DISTRIBUTORSHIPS WILL CREATE JOBS, BUSINESS
HARRISBURG, October 18, 2004 –Repealing a requirement in Act 71 that slot machine manufacturers sell their products through Pennsylvania suppliers will cost this state jobs and business opportunities, including opportunities for minorities, a group of legislators said today.
A bill that passed the Senate on Oct. 6 (SB1209) effectively removes a provision in Pennsylvania’s new gaming law that was designed to foster economic and business development. That bill awaits action in the House of Representatives.
"By eliminating the supplier provision, the Republican proponents of this change are helping out-of-state slot machine manufacturers, and no one else," said state Senator Vince Fumo (D-Philadelphia.)
"This is simply an attempt by out-of-state gaming companies to exclude Pennsylvania participation in the industry, so they can maximize their profits," he added.
There are no slot machine manufacturers headquartered in Pennsylvania. It is also likely that successful bidders for licenses to operate the state’s 14 slot parlors will include some large out-of-state gaming firms. (Just last week, Penn National Corp. sold Pocono Downs Race Track, which is in line for a slot license, to Connecticut-based Mohegan Sun. Nevada-based Harrah’s has entered into a deal to operate the Chester Downs slot facility.) Without the distributorship requirement contained in the original law, those large out-of-state companies will simply do business with one another, bypassing Pennsylvania businesses.
By contrast, the Act 71 distributorship provision will:
ensure that the installation, sale,
leasing, and servicing of any slot machine and related equipment is done
under the regulatory jurisdiction of the Pennsylvania Gaming Control Board
by a Pennsylvania-licensed business;
encourage the development of new Pennsylvania business, employment opportunities, and direct participation through business ownership of diverse groups.
There is no ceiling on the number of distributorship licenses that the Gaming Control Board can award.
"There are only a limited number of slot parlor licenses, and most of those will naturally go to large, well financed companies. The distributor system will give small businesses a chance to be part of our new gambling industry, and that is especially important for minority-owned companies," said state Senator Shirley M. Kitchen (D-Philadelphia.)
"Eliminating these new distributorship businesses will effectively remove the most likely avenue for minorities to have a meaningful ownership stake in gambling," said state Senator Vincent Hughes (D-Philadelphia.)
A group of House members likewise expressed support today for keeping the supplier provision in the law.
On July 5, 2004, Gov. Ed Rendell signed the Pennsylvania Race Horse Development and Gaming Act (Act 71), after about 18 months of negotiations among legislative leaders on the issue, including Fumo. Originally, some legislators wanted to include a provision that the slot machines actually be manufactured in the state. That was considered impractical, however, and they settled instead on a requirement that the machines be sold through businesses headquartered in Pennsylvania.
Pennsylvania companies, either new or existing ones, can contract with machine manufacturers to serve as their sales and service representatives when dealing with Pennsylvania’s 14 slots casinos.
On October 6, the Senate passed SB 1209, after Republicans used a rare parliamentary maneuver to cut off debate and prevent Democrats from offering amendments. Fumo had prepared and intended to offer an amendment that would have retained the distributorship requirement in the original Act 71.