Philly Finally Has a Second Casino. What Exactly Do We Win?

Now that we have two Philly casinos, what do we win? Illustration by Pete Ryan

The first time I went to a casino, I drove all the way to Atlantic City with the windows down, smoking cigarettes and dreaming about how the money I was about to win would change my life. A few hard nights taught me a different approach: Decide ahead of time how much you can lose. As I enter South Philly’s Live Casino & Hotel on opening night, I decide it’s $47 — $40 from the ATM and the $7 in my pocket.

The place is a spectacle. Masked dancers in feathery red outfits are stalking around the slots parlor on stilts and dangling from hoops atop brass poles. One is perched upside down on a disco ball. I try to ignore the incessant “Live!” exclamation point found on branding throughout the joint, but the marketing department is clearly proud of it. I put a $5 bill in a penny slot machine called Epic Fortunes that features a smiling infant riding a red-crowned crane, bet all 500 credits, and lose the $5 in one pull. I lose a dollar in a slot machine called Eagle Bucks and another on Buffalo Rush. I put in a $20 bill and lose $5 more. Mystical Unicorn swallows up $4.80, and I drain most of the remaining $10 on a machine called 8 Petals. I print out my ticket with a 30-cent balance and take a walk around.

It’s a big flat room filled with slot machines and table games, ringed by restaurants, a poker room, a discreet high-limit slot parlor, and more table-game parlors. The center has a raised circular bar and layer-cake chandeliers hanging from the ceiling. It feels a little nicer than how I remember SugarHouse Casino in Fishtown, now known as Rivers. Nicer by what measure, I’m not sure.

I try to get a gin and tonic at the center bar, but because of COVID, I have to sit at a table and eat a meal if I want a drink. Some people are actually doing this, including a couple on a date and what appears to be a family. Charlie Manuel, the former Phillies manager, is leaving a private event at the Prime Rib, which won’t open to the public for a few more weeks. Fox 29’s Chris O’Connell is doing a TV spot about the grand opening of Philly’s second casino, “bringing with it lots of much-needed jobs and lots of new energy to South Philly.”

I pull up to a video roulette machine, put in $20, play for five or six minutes, and walk away with my stake miraculously intact. So I promptly lose $18 in a slot machine called Celestial Sun Riches. I take my last $2 to another slot — Mayan Chief Great Stacks — push the button a couple times, and cash out with a nine-cent keepsake. I circumnavigate the casino floor a few more times, sweating inside my parka and double mask, then take the elevator back to the parking garage and go home.

My $47 in losses will be divided, by law, as follows: Forty-six percent of each dollar lost to a slot machine in Pennsylvania, or $21.62 of my losings, goes back to the casino operator — in this case, the Cordish Companies and their chairman and CEO, David Cordish. Four percent, $1.88, goes to local and county governments. Five percent, $2.35, goes to a state fund for tourism and economic development. The Pennsylvania horse-racing industry collects 11 percent, which means I’ve donated $5.17 directly to people who are already rich enough to breed racehorses. (Never mind that horse-racing in Pennsylvania is at best a dying industry and at worst one that facilitates widespread animal abuse.) The remaining 34 percent, $15.98 that once belonged to me, is used to keep Pennsylvania property taxes down and, in Philly, to reduce the wage tax.

That’s the split: 54 percent to the state and 46 percent to the casino owners. And still, they turn a profit. That’s why both parties — gaming executives and elected officials — have spent three decades pushing to legalize and expand casino gambling in Pennsylvania. It’s pretty clear what’s in it for them. A harder question: What, exactly, is in it for us?

It used to be illegal to gamble. More illegal than it is now, anyway. After Atlantic City legalized casinos in 1977, it had a regional monopoly on slots and table games for a couple of decades. But when Ed Rendell was elected to his first term as mayor of Philadelphia, in 1991, the city faced a $250 million structural deficit — the biggest budget gap of any city in the country, according to Rendell. It had raised taxes 19 times in just the previous decade, he told me recently, without making a dent. Raising taxes again was “out of the question,” he said. Casinos would mean jobs.

Some elected officials and civic leaders in Pennsylvania had long professed moral opposition to gambling as a vice that could lead to personal ruin. For Rendell, that was undercut by the existence of the state lottery, created in 1971, and by the fact that busloads of people in Philly were visiting Atlantic City every day. In his view, the city was leaving money on the table by letting people gamble out of state. If there was a downside to legalized gambling — and Rendell didn’t believe there was, much — he reasoned that gambling already existed. So in 1991, between his election and his swearing-in, Rendell went to Harrisburg to make the case to then-Governor Bob Casey Sr. that Philly should have licensed casino boats floating on the Delaware River, like the ones that had been legalized in Louisiana. The two met privately, and Rendell spoke for 40 minutes.

“And at the end of the 40 minutes, he said — as if I hadn’t presented at all — he said, ‘I am philosophically opposed to any expansion of gaming,’” Rendell said.

Nevertheless, a few years later, word began to spread that state legislators were working on a bill to legalize riverboat gambling in Philadelphia. Developer Bart Blatstein, who’d built a series of big-box stores along the Delaware, found himself with the largest plot on the waterfront. It was considered junk property at the time, Blatstein told me recently. Still, “All of a sudden, I became a very popular guy. Every day there were meetings, and every stretch limo was longer than the next, and every casino executive was better dressed and tanned.” Among those who expressed interest in the site was Donald Trump, then in the midst of a series of business bankruptcies, including for one of his Atlantic City casinos. Blatstein eventually sold the site to Bally’s, which became Caesars, which sold the site to Foxwoods, which would go on to win (and then lose) one of the first Philly casino licenses.

Governor Casey maintained his opposition to gambling through the mid-1990s. Governor Tom Ridge waffled on the issue for his two terms while the state legislature debated various proposals. By 2003, during Rendell’s first year as governor, John Perzel, a Northeast Philly Republican who was then Speaker of the state House, came down hard in favor of legalizing casinos. “If this is about making money,” Perzel, who was later jailed on corruption charges unrelated to gaming, told the Inquirer, “we ought to just go out and make the money.”

In 2004, the state legislature finally passed a bill that legalized slot machines and allowed for licensing of two casinos in the city. The bill was crafted in large part by former state Senator Vince Fumo, also later jailed on corruption charges unrelated to gaming. And it had been fueled, going back years, by thousands of dollars in campaign donations to state lawmakers from gaming-industry insiders, including Trump, who reportedly gave Rendell a total of $32,000 during his run for governor in 2002 and early in his first term.

The plan to site two casinos in Philadelphia quickly stirred controversy. In 2006, the state gaming board awarded licenses to SugarHouse, for a site in Fishtown that had been home to the Jack Frost sugar refinery, and to Foxwoods, to build on the site Blatstein had sold to Bally’s. (It would revoke the Foxwoods license in 2010 over questions about financing.) That same year, the group Casino-Free Philadelphia started campaigning to stop casinos in Philadelphia, with people posting “Casi-NO” signs in their rowhouse windows. They claimed that residents’ opinions hadn’t been taken into consideration and that a casino would attract crime, tie up traffic and parking, reduce property values, and feed on the misery of addicted gamblers.

But Maggie O’Brien, chair of the outreach committee for the Fishtown Neighbors Association, says the opposition always looked bigger than it was. Her association was hijacked by casino opponents, she says. She was accused of being a shill for SugarHouse; neighbors suggested she’d been bought off — that the casino had promised her a fancy job. In fact, she’s had the same job at the Inquirer for decades, with five weeks’ vacation a year.

“It was a nasty time,” O’Brien recalls. “It was very, very nasty. The hype was so great that everybody was against the casino that we thought everybody was against it.” Meantime, some longtime Fishtowners eager for jobs the new casino would bring formed Fishtown Action, or FACT, to advocate for the casino.

Since SugarHouse opened, none of the opponents’ worst fears have come to pass. Crime is minimal. There’s plenty of free parking on-site. And the casino funds improvement projects all over the neighborhood. FACT has disbanded, and FNA has mostly reunited.

“We were right,” O’Brien says. “And guess what? It feels so good.”

The lack of direct harm to the neighborhood masks a more insidious impact, though. Hopes of legalized gambling had fueled property speculation up and down the waterfront for years. (One example: In the 1990s, a corporation called LHTW bought the Fishtown property that would become SugarHouse. The initials stood for “Let’s hope this works.”) “Land was frozen all along the waterfront for casino speculation,” says Matt Ruben, chair of the Central Delaware Advocacy Group. “It wasn’t like there was a public process that was open and transparent and Philadelphians were given a chance to decide if they wanted them and if so, where. … That’s not what happened. Everybody was gambling” on where casinos would be built. “Everyone was playing the lottery. And that froze development.”

The speculation reached into Center City, too, as sites along Market Street east of City Hall were considered, including the “Disney Hole” at 8th and Market and the Gallery mall. Some of these proposals faced stiff opposition in Chinatown. City Councilmember Helen Gym, then a board member at Asian Americans United, had experience warding off developers; in 2000, she’d helped stop construction of a baseball stadium in Chinatown. The casino proposals were “a threat to the cohesion of our community,” according to Gym.

“Casinos are a predatory industry,” Gym says. “They prey on Asians. They prey on seniors. They prey on weekly paycheck holders and college students. … It’s appalling and absolutely antithetical to what government should be doing to protect people and regulate an industry.”

It’s plainly true that casinos work to draw in Asian gamblers. Live held its grand opening on the eve of the Lunar New Year. It includes a Cordish-exclusive restaurant, called Luk Fu, that serves Japanese, Thai, Korean, Chinese and Vietnamese dishes, and many of the slot machines have Asian themes and imagery. Rivers Casino also has an Asian restaurant, called Mian, and used to run a free shuttle bus from parts of South Philly where a lot of Asian families live. In 2015, the Mural Arts program dedicated a mural at 7th and Wolf — Fables of Fortune, by artist Eric Okdeh — that depicts problem gambling in Asian communities.

“One of the things that we pride ourselves on is being an Asian-friendly product,” Mario Maesano, Live’s senior vice president of marketing, told me during a tour of the casino in February. “We think we do Asian marketing and cater to the Asian gaming customer a lot better than anybody in the community here.” In March, Rivers Casino had an open position for Asian Marketing Executive.

In 2015, as City Council was considering a zoning bill for the Live project, a local chapter of the National Action Network, the group founded by Al Sharpton, raised concerns about allegations that Black customers were being discriminated against at other Cordish-run properties, in Louisville and Kansas City. A judge reportedly dismissed a lawsuit related to those allegations because the plaintiffs couldn’t show that Cordish was involved. City Councilmember Kenyatta Johnson, who represents the area, says he spoke with Cordish executives at the time and decided he was comfortable pushing the bill forward. Since then, he notes, the company has exceeded its goals for minority participation in construction: 51 percent of contracts went to minority-owned businesses, according to the company, and another 15 percent to women-owned businesses. The new casino is “an economic asset” to the neighborhood and the whole region, Johnson says.

Unsurprisingly, Cordish wouldn’t provide demographic information about its customers. But of course, it knows who they are. And it matters who gambles the most, or at least it should, because casinos aren’t like other businesses. There was no active demand for casino gambling, no grassroots pro-casino movement, before the state moved to legalize the industry. Legalization was an explicit attempt on the part of elected officials to plug budget shortfalls without cutting services or raising taxes, which makes casino gambling in Pennsylvania essentially a government program. We collect more tax revenue from casinos than any other state, including Nevada. And more of Pennsylvania’s budget is based on gambling revenue and other “sin taxes,” like those on alcohol and tobacco, than budgets in most other states.

Casino gambling was specifically designed to benefit the state, so the city’s share of the overall take is quite small. Under the 2004 state gaming law, Philly gets around $86 million a year in exchange for scheduled wage-tax reductions. (Other jurisdictions get revenue to offset school property taxes for homeowners.) According to a city spokesperson, that has helped lower the wage-tax rate for residents from above 4.16 percent to 3.87 percent. In 2019, Rivers Casino paid more than $19 million in taxes to the City of Philadelphia, according to a casino spokesperson, and $121 million to the state. In 2019, the state collected around $1.5 billion in taxes from the gaming industry, the vast majority of it from slot machines. All of this revenue is based on casino customers’ steady, predictable financial losses. And the casinos just happen to be clustered near one of the poorest cities in the country.

According to Les Bernal, national director of Stop Predatory Gambling, the spread of legalized casinos coincides with a growing focus on nickel and penny slot machines that target lower-income people, not high rollers. “Really, what it’s doing,” he says, “is shifting the tax burden from the middle- and upper-income classes, most of whom are white, onto lower-income people, most of whom are Black and brown.”

And what about those alluring jobs? Prior to pandemic shutdowns, SugarHouse employed 1,593 people, according to the gaming control board. When it reopened last summer after the first wave of COVID closures, it had 813 active employees. Statewide, under non-­pandemic conditions, the industry supports 16,000 jobs, according to the gaming control board, from low-wage hourly gigs to salaried executive positions. A typical casino dealer in Pennsylvania only earns around $35,000 a year, according to Zip­Recruiter; the new Live Casino says its wages start at $12 an hour. A Cordish spokesperson says the casino has filled 1,200 permanent positions so far, 90 percent of them full-time, and that 53 percent of the permanent employees live inside the city. This may be what Ed Rendell had in mind. But, notably, our budget problems haven’t disappeared.

I took another walk through the casino floor one Sunday afternoon in February. A few people were playing the slot machines, but the place was fairly empty. I didn’t put any money down, just floated around the room on the ambient sounds of gongs, bells, cascading coins, slot-machine arms cranking, cash drawers opening, and new tickets being printed. I entered on the west side and walked out via the east, where the hotel lobby is. A man on a bench who was smoking a cigarette looked at me and said something about being “so sad.”

“No luck?” I asked, gazing out across a maze of highway ramps to the Walt Whitman Bridge.

“I lost every penny,” he said.

The casino, built just a short walk from Citizens Bank Park, is betting it will be jam-packed on game nights, which isn’t hard to imagine. After a few years of negotiations, Live signed a community benefits agreement with a group of local civic associations, making promises about parking, lighting and security and pledging to fund local improvement projects. Already, Live has granted more than $100,000 to fix up a ball field at 7th and Bigler and improve irrigation at another at 7th and Packer, according to Rich Cedrone, a civic association leader. The casino is fairly cut off from residential space. The neighborhood never really rallied against it in the first place, and civic leaders say most people in the vicinity are now either happy or indifferent about it.

“Let’s face it: It’s a $700 million project that helped a lot of people and fed a lot of families,” says Mark Kapczynski, president of Whitman Council Inc., another neighborhood group.

These days, lawmakers extol the many benefits of legalized casinos, from jobs to construction to those billions in state tax revenue. This can make it easy to forget what a casino is: a room full of games that are rigged to make sure players lose more than they win. One of the reasons it took so long to legalize casinos in Pennsylvania is that our society judged gambling to be immoral — something to do in the shadows, as evidenced by the fact that it was isolated for decades in the Las Vegas desert. That morality was always a little twisted. Gambling isn’t a sin. But operating a casino just might be. And that’s the business we’re all in now.

Published as “Philadelphia’s Big Gamble” in the May 2021 issue of Philadelphia magazine.