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Casino ownership lists remind voters of need for slots reforms

As the ownership structures of prospective casinos have become public, it is increasingly clear that the main beneficiaries of slot machine gambling in Pennsylvania will be wealthy investors and the well-connected — not property tax payers, as Gov. Ed Rendell and other gambling supporters had promised.

Early this week, the state gambling authority, officially known as the Pennsylvania Gaming Control Board, released a list of prospective owners of gambling operations in Pennsylvania, once slot machines are up and running at 14 sites across the state.

The board's release of the future casino ownership lists came only after the board reversed its initial refusal to release the names. That early refusal drew widespread criticism, and the board eventually decided to release the sometimes-complicated ownership structures of the 22 applicants on its Web site.

An Associated Press article noted that the list includes "wealthy developers, entrepreneurs, public companies and an Indian tribe" and that while some prospective casino ownership structures are simple, some casino ownership would be "spread among partnerships within partnerships that eventually divide ownership shares into fractions of a percentage point."

Much like the revelations concerning the groups of investors submitting applications to become slot machine distributorships, the prospective casino ownership includes wealthy or well-connected people as well as developers and publicly owned companies.

That's not surprising, considering the hundreds of millions of dollars of investment required to build a casino complex. But the list of prospective casino owners does serve as a reminder of who will benefit most from legalized slot machines in the Keystone State.

Rendell and other slots backers have promoted expanded gambling as providing relief to property tax payers, but it has been clear since early in the process that taxpayer benefits will be the crumbs compared with the feast that feeds the wealthy developers, entrepreneurs, invcstment bankers and well-connected investors.

Another concern raised in the AP article is the complicated ownership structure that is found in some ownership groups. While some potential casino owners, such as Scranton businessman Louis A. DeNaples and Chicago real estate developer Neil G. Bluhm, are straightforward, others are not — with one prospective casino boasting 36 owners, most of whom have small, fractional ownership stakes of less than 1 percent. But a less-than-1-percent stake of a billion-dollar operation is not peanuts.

In some cases, outside investors have sought out local partners in the hope that the local connections will give their application an edge. In other cases, local investors might have pursued national gambling or development companies in the hopes of grabbing a slice of the near-certain profits.

Building casino complexes is big business and requires big money. Some fractional owners will pocket their profits; others indicate that they will direct their share to charitable or community-based causes.

There's nothing wrong with investors making profits. Although in this case, with a limited number of casinos and where the "house"is programmed to win, the profits are essentially guaranteed.

But overall, concerns remain over politicians and the politically well-connected benefiting — directly or indirectly — from casino gambling. The $750,000 given over a recent five-month stretch to state officials' re-election campaigns by lobbyists for gambling interests is one way elected officials are already profiting from expanded gambling in Pennsylvania. And the 1 percent ownership loophole for elected officials that remains in the state's gambling law is another potential avenue for politicians to profit. Public pressure should demand that that loophole be closed.

From the beginning, the introduction of slot machine gambling in Pennsylvania appeared ripe for abuse. The best way to minimize abuse is to favor transparency over secrecy in every aspect of gambling and to pass meaningful reforms to the existing gambling law when lawmakers return to Harrisburg in September. For this to happen, lawmakers must know that voters are watching — and expecting action.

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