How a new Philly casino could jeopardize a different city’s finances

The Pennsylvania Gaming Control Board’s impending decision over Philadelphia’s second casino license has people in Chester shaking in their boots.

The Pennsylvania Gaming Control Board is expected to grant a second Philadelphia casino license tomorrow. The board is looking at four proposals — two in Center City, and two in South Philadelphia.

That has a lot of people in Chester shaking in their boots.

Chester is about a 20-minute drive from Philadelphia, and it has its own casino, (the ironically named) Harrah’s Philadelphia. As Keystone Crossroads reported in July, Chester’s population has fallen to half of what it was 50 years ago. The city has long struggled with high unemployment and vacant, rundown properties.

Harrah’s built the casino in Chester eight years ago, taking advantage of the state’s Keystone Opportunity Zone program, which gives companies tax breaks for developing vacant or contaminated land.

Under state gaming laws, Harrah’s pays Chester at least $10 million a year in gaming revenue. That amounts to about thirty percent of the city’s operating revenue. And that’s just the minimum; the city gets even more gaming revenue when the casino is doing well.

The Chester community had high hopes for Harrah’s. Many people said they expected jobs for locals. But out of the casino’s more than 1,600 employees, only about 130 live in Chester. Nearly 400 live outside the state.

Others hoped for economic development spinoff. Some companies have moved to the Chester waterfront, like PPL Park, a soccer stadium that also got tax incentives from the state. The city’s downtown remains desolate.But the one success of Harrah’s is that the casino pulled the city out of a financial hole.

Thomas Moore, who was the chief-of-staff to the former mayor when Harrah’s opened, told us that Chester went from having deficits to having surpluses, thanks to the casino. The gaming revenue allowed the city “to pay the bills without going further and further into debt,” Moore said.

The city has used the money to lower taxes, invest in infrastructure, and reduce tuition for Chester residents at a local community college, among other things.

But costs have gone up in Chester, and the city is once again running a deficit.

At the same time, gaming revenues at Harrah’s have been falling for years. As the Delaware County Daily Times reported today, the casino’s revenues fell nearly 20 percent when Valley Forge Casino Resort opened 25 miles away in March 2012.

Something similar happened in September 2010, when Sugarhouse Casino opened 18 miles from Harrah’s, in Philadelphia. Harrah’s earned $450,000 less that week that it did the same time a year earlier, the Delco Times reports.

Many people in Chester think another Philadelphia casino would sink Harrah’s.

When we interviewed Baumann in July, he said the casino market in Pennsylvania was saturated. “There [are] only so many people that enjoy gaming and entertainment, just like there [are] so many people that go to Wawa or Walmart or Nordstrom,” he said at the time.

The Delco Times story got reactions from Chester’s mayor, State Rep. Thaddeus Kirkland (D-159), Baumann, and other community members. It’s worth a read. No one is happy.

If Harrah’s keeps losing gaming revenue, Chester could end up with the bare minumum $10 million that Harrah’s has to pay each year, regardless of gaming revenue. If the casino is forced to close, the city will be back where it started eight years ago — running a deep deficit, and unable to pay its bills.

It’s no wonder people in Chester are concerned.