PARX CEO Eric Hausler's House GOP Policy Committee Testimony

Thank you for the opportunity to present today. My name is Eric Hausler and I am the President and CEO of Greenwood Racing Inc. the parent company of Parx Casino Bensalem and Parx Casino Shippensburg.

I want to address three myths that the skill game industry, particularly Pace-O-Matic, has been peddling across PA.

First, Pennsylvania’s casino industry is not some monolith of out-of-state companies.

Greenwood Racing is based in Pennsylvania and has been continuously owned and operated in Pennsylvania for over 30 years. My corporate team works out of our offices in Bensalem, PA. Penn Entertainment has also been based in Wyomissing, Pennsylvania, for decades. Nemacolin/84 Lumber are based in Western Pennsylvania and our colleagues in the industry employ thousands of Pennsylvanians in good paying jobs. The casinos also support hundreds of local businesses and charities as you will hear today. So as an industry, we are Pennsylvania and Pennsylvania workers. Local businesses and taxpayers are the beneficiaries of this industry.

Today we want to put a face to our industry so that you can learn more about who we are and how we impact lives around the Commonwealth. Our industry contributes much more than the $2.3 billion we generated in state gaming taxes last year.

We often hear about how small businesses were impacted by the pandemic and need skill games to survive. While I don’t want to diminish their struggles, our industry was completely closed for over three months in 2020. During that closure time, Parx paid its Team members full wages for 1 ½ months and we maintained their health benefits at our cost during that time. We also spent millions of dollars as an industry to reopen our businesses safely. Convenience stores were open, restaurants and bars could serve take out and to go alcohol service. The retail casino industry was completely shut down in Pennsylvania and yet we had to maintain significant security and surveillance staff to protect our assets costing millions of dollars. There are very few businesses and employees in the Commonwealth that suffered a worse impact from COVID than the hospitality industry, specifically casinos.

Second, there is the myth that because the casino industry has been generating record revenues because of online gaming, skill games are not affecting our business or workforce or the tax revenues we generate. Remember that we pay 54% of our slot machine revenues to the Commonwealth, the majority of which goes to reduce property taxes. Skill games take slot players away from legal, regulated and taxed online and retail casinos.

Since 2018, Pennsylvania’s retail slot revenues have grown only 4% in aggregate. The surrounding states, none of which have skill games, have grown an average of 21%. NJ slot revenues have grown 16% over that time and it has online slots and tables just like PA, but NO skill games.

Look at the Facts—Skill Games Are Hurting the Property Tax Relief Fund

This sluggish growth rate exists despite the fact that since 2018, five new retail casinos have been added to the Commonwealth at an investment of $1.15 billion. These five properties also employ 2,700 local citizens in good paying jobs which offer comprehensive benefits.

Pennsylvania is the only state in the region with skill games and the impact is clear. Slot revenues at PA retail casinos are growing well below slot revenues in surrounding states because of unregulated and untaxed skill games. (I note that All of our surrounding states have some form of online gaming/sports gaming as well and are still growing faster than PA.)

If we want to compare the direct example of what happens when there are skill games versus no skill games we need only look at Virginia. In November 2023, Virginia shut down all skill games in the state. In the four months since the shut down of skill games in Virginia, slot revenues for the casinos in Virginia have increased 11 percent per day versus the four months prior to the shut down. In Pennsylvania an 11% increase in slot win per day would translate to more than $150 million of additional tax revenue to the Commonwealth per year at our 54% tax rate.

Any way we look at it, unregulated and untaxed skill games are costing the Commonwealth more than $150 million in tax revenue from slot machines per year that could be going toward property tax relief for hardworking Pennsylvania citizens. The people who are getting gipped on this property tax relief are the people who most need it.

Manufacturers of skill games and their proponents peddle the notion that they are merely helping small business and do not affect either the PA casinos or the Lottery. The truth is starkly different. The large out-of-state skill companies, like Pace-O-Matic who is based in Georgia, provide far more of these skill games on the streets of Pennsylvania than all the slot machines provided by the state’s 17 casinos combined. Potential tax money is flowing out-of-state to their pockets, not the citizens of Pennsylvania.

The third myth is that because a customer can “win” in skill games they somehow offer a better option for the consumer because of the so-called skill element and should be treated differently from a tax or regulatory standpoint. According to a study by the Alcoholic Beverage Control of Virginia and I quote from the report:

“Data collected by ABC in FY21 shows that gray machines have much lower average payout rates than other electronic gaming devices. In Virginia, slot machines, HHR machines, and electronic pull tab machines all have average payout rates of roughly 90 percent meaning that, on average, gamblers make back 90 percent of the money they gamble on them. Gray machines appear to have an average payout rate of roughly 77 percent, meaning players make back less money on gray machines compared with those used in regulated gaming.

When the Commonwealth legalized casino gaming 20 years ago it did so in a carefully controlled and regulated environment with licensing, surveillance, security and money laundering controls. Lawmakers and successive administrations got it right – and the results speak for themselves. Skill games have exploded across the state with none of these controls and, again, the results speak for themselves: underage gambling, one crime after another and another; and entire neighborhoods put at risk by skill games.

To the extent the legislature desires to regulate and tax skill games, the casino industry believes the locations should be very limited. Helping non-profits and clubs should be the primary focus, not for-profit businesses such as beauty salons, gas stations and laundromats, that started in a different business and now want to be in the gambling business. The tax rate across the industry should allow all parties to compete effectively and the games should be regulated with the same rigor and similar licensing parameters as the very successful casino industry.

Thank you for your time.