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Cut licensing fees for a business partner?

SENATE Finance Committee Chairman Roman Prezioso looked like he was in pain.

There was the longtime lawmaker, who has never supported gambling, shepherding through the Legislature a bill to give the state's four racetracks and casinos a one-year, $1 million dollar apiece break on their table games licensing fees. (The current annual license fee is $2.5 million.)

The irony of Prezioso's position is indicative of the conundrum the state of West Virginia now finds itself in regarding gambling.

Just a few years ago, West Virginia had a monopoly on casino games. But now Ohio, Maryland and Pennsylvania have all jumped in, cutting significantly into West Virginia's market share.

For example, Wheeling Island says it will lose money this year on table games and may not renew its license for the next fiscal year.

On one hand, the argument is being made under the Capitol dome that the casinos should be on their own. Republican Sen. Mitch Carmichael was livid when the discounted licensing fee bill came to the floor.

"We can't cut a tax for manufacturing. . . for any other business in West Virginia, and yet we come in here and for gambling, for table games, we can reduce their fees," roared an incensed Carmichael.

But like it or not, West Virginia is in business with the casinos. It's really more of a partnership, with the state taking a huge chunk of money from gambling - about $440 million this year.

The state has a vested interest in keeping the racinos viable, otherwise even more of the badly needed gambling revenue will dry up.

In the short term, that means passing Prezioso's temporary discount on the licensing fee to keep the table games at Wheeling Island, at least for now.

The Senate went along with the plan, but it faces an uncertain future in the House of Delegates. There's less job security for House members who have to run every two years, and many will be sensitive to voting for a tax break for gambling, even if it's comparatively small.

While the bill, if passed, is a one-year fix, it's not a permanent solution.

Prezioso wants a study to quantify how the gambling landscape has changed in the last decade and, more specifically, what the tax rates are that casinos in Maryland, Ohio and Pennsylvania pay compared with West Virginia.

The gambling lobbyists believe that study will show the West Virginia tax rates are higher.  If so, that will lay the groundwork for legislation next year restructuring the racinos' deal with the state.

That's going to be a tough call for the governor and the Legislature.

Do nothing and the state's casinos may wither on the vine, dramatically decreasing revenue to the state. However, if the state helps the casinos by lowering the tax rate, it will help the operations remain in business, a move that's a political winner only in districts where the casinos are located.

No wonder Prezioso looked like a guy caught between a rock and a hard place.

Kercheval is host of TalkLine, broadcast by the MetroNews Statewide Radio Network from 10 a.m. to noon Monday through Friday. The show can be heard locally on WCHS 580 AM.


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