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Horsey Hypocrisy Further Revealed in Off-Track Betting Parlor Deal

HARRISBURG, PA—As the Pennsylvania House of Representatives considers the creation of the single largest corporate welfare program in the Commonwealth’s history through the granting of monopoly gambling licenses, a deal struck between two racetrack companies further reveals the hypocrisy of those poised to receive a multi-billion dollar windfall of taxpayer money. 

Horse racetrack owners and Gov. Ed Rendell have dismissed the idea of maximizing the revenue from the gambling licenses through an auction due to self-proclaimed dire financial straits of the horse racing industry.  But yesterday, the MTR Gaming Group, Inc.—the company granted a license for the yet-to-built Presque Isle Downs—revealed a deal to purchase an off-track betting parlor from Penn National Gaming, Inc., owner of two Pennsylvania horse racetracks, for $7 million.

“So much for their poverty claims,” said Matthew J. Brouillette, president of The Commonwealth Foundation, a free-market public policy think tank in Harrisburg.  “MTR Gaming is buying a bar with large television screens to watch horses running around for $7 million, yet they have the audacity to claim they can’t pay the fair market value for a monopoly gambling license?”

Brouillette noted that Penn National’s projected revenues for 2003 will exceed $1 billion, and MTR expects nearly $300 million in revenue by year’s end.  Penn National, according to the Patriot-News, is also the top publicly traded company in Central Pennsylvania for the second consecutive year.  With the recent $775 million purchase of Hollywood Casino Corp. in Illinois, Penn National is the seventh-largest public gaming company in the nation.

“The horse racing industry has been pleading for government assistance, claiming it will go out of business if it does not get slot machines at its race tracks,” said Brouillette.  “But the annual revenues generated by MTR Gaming and Penn National demonstrate their hypocrisy and willingness to rip off the people of Pennsylvania.  Clearly, neither of these companies need any more corporate welfare from the taxpayers of this state.”

Gov. Rendell and gambling proponents in the General Assembly have been willing to settle for a meager $50 million per license—a 90% discount of the market value of these licenses—because they’ve been led to believe the horse racing industry is struggling, said Brouillette.

As soon as today, the House may consider giving these monopoly gambling licenses away for a fraction of their real market value.  For months, The Commonwealth Foundation has encouraged Gov. Rendell and the General Assembly to maximize the amount of revenue from these monopoly gambling licenses, if they are determined to expand gambling in Pennsylvania.

Multiple valuations of these monopoly gambling licenses in Pennsylvania have found them to be worth hundreds of millions of dollars each.  In total, a conservative estimate placed the value of 8 slot machine licenses at over $2.1 billion.

“This $2.1 billion could provide a $375 tax rebate for every working man and woman in Pennsylvania, or $750 for every working mom and dad trying to make their family’s financial ends meet,” said Brouillette.  “Or put another way, the $2.1 billion is nearly as much Gov. Rendell wants to take out of Pennsylvanians’ paychecks through his 34% income tax increase.”

“This $7 million deal between MTR Gaming and Penn National for a bar and television screens and their annual revenues make it clear that the horse racetrack owners can afford to pay the fair market value for their monopoly gambling licenses,” Brouillette said.  “Instead of handing out the single largest corporate welfare subsidy in Pennsylvania history, Gov. Rendell and the General Assembly should put the interests of hard-working, tax-paying Pennsylvanians first and forget about providing these wealthy corporations with another taxpayer-supported welfare check.”

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The Commonwealth Foundation is a free-market public policy research and educational institute based in Harrisburg, Pennsylvania.  For more information, please visit www.CommonwealthFoundation.org.

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