Looking to fill a COVID-19 budget hole, backers push for video gambling in bars, restaurants | Friday Morning Coffee

May 22, 2020 7:12 am

Good Friday Morning, Fellow Seekers.

Jerry McArdle’s been in the bar business for 36 years. He owns Jack’s Tavern, in Media, Delaware County, and the Happy Rooster Saloon, in Gap, Lancaster County. Like every other bar and restaurant owner in Pennsylvania in the age of COVID-19, he’s been trying to get by as best as he can with curbside service and take-away beer. But it only gets him so far.

“Food is a very low margin, people who are doing it, are doing it to stay in the game. There is no money in take-out food, or even in my place, with take-out beer,” he told the Capital-Star this week. “I’m doing it to stay in the game, to be open, to be relevant. There’s no way to stay open doing just that.”

So McArdle is throwing in with an emerging effort to expand video gambling, already allowed at truck stops in Pennsylvania, to the state’s bars and restaurants. And backers are betting that Pennsylvania lawmakers, looking to fill the gaping hole that COVID-19 tore in the state’s bottom line, will agree with them.

“Financially speaking, the expansion of [VGTs] … will really help restaurant and bar owners and vendors … when we need the revenue to survive,” Rich Teitelbaum, the president of the Pennsylvania Video Gaming Association, an industry trade association, told the Capital-Star this week.

(Image via Flickr Commons)

Backers estimate the legalization of VGTs at bars and restaurants across the state will net $100 million in revenue in the first year, moving up to $472 million a year for the state over time. That’s based on the 33 percent tax rate now in place in Illinois, which legalized VGTs a decade agoJeffrey Sheridan, a spokesman for the Video Gaming Association, told the Capital-Star in an email.

And, yes, in case you’re wondering: It’s that Jeffrey Sheridan, the former chief spokesman for Gov. Tom Wolf, who once again proves our Political Law of the Conservation of Matter: Old operatives are neither created nor destroyed. They just change jobs.

For a bar owner such as McArdle, having four or five machines in his place — an industry standard —  would net him around $50 a day, which means about $8,000 or $10,000 a month, Rich Meitzler, the CEO of suburban-Chicago based Novomatic Americas, which manufactures the terminals, said in a phone interview.

“The average bar does $65,000 to $200,000 a year, pre-tax,” from the machines, Meitzler said. “Here in Illinois, if you take a look at what the bars are doing here, some were facing bankruptcy. They can pay their employees, and make money to keep that business running. We’ve really seen an uptick in business here in Illinois.”

For McArdle, who’s hoping to bring back the 10 employees he laid off before the pandemic, that’s a deal that’s hard to pass up.

“Small neighborhood places need another source of revenue to get people to come into their places,” he said “With the change in drinking habits over the year, before this, small places needed an additional source of revenue. Now with this pandemic, more than ever they need an additional source of revenue. It would be the lifeline that allows a lot of places to stay open. I’ve read in some trade magazines, they’re saying 40 to 50 percent of independent bars and restaurants will close by the time this is over.”

Pa. House Majority Bryan Cutler, R-Lancaster, meets the press after Gov. Tom Wolf’s budget address to a joint session of the state House and Senate on Tuesday, 2/4/2020 (Capital-Star photo by John L. Micek)

The math of VGTs may be a no-brainer for McArdle and other saloon-keepers. But solving that age-old political equation: 102+26+1 is another matter entirely (That’s the number of House and Senate votes required to pass a bill and the one gubernatorial signature needed to make it law).

Legal VGTs in bars and restaurants fell off the table in the 2017 legislative push that legalized video gaming terminals in truck stops. And state officials have been trying to stamp out the unregulated, cash-paying games that have popped up in bars and restaurants across Pennsylvania.

There’s also the Legislature’s anti-gambling lobby, which has traditionally spoken with a loud voice. In the final analysis, they’ve been able to stop the slow creep of gambling across the state.

Mike Straub, a spokesman for House Majority Leader Bryan Cutler, R-Lancaster, confirmed that legal VGTs are floating in the sea of ideas that lawmakers are considering to fill a multi-billion dollar budget hole.

But it’s one among many plans, and “even if they [VGTs] expanded – bars and restaurants aren’t open to patrons to sit inside and play [them].”

So there’s that wrinkle. There’s also the calendar.

Reminding us that everything old is Rendell again, Straub said lawmakers are aiming to pass a pair of short-term budgets this year. One would be “finished in the next few weeks, and another later in the year. The issue driving that timeline is moving the tax deadline to July 15, it means we really won’t see the impact of the shutdown on state resources until a few months from now,” Straub said.

The current fiscal year ends June 30. And while some legislative leaders had floated the idea of a finished spending plan by the end of May, that currently appears unlikely.

The Pennsylvania Capitol building. (Capital-Star photo by Sarah Anne Hughes)

Our Stuff.
The deadline to apply for a mail-in ballot is next Tuesday, May 26Elizabeth Hardison has everything you need to know. And once that’s taken care of, you can peruse the Capital-Star’s exhaustive guide to the June 2 primary election.

Pennsylvania changed the way it reports negative COVID-19 tests. But officials can’t say when it began or how many tests are affected. Elizabeth Hardison has this in-depth look.

A Pennsylvania state House panel cast a party-line vote Thursday to advance a bill rescinding Gov. Tom Wolf’s COVID-19 disaster declarationStephen Caruso reports.

U.S. Rep. Mary Gay Scanlon, D-5th District, and other Dems got together Thursday to talk about the challenges facing Census-takers in the midst of the pandemicAssociate Editor Cassie Miller reports.

It’s National Emergency Medical Services Week in America this week. State Health Secretary Dr. Rachel Levine threw first-responders a shout-out in her daily briefing on Thursday, Miller also reports.

Your humble newsletter author caught up with a Pittsburgh nurse, who shared her often heart-breaking experience working in a Squirrel Hill nursing home.

And U.S. Sen. Bob Casey, D-Pa.slammed the Trump White House for its sluggish release of nursing home data, Washington Bureau Chief Robin Bravender reports.

On our Commentary Page, Pa.’s county commissioners say funding for mental health programs is critical this budget season. And attorney Rory Fleming looks at what he says is really behind Attorney General Josh Shapiro’s decision to file charges against an employee of Philly DA District Attorney Larry Krasner.

Speaking of revenue raisers, some Republican lawmakers are eyeing recreational cannabis legalization as a way to fill the budget hole, the Inquirer reports.
Pittsburgh City Paper previews the 34th House District primary between state Rep. Summer Lee, D-Allegheny, and challenger Chris Roland.
PennLive speculates on which Pa. counties could be headed for yellow and green phaseGov. Tom Wolf is expected to make an announcement today.
Will Lehigh County be among the yellow counties? The Morning Call takes up the case.

Here’s your #Pennsylvania Instagram of the Day:

Philadelphians who have been struggling to pay their water bills are getting a reprieve, WHYY-FM reports.
State Rep. Russ Diamond, R-Lebanon says it’s an ‘open question’ whether Gov. Tom Wolf could veto a measure lifting his emergency declaration, the PA Post reports.
As they look to reopen, businesses nationwide are making a run on PPE, reports.
U.S. Energy Department officials say the government computers working on coronavirus research are targets for hackers, Roll Call reports.

What Goes On.
Time TBD:
 Daily COVID-19 update

You Say It’s Your Birthday Dept.
Best wishes go out this morning to our old pal, Jacob W. Michaels, at the Morning Call, of Allentown, who celebrates today. Congratulations, and enjoy the day, sir.

Heavy Rotation.
We’ll go out on a baroque note this week. Here’s The Divine Comedy and ‘The National Express.’

Friday’s Gratuitous Baseball Link.
The MLB Players’ Association has weighed in on the league’s proposed health and safety standards for resuming play. The response is ‘wide-ranging,’ the Associated Press reports.

And now you’re up to date.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

John L. Micek

A three-decade veteran of the news business, John L. Micek is the Pennsylvania Capital-Star's former Editor-in-Chief.