Casino gambling effort in NH looks at Pennsylvania
CONCORD — A former Pennsylvania Gaming Control Board commissioner Thursday urged the state to create an independent, stand-alone agency to regulate casino gambling.
Kenneth McCabe, a former Federal Bureau of Investigation regional director when he accepted the gaming board position, said the Pennsylvania legislature wanted the board to be independent from all other state agencies and free of political influence.
The New Hampshire Gaming Regulatory Oversight Authority is working to develop a regulatory structure for the state if lawmakers approve casino gambling, which they have yet to do.
Speaking to the authority Thursday, McCabe said since casino gambling was approved in 2004, the industry has created 15,000 jobs — more than 90 percent held by Pennsylvania residents — and produced $5.1 billion in revenue for the state.
“There is a lot of misunderstanding about what gambling is like today,” said McCabe, who is now the CEO of Southern Gaming Resorts LLC. “Gaming wants to be regulated. A casino is an asset in a portfolio of a large (corporation) with multi-jurisdictional holdings and (state) regulatory agencies talk to each other.”
When the Pennsylvania legislature approved gambling, it created a seven—member board — four appointed by the legislature and three by the governor — to regulate casino operations. The four legislative members and at least one of the governor’s appointments have to agree on any decision, which essentially gives them veto power.
While that forces commissioners from different backgrounds and philosophies to work together, McCabe said, he is not sure he would recommend New Hampshire adopt a similar provision.
He noted his agency had several independent units to investigate complaints, violations and crimes and to provide financial information and studies, to help make decisions.
The board was a separate authority from agencies regulating racing and from the state lottery, McCabe said, noting “We really didn’t answer to anyone; we answered to the people of Pennsylvania.”
Along with establishing a regulatory structure, the New Hampshire authority is also exploring whether the sizable charitable gambling industry in New Hampshire should also come under the new regulatory structure.
Currently the charitable gaming industry is regulated by the Racing and Charitable Gaming Commission, after it was regulated by the Lottery Commission for many years.
“I personally believe there should be a level playing ground, everyone should follow the same rules,” McCabe said. “Gambling is gambling.”
Pennsylvania approved 14 gaming licenses, seven for the existing race tracks, five destination, stand-alone casinos, and two resort casinos. To date 12 licenses have been issued.
McCabe said it took a year-and-a-half from the time the law passed for the first casino to open, which was a temporary facility at a race track. The larger destination casinos took three to four years before they opened, he noted. Senate Bill 152, which passed the Senate and had the backing Gov. Maggie Hassan, but failed in the House, envisioned the state collecting an $80 million licensing fee during the next fiscal year.
A similar bill establishing one casino along the state’s southern border with and possibly one or two other facilities is expected to be introduced in the 2014 session.
The authority was created to address critics who said the state needs to establish a regulatory and enforcement structure before casino gambling is approved.
McCabe refuted claims by casino opponents that crime will rise. As a former FBI agent, he said he began with a jaundiced eye, fearing crime would increase and he heard the tales of half-naked prostitutes and grandmothers gambling away their Social Security checks.
“Most of it is not true,” McCabe said, and instead added crime increases because more people are there just like it does at Penn State University on weekends when the football team plays at home.
“You have to ask, is it really a crime against the community,” he said.
He warned whatever board the authority decides should regulate casino gambling will be criticized.
“No matter what decision you make, people are going to think the fix is in. Be prepared to be sued,” McCabe said. “You have to do what is best for New Hampshire, based on the laws, your traditions and the legislative intent.”
The authority also heard from James Nickerson with the authority’s consulting firm WhiteSands Gaming, who told the authority licensing fees and tax rates are a trade off.
Pennsylvania, which charges a 55 percent tax on video lottery machines, the second highest in the country, has relatively low licensing fees, charging race tracks $500,000, resort casinos $5 million and destination casinos $50 million.
He said the range in tax rates is from 8 percent in Nevada to 67 percent in Maryland. “It’s a trade off,” Nickerson told the committee. “The more you pay in taxes, the less reinvestment that goes into the facility or the patrons.”
Authority member and SB 152 co-sponsor Sen. Jim Rausch, R-Derry, asked Nickerson how important is it for a casino to be the first in the market, noting that Massachusetts has already approved three casinos.
Nickerson said while being the first into the market is important, it is equally important to have a quality product. “If people have a good time, they will come back,” he said.
The authority will have to decide if casino oversight will be done by a stand-alone agency like Pennsylvania’s, or by the New Hampshire Lottery Commission as some suggest, with the Attorney General’s Office and State Police enforcing the law and investigating possible crimes.
The authority has a deadline of Dec. 15 to release a final report suggesting legislation to establish a regulatory structure.