Area deal on thin ice
In the midst of all the celebration over the $290 million deal that keeps the Penguins in Pittsburgh, one important fact must not be overlooked: The financing deal is skating on thin ice – gambling revenue from slot machines
The deal includes $15 million a year in proceeds from slot machine casinos. Half of that amount will come from Don Barden, a Detroit casino owner who is building a slots parlor in Pittsburgh, and half will be in the form of state development money derived from other casino proceeds.
Gov. Ed Rendell made no bones about it. Without the revenue from slot machines, this deal would not have been possible.
The problem is that nobody knows how much revenue slot machines are going to generate for Pennsylvania. The number $1 billion has been tossed around so long and so often that many people, including those who should know better, have forgotten that it is an estimate and not cold, hard cash.
What if this golden goose starts laying rotten eggs?
What if the revenue from slots falls far short of the $1 billion a year that has been projected? What if Barden’s North Side endeavor is a bust?
Equally important, what happens if state officials commit slots revenue to too many projects and end up overextending the revenue generated by slot machines? Many state and local officials seem to think slots revenue is the cure-all for every initiative.
The slots parlors that have opened are off to a great start. However, what’s going to happen when the rest of the casinos open and the newness of slots gambling in Pennsylvania wears off?
Then there’s competition from other states. West Virginia is already looking to expand its gambling operations, and Delaware isn’t going to sit back and watch revenue go to Pennsylvania. On top of that, Maryland is again looking at legalizing slot machines to generate revenue. And how long is Ohio going to watch slots revenue go to Pennsylvania and West Virginia?
Area residents have good reasons to celebrate this deal. The Penguins are an exciting young team that has the potential to become the next hockey dynasty. The new multi-use facility also will make the city more attractive for concerts and other forms of entertainment.
However, don’t forget that there is no such thing as a free lunch. If lottery revenues don’t pan out, someone is going to have to pick up the tab.