Penn National Gaming will offer $3 million in fees to state regulators if the state drops its bid to impose additional taxes on slot machines the company plans for Bangor Raceway.
The plan, introduced Thursday as an amendment to the governor’s gambling regulatory bill, would eliminate a newly proposed tax on the total amount wagered on the slots.
Penn officials have argued the new tax – which could net the state more than $8 million a year if the facility reaches its capacity of 1,500 slot machines – is unfair because it essentially raises the effective tax rate on the project from 39 percent in the original bill to 49 percent.
Such a high tax rate could “spell disaster” for the Bangor project, Penn officials say.
The one-time, $3 million licensing fee was a workable compromise, according to Penn spokesman Eric Schippers.
“What we’re trying to do is address the needs of the state from a budgetary standpoint,” Schippers said Friday, citing the state’s well-documented budget shortfall.
Some industry officials have suggested the state’s fiscal woes prompted the unexpected introduction of the new slots tax that could pump millions of dollars into the state’s general fund each year – much more than is needed to oversee the new industry.
The new tax, state officials say, was suggested after a determination the state’s share of the slots revenue would not cover administrative costs.
The bill appears destined for a fierce fight on the House floor next week, with both gambling opponents and supporters pushing for major changes.
Besides the elimination of the new tax, Penn also will propose a less costly – but equally effective, they say – system of monitoring the slots.
Under the current proposal, the state-run control system would cost roughly $2.7 million a year to operate. Penn’s alternative, which would give the state access to the company’s internal system, would cost roughly $400,000 a year, based on state estimates.
Gov. John Baldacci proposed the stricter controls – including the formation of a gambling control board – as part of his bill, LD 1820, designed to replace a citizen-initiated bill legalizing slots at the state’s harness racing tracks.
Administration officials on Friday said they remained wary of any changes to the central monitoring system.
“We are concerned, and we must make sure any change not restrict the gambling board’s flexibility and still provide robust oversight,” said Baldacci spokesman Lee Umphrey.
Beyond the fight over how strictly the state will regulate slots, gambling opponents are expected to offer their own amendments in floor debate including one that would give voters a chance to repeal the slots legislation.
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