.

14 REPRESENTATIVE MILLARD: I just wondered if

15 you had a thought process behind that. I'd certainly

16 like to see another million for the fairs in the absence

17 of an agreed-to amount that would recur year after year

18 between the thoroughbred, standard breds and the fair

19 funding line item. I'm glad to see that the proposal's

20 there.

21 Another 1 million in that for your

22 information and for public is that there's 109 fairs in

23 Pennsylvania. Three million dollars right now allows

24 them to meet all their premium requirements in the Class

25 A through E fairs; an additional 1 million spread out 46

1 among 109 potential for a capital improvement project is

2 a dollar-for-dollar match, and I always viewed that

3 across the whole Commonwealth as 109 economic engines

4 that keep people employed in their community and provide

5 continuity.

6 My final question here for you during this

7 round is that the Governor's proposing a new transfer of

8 6.5 million from the Racehorse Development Fund to the

9 Racing Fund for the operations of the State Racing

10 Commission.

11 Can you explain the need for this transfer?

12 And just let me finish another paragraph here to give

13 you a little background. In 2013, there was a need for

14 the State Racing Commission to receive an amount of 5

15 million, and Act 52 of 2013 implemented the Nonlicensed

16 Corporation Pari-Mutuel Wagering tax, which was to

17 provide up to 5 million annually to the State Racing

18 Commission.

19 Now, why -- I understand the Nonlicensed

20 Pari-Mutuel Wagering Tax generated only 2.2 million in

21 fiscal year 2013-14 for the State Racing Commission, I'm

22 wondering why there is now a need for an additional 6.5

23 million.

24 MR. RYAN: I'll take a stab at this. Again,

25 this is out of our bailiwick, for the most part, 47

1 Representative. But as I understand it, the pari-mutuel

2 tax has been a mainstay of the funding source for the

3 two commissions. And, unfortunately, betting, on-track

4 betting, at-track betting on Pennsylvania races or

5 betting by Pennsylvania race goers through simulcast on

6 out-of-state races has been declining and the declining

7 purse or revenue from that decline in the number of

8 people betting leads to a problem in the funding stream.

9 And I was told last year that that is a

10 major problem, as far as the horse race commissions are

11 concerned. That's about the best I can do for you.

12 Kevin.

13 MR. O'TOOLE: I agree with that.

14 REPRESENTATIVE MILLARD: Okay. Well, I

15 think you've shed some light on it; so I do appreciate

16 that.

17 Thank you for your comments. Thank you, Mr.

18 Chairman.

19 MAJORITY CHAIRMAN ADOLPH: Representative

20 Brownlee.

21 REPRESENTATIVE BROWNLEE: Thank you, Mr.

22 Chairman. Chairman Ryan and Executive Director O'Toole,

23 I'm surprised that no one here has asked about the jobs

24 that this industry has created for Pennsylvanians. So

25 my question is relative to the jobs. I see here that by 48

1 the end of 2014 Pennsylvania casinos have employed over

2 17,000 employees. Of this number, over 89 percent are

3 Pennsylvania residents; and there's a large percentage

4 of minorities who are employed by the industry as well.

5 My question is: Since this industry has

6 done so well creating jobs, does the supporting

7 industries that support the casinos, have you seen or do

8 you know that that has flourished as well in the

9 communities that these casinos are located?

10 MR. RYAN: It is our understanding, ma'am,

11 that they have. Figures that I have here are that just

12 in the last five years: 2010, 2011, 2012 and 2013 and

13 2014, nonconstruction vendor purchases are $823 million;

14 and 64 percent of that to local businesses, that is

15 businesses that are in the municipality or in the county

16 or contiguous counties; and that's nonconstruction.

17 Construction, it's about 392 million; and 71

18 percent of that business is going to local people; so I

19 think one of the biggest benefits of casinos has been a

20 relatively high-spend, as they call it, for goods and

21 services they need every day; and a very high percentage

22 of that spend takes place right where that facility is

23 located.

24 REPRESENTATIVE BROWNLEE: Okay. Thank you.

25 Thank you, Mr. Chairman. 49

1 MAJORITY CHAIRMAN ADOLPH: Thank you,

2 Representative. Representative Marguerite Quinn.

3 REPRESENTATIVE QUINN: Good morning.

4 Thanks, Mr. Chairman; and thank you very much for being

5 here. Before I ask my question, I just want to follow

6 up on something that Representative Greiner was asking,

7 if you don't mind.

8 Just trying to understand. With regard to

9 the Act 1 gaming funds, the money that's currently being

10 given to our school districts, it's presently at about

11 595 or, you know, $600 million, correct?

12 MR. RYAN: That's correct.

13 REPRESENTATIVE QUINN: Okay. So then you

14 said to someone else, you say that you would

15 characterize the state of gaming in Pennsylvania as

16 being stable.

17 So with that, am I correct in thinking that

18 we should not be expecting much more than $595 from the

19 gaming industry and property tax relief this coming

20 year?

21 MR. RYAN: Well, based on the way that the

22 funds are now put in categories, if the categories stay

23 the same, I would expect not, ma'am, at least not unless

24 we would see a spike in slot revenue.

25 REPRESENTATIVE QUINN: Right. 50

1 MR. RYAN: I don't expect -- I'm no expert,

2 but I don't expect a spike in slot revenue. Is it

3 possible that we'll see, as an economy, our economy

4 improves, a progression, an improvement year to year?

5 Yes. But I would not expect to see the kind of spiking

6 we saw from '06 to '10, because we were opening new

7 casinos.

8 REPRESENTATIVE QUINN: Yeah. Well, I'm no

9 expert either and I don't see the categories of where

10 the money's going changing either anytime soon. So if

11 we're looking at basically that amount, when we're

12 talking about the property tax that's been discussed in

13 this budget, and I know I'm not asking you to comment on

14 that, but that $300 billion, that bucket, this $600

15 million is already part of that. So the additional will

16 have to come from not the casino industry but the taxes

17 that are out there, be it the PIT or the sales and use

18 tax.

19 Am I characterizing my expectations with the

20 property tax correctly with regard to gaming?

21 MR. RYAN: Well, I can only comment about

22 gaming.

23 REPRESENTATIVE QUINN: That's what I'm

24 asking.

25 MR. RYAN: Gaming is going to be, I would 51

1 expect, where gaming is now.

2 REPRESENTATIVE QUINN: Okay. Thanks. One

3 other thing. The self-exclusion program has been

4 mentioned. Do you have to only be literal

5 self-exclusion or can it be a spouse excluder, a good

6 buddy excludes you from that?

7 MR. RYAN: Only an individual can exclude

8 himself or herself.

9 ` REPRESENTATIVE QUINN: Okay. Thanks. Now,

10 the question I wanted to ask, we recently passed

11 legislation out of the House that would intercept

12 lottery winnings for back child support. Okay?

13 I have a draft on my desk right now to do

14 the same thing to casino winnings, table games, and slot

15 machines, to try to, you know, get that back child

16 support paid. Can I anticipate your support on that?

17 MR. RYAN: I -- that, to me, is a matter of

18 policy that would be best left to the General Assembly.

19 I certainly would be willing to talk to my colleagues

20 and get their view on it. But at this point, to me,

21 that's similar to an issue like, should we have internet

22 gaming?

23 REPRESENTATIVE QUINN: Okay. Thank you.

24 MR. RYAN: What we do is regulate. We don't

25 lay down policy. That's what we have you ladies and 52

1 gentlemen and the Governor for.

2 REPRESENTATIVE QUINN: Thanks. I'll make

3 sure to get a draft to you.

4 Thank you, Mr. Chairman.

5 MAJORITY CHAIRMAN ADOLPH: Thank you.

6 Representative Curt Sonney.

7 REPRESENTATIVE SONNEY: Thank you, Mr.

8 Chairman. Good morning.

9 MR. RYAN: Good morning.

10 REPRESENTATIVE SONNEY: I just want to

11 switch gears a little bit and just talk a little bit

12 about enforcement. I'm just kind of curious as to how

13 our casinos are performing, especially when it comes to

14 performing to the letter of the law. You know, how many

15 judgments have you made against the industry in the past

16 year, you know, how many dollars and fines have been

17 generated over the past year?

18 MR. RYAN: Okay.

19 MR. O'TOOLE: Over the calendar year 2014,

20 fines have approximated $750,000. We continued to, very

21 consistently, bring the casinos before the Board for

22 underage gambling violations. There's, you know, no

23 excuse in our book for not being diligent at the post

24 where the security officers are required to check ID for

25 anybody who appears to be under 30. 53

1 So those continue to come before the Board

2 to some extent. With the advent of table games, it

3 brought in a whole new binder of very good regulations

4 and regulatory requirements. So we are now beginning to

5 see, on occasion, some laxity in compliance with those

6 internal controls.

7 But when we find them and when it's serious

8 enough to impose a sanction, our Office of Enforcement

9 Counsel notifies the casino, they engage in assembling

10 conferences; and when an agreement is made, it's brought

11 before the Board.

12 REPRESENTATIVE SONNEY: Do you have a

13 maximum set on the fines that you can levy, or is it

14 almost always that, you know, negotiated or simply the

15 Board amongst themselves decides?

16 In other words, when you have the same

17 casino having the same problem over and over and over

18 again, does it just keep ramping up higher and higher

19 and higher, or do you have a limit?

20 MR. O'TOOLE: No, there's no limit. But the

21 consent agreement is a document entered into by the

22 casino licensee and our Office of Enforcement Counsel.

23 It is brought before the Board at a public meeting. The

24 Board can accept that consent agreement or they can

25 defer on it or they could reject it, if they're not 54

1 comfortable with what the proposed resolution of that

2 matter is. And, on occasion, the Board has exercised

3 that, indicating that perhaps the fine was too high or

4 perhaps the fine was too low; and those parties then

5 have to discuss how to modify that agreement in order to

6 bring it back to the Board for the Board's ultimate

7 decision.

8 REPRESENTATIVE SONNEY: So what department

9 or agency is actually coming up with the figure of the

10 fine then?

11 MR. O'TOOLE: Our Office of Enforcement

12 Counsel, which is within our Bureau of Investigations

13 and Enforcement.

14 REPRESENTATIVE SONNEY: A little bit was

15 said here, you know, about the problem gambler list. Is

16 there a consequence to a casino if a problem gambler

17 that is signed on to the list is let into their

18 establishment?

19 MR. O'TOOLE: Yes, there is. And those

20 cases come before the Board when the casino negligently

21 does not identify that person as a self-excluded

22 individual, because it's required that the casino put

23 within their computer system, a flag that would identify

24 any of those 8,000 people on the list.

25 So if a person comes in and wants to cash a 55

1 $200 check and goes to the casino cage, that cashier's

2 required to put that name into the database; and if a

3 red flag comes out, they will notify security and that

4 person will be, you know, be ushered out of the property

5 and they'll notify the Pennsylvania State Police that

6 there's a violator.

7 But if they neglect to do that test at the

8 cage and go ahead and cash the check, then they will be,

9 in all likelihood, brought before the Board in the

10 context of an enforcement action.

11 REPRESENTATIVE SONNEY: And how many of

12 those actions did you say were taken over the course of

13 the last year?

14 MR. O'TOOLE: Well, the total fines

15 approximate 750,000.

16 REPRESENTATIVE SONNEY: And how many actions

17 was that, do you know, just approximately?

18 MR. RYAN: We could certainly get that for

19 you, sir. I don't think we have it here.

20 REPRESENTATIVE SONNEY: And underage still

21 seems to be, like, the prevailing issue?

22 MR. O'TOOLE: Well, it still comes up. I

23 wouldn't say it's the prevailing issue, but it still

24 comes up. With table games and the requirements in that

25 area, we're seeing more cases come before us for failure 56

1 to follow those procedures, as well.

2 REPRESENTATIVE SONNEY: Thank you. Thank

3 you, Mr. Chairman.

4 MAJORITY CHAIRMAN ADOLPH: Thank you very

5 much, Representative. Representative Warren Kampf.

6 REPRESENTATIVE KAMPF: Thank you, Mr.

7 Chairman, Mr. Ryan. So I'm asking a little bit about

8 your employee complement. So I think I read your budget

9 presentation. It looks like back in 2011 you had 326

10 people and you're down to 310; is that right?

11 MR. RYAN: Right.

12 REPRESENTATIVE KAMPF: You're authorized at

13 316. I think I heard you say you don't have any plans

14 to fill those six.

15 MR. RYAN: No.

16 REPRESENTATIVE KAMPF: Okay. And you

17 indicated that you had actually left unfilled about 20

18 or 30 spots. Can you just clarify that for me? I

19 didn't follow that.

20 MR. RYAN: Well, three years ago, our

21 complement at the end of '11 was 326.

22 REPRESENTATIVE KAMPF: Okay.

23 MR. RYAN: And we began, in earnest, looking

24 at positions when we had a vacancy. And as a result of

25 that, we were able to eliminate 30 positions, which 57

1 would obviously put the figure not down to 310 but to 14

2 below that. The reason we have 310 is that we also

3 opened two casinos; and we have to have compliance

4 representatives 24/7 in each of those casinos, and that

5 means seven employees have to be hired to staff those

6 casinos.

7 REPRESENTATIVE KAMPF: Okay.

8 MR. RYAN: So that was something we could

9 not avoid.

10 REPRESENTATIVE KAMPF: Right.

11 MR. RYAN: But in our general operations, I

12 suppose I should put it, we were able to eliminate 38

13 positions.

14 REPRESENTATIVE KAMPF: Okay. All right.

15 Something that you said caught me, and I'm not in any

16 way trying to criticize the Gaming Board by what I'm

17 about to describe, because it looks to me by the

18 financials you've presented to us that you are operating

19 as lean an operation as you can.

20 But I heard you testify that an amount equal

21 to 68 percent of the payroll of the Gaming Board is

22 going to benefits. And, of course, all of this is not

23 being paid by taxpayers; it's being paid by license

24 holders, so we're not talking about taxpayer dollars.

25 But I looked into the math. So you have 58

1 salary and benefits of $34.5 million. An amount

2 equivalent to 68 percent of that is going to benefits.

3 MR. RYAN: Right.

4 REPRESENTATIVE KAMPF: So, roughly, that's

5 about 20 million for salaries and 14 million for

6 benefits?

7 MR. RYAN: I haven't done the math exactly.

8 I'll take your word for it.

9 REPRESENTATIVE KAMPF: Ballpark. Okay? You

10 also indicated that you have a contribution amount to

11 pensions of 25 percent, 25 percent of your overall

12 payroll, which is 34 million. That's about $8 million

13 this year; is that right?

14 MR. RYAN: Well, I think, and you can

15 correct me if I'm wrong, the payroll is 34; the 68 is in

16 addition to that.

17 MR. O'TOOLE: No.

18 REPRESENTATIVE KAMPF: No, I don't think so.

19 MR. O'TOOLE: Each employee, it's 68 percent

20 of their salary.

21 MR. RYAN: It's made up of.

22 MR. O'TOOLE: On top of it. If a person

23 earns, for instance, $50,000, then it's anticipated that

24 68 percent of 50,000 is the cost it goes above the

25 50,000 in salary for the benefits. 59

1 REPRESENTATIVE KAMPF: No, I get it. But if

2 you have $34 million in payroll costs and 25 percent of

3 that is for pensions, that number is $8 million,

4 because that's what you're contributing this year to

5 PSERS. SERS, I'm sorry. Forgive me.

6 MR. RYAN: Excuse me for one second, if I

7 can. Okay. Salaries are $20 million; and then the

8 final figure, 34, brings it to -- is the 68 percent,

9 right?

10 REPRESENTATIVE KAMPF: Right.

11 MR. RYAN: Right. So the actual income to

12 the employees amounts to $20 million. Then, in

13 addition, is 68 percent of that figure, which is $14

14 million; it takes it to 34.

15 REPRESENTATIVE KAMPF: Right.

16 MR. RYAN: So it is salary, 20 million and

17 then benefits, 14,34.

18 REPRESENTATIVE KAMPF: Right. And of the 14

19 million for benefits, 8 million is going to SERS this

20 year, is it not?

21 MR. RYAN: Representative, I'm not sure.

22 Perhaps we could talk about this after the hearing. I

23 think there may be some confusion between you and us.

24 REPRESENTATIVE KAMPF: Okay. All right.

25 Let's talk after the hearing. You are contributing 60

1 roughly 25 percent of payroll this year to SERS like

2 every other agency in SERS, right?

3 MR. RYAN: I'll take your word for that.

4 That's correct.

5 REPRESENTATIVE KAMPF: And did that go up

6 significantly from last year?

7 MR. RYAN: 24.6 percent.

8 REPRESENTATIVE KAMPF: And how much was that

9 in dollars? Any idea?

10 MR. RYAN: I'd have to check. We can get --

11 these figures don't show that clearly.

12 REPRESENTATIVE KAMPF: Sure. If you had a

13 retirement benefit, say, that instead of 25 percent of

14 payroll, was 4 percent each year, would it make it a

15 little bit easier to operate your agency?

16 MR. RYAN: I'd have to check the numbers.

17 I'm not particularly good with numbers, Representative.

18 REPRESENTATIVE KAMPF: Okay. And just,

19 finally, if we have 34 million in payroll and 20 million

20 of it is actual salary, that roughly means the average

21 employee earns about 65,000 a year and the Gaming Board

22 has to pay an amount equivalent to about $48,000 a year

23 for benefits. Would you agree with me there?

24 MR. RYAN: Sounds right.

25 REPRESENTATIVE KAMPF: Thank you. Sorry for 61

1 the difficulty.

2 MR. RYAN: That's okay.

3 MAJORITY CHAIRMAN ADOLPH: Representative

4 Seth Grove.

5 REPRESENTATIVE GROVE: Gentlemen, thank you

6 so much. The rest of the Board, hello and welcome.

7 First question is on law-enforcement grants. We've

8 always had a surplus in that. Do you expect a surplus

9 again this year out of the $2 million paying out to

10 law-enforcement grants?

11 MR. RYAN: Probably.

12 REPRESENTATIVE GROVE: Okay. Thank you.

13 It's like Groundhog Day. I do appreciate that. The

14 Governor introduced a property tax plan that's going to

15 raise $6 billion and personal income tax increases,

16 payout $3.8 billion. Is it correct that out of that

17 $3.8 billion, $600 million, $595 million is already

18 allocated slot revenue from gaming?

19 MR. RYAN: I have not taken a look at the

20 entire Governor's budget. I wouldn't want to tell you

21 yes or no on that, sir.

22 REPRESENTATIVE GROVE: Okay. Fair enough.

23 Fair enough. Another thing you said was about the $6.4

24 million as being paid back by licensees. In the

25 Governor's executive booklet, the footnotes put the 62

1 reserve account in 13-14 at $42.7 million; 14-15, $21.2

2 million; 15-16, $1.4 million, so it's being drawn down.

3 If we're putting 6.4 million in, why's that account

4 being drawn down -- the reserve account?

5 MR. RYAN: I think you'd have to ask the

6 Office of the Budget that, sir.

7 REPRESENTATIVE GROVE: Okay. I'm hoping the

8 answer is, because we're paying out more than what we're

9 bringing in and the account's going to go bankrupt. I

10 hope that's not the answer, but that's the way it's

11 looking at on the Governor's executive budget. But I

12 appreciate that.

13 Thank you so much.

14 MAJORITY CHAIRMAN ADOLPH: Thank you. At

15 this time, I'd like to recognize Representative Jerry

16 Knowles, who has joined us. And the last question will

17 be asked by Representative Gary Day.

18 REPRESENTATIVE DAY: Thank you, Mr.

19 Chairman. Latitude to the Chairs and to the final

20 speaker; is that right, Mr. Chairman? I heard the

21 answer over here from my colleagues, so --

22 Thank you for your testimony today. I

23 appreciate the work that you do for the Commonwealth of

24 Pennsylvania. Online gaming and consumer protection:

25 You've already made statements that, you know, it's a 63

1 policy decision, but just specifically about where it is

2 in your budget. You know, to me, government's role in

3 gaming is to ensure games are fair for customers that

4 walk in the door. So when a customer enters a

5 bricks-and-mortar casino, can you explain, how do they

6 know that slots are fair?

7 So my definition of fair is calibrated with

8 published returns. And where is that in your budget

9 taken care of?

10 MR. O'TOOLE: It's taken care of in our

11 budget through our gaming lab. We have a gaming lab

12 where we test all hardware and all software that's ever

13 implemented on a gaming floor in the Commonwealth of

14 Pennsylvania.

15 They test that software to ensure that it

16 meets the 85-percent payout -- theoretical payout

17 percentage that's mandated in the Gaming Act, and we

18 also have a regulation that imposes standards on that

19 software that are designed to ensure the fairness of the

20 slot machines.

21 We, also, on the table-game side, while

22 we're on that topic, we specify the rules of play for

23 all the table games and we ensure that the individual

24 wagers and the payouts of those wagers meet

25 reasonableness standards and give the public a fair 64

1 opportunity when they play table games.

2 REPRESENTATIVE DAY: Do you measure the

3 probability or anything like that at table games? I

4 just figured I'd ask that question while you're this

5 close to it.

6 MR. O'TOOLE: Well, we ensure that -- for

7 instance, in blackjack, there are some jurisdictions

8 that if you're a player and you win at blackjack, you

9 win 6-to-5 odds. So if you make a $10 wager, you're

10 going to get paid back $12.50. We don't allow 6-to-5

11 odds at blackjack. We require 3-to-2 odds. So if you

12 place a $10 wager at blackjack, you'll win; and you get

13 blackjack, you'll win $15.

14 REPRESENTATIVE DAY: So I was trying to

15 establish and understand for our committee. So you test

16 the machines and you have a lab, you have a whole setup,

17 what is the asset in your budget that goes toward that?

18 MR. O'TOOLE: Salaries.

19 REPRESENTATIVE DAY: So you think it's

20 everybody's involved in that? I was thinking, is there

21 gaming lab dollars in one of the line items or

22 something?

23 MR. O'TOOLE: No. The work of the gaming

24 lab does. As indicated in the Gaming Act, we bill the

25 slot manufacturers by the hour for the work that we do 65

1 to test their equipment and to test the software that

2 they send into us that they've requested our review and

3 our approval of.

4 REPRESENTATIVE DAY: Okay. I want to go on

5 to online gaming. And the reason I asked you that

6 question is, we are going to be taking up this policy

7 issue at some level, whether it's the committee level or

8 just talking about it from our individual bully pulpits

9 to try to add it to our budget possibly this year.

10 So you just explained how you assure

11 fairness in the current system. I think it's very

12 important that you would tell us, have you looked at,

13 and if so, how much would it cost us to assure fairness

14 with online gaming? Is there even a system out there

15 that can do it? How do you measure, you know, total

16 revenue for a company? How do you measure total revenue

17 just in Pennsylvania? Do you already know how to do

18 this? Can you help us with some of these answers?

19 MR. O'TOOLE: Not entirely, Representative.

20 But we have attended conferences that have been given on

21 the east coast to learn as much as we can. We've tried

22 to prepare ourselves for the possibility of online

23 gaming.

24 There's nothing in that budget that focuses

25 on online gaming. But we understand that if it were to 66

1 move forward and get the General Assembly's support and

2 the Administration's support that we would have to do a

3 lot of work, and we're up for that task if we're called

4 upon to do it.

5 We would also request the ability to provide

6 any comment on the legislation that the Committees would

7 be reviewing, because we would like to make sure that

8 there's required clause in there that mandates that the

9 equipment be tested by our lab.

10 We want that in the legislation to ensure

11 the concept of fairness on the internet side.

12 REPRESENTATIVE DAY: So just online gaming

13 available in the home over an internet connection, do

14 you have any comment about what your comfort level would

15 be to maintain fairness for a Pennsylvania user?

16 MR. O'TOOLE: The level of comfort that we

17 would have if we are given the responsibility to test

18 that software that the standards for the software when

19 you access the game online will be similar to the

20 standards if you're in front of a slot machine.

21 There'd be an 85-percent theoretical payout

22 percentage and that other standards that ensure the

23 fairness of that game are present on the online

24 environment, just as they are on the brick-and-mortar

25 environment. 67

1 REPRESENTATIVE DAY: One last question on

2 another topic. If the legislature would pass a law, I

3 want to know how this would affect gaming revenue, if

4 you guys know about this. A former member had this bill

5 out there that would mandate that each players club

6 member -- I'm going to use that as a general term -- but

7 someone who goes into a casino, has some type of

8 membership where they can collect and collate their

9 data, would have a monthly statement sent home to them

10 or some periodic statement.

11 If we pass something like that, would that

12 have any impact on revenues in Pennsylvania? Gaming

13 revenues. I'm sorry.

14 MR. RYAN: On gaming revenues? That would

15 just be conjecture, I think. I don't think you can say

16 what impact it would have. Kevin.

17 MR. O'TOOLE: I think it would be

18 speculative. I mean, there could be, you know, postage

19 and maybe an additional employee or two to administer

20 that program. But any gambler in the Commonwealth or

21 outside of the Commonwealth can make a telephone call to

22 the casino and request their gaming history, and they

23 will receive that upon request.

24 MR. RYAN: And, sir, I thought your question

25 was, would it affect gaming revenue. It certainly would 68

1 impose a cost on the casino.

2 REPRESENTATIVE DAY: Right.

3 MR. RYAN: What that would be, I don't know.

4 What impact it would have on gaming revenue, I don't

5 know.

6 REPRESENTATIVE DAY: Thank you for your

7 answers. Thank you for being here today. Thank you,

8 Mr. Chairman.

9 MAJORITY CHAIRMAN ADOLPH: Thank you,

10 Representative.

11 Chairman Ryan, as you may know, the General

12 Assembly and the previous administration have budgeted

13 75 million in our current budget for the second casino

14 in Philadelphia.

15 Governor Wolf has now budgeted to 75 million

16 in the 15-16 budget. If you were putting together a

17 budget, would you think that this $75 million in the

18 15-16 budget is appropriate?

19 MR. RYAN: I guess that depends on what I

20 thought of the chances that the court would be

21 finished -- all the appeals to finality within that

22 period, Mr. Chairman.

23 And I think the $50 million would be due, I

24 believe, ten days after all of those circumstances are

25 met. So the best place to go is the Supreme Court to 69

1 find out the answer to the question. Is it possible

2 that that will all be done in fiscal year 15-16? It's

3 possible. I can't guarantee it, because we don't have

4 any control over it.

5 MAJORITY CHAIRMAN ADOLPH: Okay. We're

6 pretty good at numbers on this end. You're the

7 attorney. I thought you might be able to help us out

8 there a little bit.

9 On the saturation of the casinos, obviously,

10 you know, I would be remiss if I didn't ask a question

11 regarding Harrah's, which is in the neighboring county

12 of Delaware. Did Harrah's play a part in the testimony

13 or the hearings, whatever took place, regarding the

14 location of the next Philadelphia casino?

15 MR. RYAN: As I recall, not a significant

16 part, no.

17 MAJORITY CHAIRMAN ADOLPH: Okay. I can just

18 let you know that Harrah's has been a very good partner

19 with the county, with the City of Chester, much-needed

20 funds for not an impoverished urban area; and obviously,

21 it's important for county counsel and the city officials

22 of Chester that the revenue that they've been receiving

23 from Harrah's continues.

24 Listen, I see the big picture. I think that

25 location, you know, what was selected is fantastic by 70

1 the stadiums and the infrastructure that's already

2 there. I get the big picture. But we certainly do not

3 want to lose a vital economic tool in our county as a

4 result of it, which is only, you know, 10 miles away,

5 you know, so to say.

6 Closing comments. I want to thank the Board

7 for being here, for your openness in providing us with

8 these necessary figures as we put together the budget

9 for 2015-16. Thank you, and keep up the good work; and

10 looking forward from hearing from you between now and

11 June 30th. Thank you.

12 MR. RYAN: Thank you. Appreciate it.

13 MAJORITY CHAIRMAN ADOLPH: For the members

14 of the Committee, we will reconvene at 1:00 with the

15 Pennsylvania Higher Education Assistance Agency. Thank

16 you.

17 (Whereupon, the hearing concluded at 11:21 a.m.)

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25 71

1 CERTIFICATE

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3 I hereby certify that the proceedings and

4 evidence are contained fully and accurately in the notes

5 taken by me on the within proceedings and that this is a

6 correct transcript of the same.

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8 ______

9 Tracy L. Markle, Court Reporter/Notary 10

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