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Howard Stutz

Pennsylvania ends slot machine manufacturer caps

18 January 2010

LAS VEGAS, Nevada -- Slot machine manufacturers will lose their monopoly on gambling in Pennsylvania later this year when the state's casinos are allowed to supplement their gambling floors with table games.

But there was one provision tucked within the 160-page table game bill that will satisfy at least one Nevada-based slot machine giant.

A four-year-old limitation that holds a slot machine manufacturer to only 50 percent of the games on a casino's gambling floor was rescinded with Gov. Ed Rendell's signature Jan. 7.

When the final version of Senate Bill 711 was approved, a change to Section 1210 of the Pennsylvania Gaming Act was also implemented. Deleted from the Act was a subsection authorizing the 50 percent limit.

When informed Friday that slot machine caps were wiped out in Pennsylvania, Chuck Brooke, senior vice president of government relations for International Game Technology, smiled and said he was pleased the limitation provision was eliminated.

It was done so quietly that even Richard McGarvey, a spokesman for Pennsylvania Gaming Control Board, had to go back and check with other officials Friday to make sure the limitation law had actually been lifted from the Act.

Pennsylvania had been one of only three states that capped the number of slot machines one manufacturer could have on a casino floor. Now, all three of those states — New Jersey, Delaware and Pennsylvania — have rescinded those limits.

The limitation on manufacturers in Pennsylvania wasn't part of the original gambling law approved in 2004 that legalized slot machine-only casinos. However, slot makers were authorized to use a Pennsylvania-based distributor to bring the games to market.

When state lawmakers went back in and cleaned up the gambling laws in 2006, the distributor portion of the bill was eliminated. Instead, the 50 percent cap on how many slot machines one company could have on a casino floor was implemented.

The move was seen as a shot at industry giant IGT, which opposed the caps, by competitors Bally Technologies and WMS Industries, which supported the provision.

Before the limits were implemented, IGT had struck a deal with Harrah's Entertainment for a more than 50 percent stake in the casino floor at the company's Chester casino and racetrack. But the agreement was allowed to stand since the contract was reached prior to the change.

IGT officials argued at the time that caps only hurt the state by inhibiting a casino's ability to install the most optimum slot machine floor possible. IGT argued tax dollars could be lost to other markets.

IGT at the time controlled more than 60 percent of nation's slot machine market. But the Reno-based company has since seen that number reduced as competition from Bally, WMS and others have whittled away at the figure.

With the slot machine caps eliminated, Pennsylvania becomes a wider open market for the slot machine industry, especially with potentially lucrative casinos in the population-rich Philadelphia area on the horizon.