JULY 2005
Pennsylvania Gaming
Gaming in Pennsylvania: Challenges resulting from the
Restoration of Local Regulation
In Pennsylvanians Against Gambling Expansion
Fund, Inc. v. Commonwealth of Pennsylvania
(“PAGE”), the Pennsylvania Supreme Court upheld
most of the Pennsylvania Race Horse Development
and Gaming Act, Act 2004-71 (“Gaming Act”),
removing substantial uncertainty regarding the fate
of Pennsylvania’s new gaming program and
potentially paving the way for the development of
gaming operations across the state. However, by
finding unconstitutional and severing from the
Gaming Act the provision preempting local
regulation of the conduct of gaming, the decision
in PAGE may considerably complicate the
development and operation of gaming facilities.
Should efforts now underway to enact legislation
preempting local regulation of gaming facilities
prove unsuccessful, entities seeking to develop
gaming facilities in Pennsylvania will face several
additional challenges. This Alert discusses those
challenges.
The Gaming Act was signed into law on July 5,
2004, authorizing limited gaming in Pennsylvania
by the installation and operation of slot machines
in three categories of facilities – licensed
racetracks, facilities in Philadelphia and Pittsburgh,
and “well-established resort hotels.” The location
and operation of these gaming facilities
undoubtedly will raise opposition in certain
communities. In its original form, however, the
Gaming Act contained an express statement
preempting local regulation of the “conduct of
gaming,” reserving to the Gaming Control Board
sole authority to determine the location of licensed
gaming facilities and to consider certain impactrelated issues in connection with licensing
proceedings. PAGE has removed the provision
preempting local regulation and, for the moment at
least, effectively restored local control over gaming
facilities.
LOCAL REGULATION IN PENNSYLVANIA
Pennsylvania generally affords municipalities
control over local land use and zoning decisions in
accordance with the Pennsylvania Municipalities
Planning Code (“MPC”). The suitability of uses to
particular locations, the appropriate design and
layout of facilities and buildings on a site, and the
need for mitigation measures to protect neighbors
and the community from adverse impacts of a use
are all decisions normally vested in local decision
makers in Pennsylvania by the MPC.
MPC § 105 sets forth broad purposes to protect and
promote citizen safety, health and morals,
accomplish coordinated development, promote
energy conservation, provide for the general welfare
by guiding and protecting development and growth
and permit municipalities to minimize such
problems as may presently exist or which may be
foreseen. To carry out these objectives, the MPC
grants municipalities the authority to adopt
comprehensive plans and to enact subdivision and
land development ordinances and zoning
ordinances. Through such plans and ordinances,
municipalities establish objectives and plans for
future development and use of land, requirements to
ensure consistency of future uses with such plans,
and specific regulations governing the use of land,
the location and configuration of structures and the
density and intensity of uses.
The Gaming Act in its original form provided that
the conduct of gaming, including the physical
location of any licensed facility, could not be
prohibited or otherwise regulated by any local
ordinance relating to land use or zoning, to the
extent the licensed facility was approved by the
Board. This language suggested a clear intention to
remove from local control decisions regarding the
location and operation of gaming establishments
that local government otherwise would enjoy in
accordance with the MPC.
THE DECISION IN PAGE
The petitioners in PAGE challenged the preemption
of local regulation afforded by the Gaming Act on
grounds that the Act improperly delegated the
legislative power of the General Assembly in
violation of Article II, Section 1 of the Pennsylvania
Constitution. Article II, § 1 provides that “[t]he
legislative power of this Commonwealth shall be
vested in a General Assembly, which shall consist of
a Senate and a House of Representatives.”
Article II, § 1 has been recognized in prior decisions
to preclude the General Assembly from delegating
the power to make law to any other branch of
government. Although the General Assembly may,
with adequate standards and guidelines, delegate
the power to administer laws, Article II, § 1 reserves
to the General Assembly alone the “basic policy
choices” embodied in legislation.
The court in PAGE agreed with the petitioners that
the Gaming Act did not specify adequate standards
and guidelines for the Board to make zoning and
land use decisions with respect to the location and
operation of gaming facilities. Accordingly, the
provision preempting local control of such
decisions was found unconstitutional and severed
from the Gaming Act.
2 JULY 2005
THE SIGNIFICANCE OF THE DECISION
As a result of PAGE, the location and operation of
gaming facilities in Pennsylvania is now subject to
local government control, by way of zoning, land
development and other land use ordinances. In the
absence of subsequent legislation lawfully
changing this result, developers of gaming facilities
will be required to comply with local zoning and
land development ordinances and, depending upon
the municipality and ordinances in question, may
be required to seek use and development approval
from the governing body of the host municipality
or a local zoning hearing board, or both. All such
proceedings would be public, with an opportunity
for participation and potential opposition by
persons affected by the application, and appeal by
those aggrieved by a local decision.
Zoning ordinances manage development by
determining what kind of uses will be allowed in
any given area, or district, of the municipality (i.e.,
office, commercial, industrial) and imposing
requirements relating to density, height, setbacks
and open space for uses in each district. Land
development ordinances address the improvement
of lots and provide standards for street design and
grading, curbs, walkways, street lights, fire
hydrants, water and sewer facilities, and public
dedication of streets.
The first question to be considered for a potential
gaming development in this context is whether the
proposed use is allowed by local ordinance on the
property (in the district) in question. The answer to
this question is complicated by the fact that few, if
any, zoning ordinances in Pennsylvania include
gaming as a specifically identified use, because
they were adopted before gaming operations were
authorized by the Gaming Act. To the extent
gaming is not authorized by an ordinance either
expressly or by inclusion with the scope of a
broader use, such as entertainment or recreation,
consideration would need to be given to the need to
amend the ordinance by way of a curative
amendment or validity challenge in accordance
with MPC procedures to allow for such use.
KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP
Zoning ordinances typically provide for certain
uses by right in a zoning district and others by
“special exception” or as “conditional uses.” Uses
permitted by special exception or conditional use
approval are permissible uses within the district
upon demonstration that the proposed use will
satisfy specific standards or criteria stated in the
ordinance, and provided that the proposed project
is not shown (by opponents) to constitute a
substantial threat to the community. The particular
wording of the special exception or conditional use
criteria in an ordinance is critical to evaluating the
suitability of a proposed development in the district
in question. Depending upon the municipality and
ordinance in question, the criteria may be specific
and objectively stated, or they may be more general
and subjectively stated, thereby affording
substantial discretion to the decisionmaker.
Ordinances often provide for approval by special
exception of uses not specifically identified in the
ordinance where the proposed use is compatible
with other uses specifically authorized in the
district – such provisions might provide
opportunities in certain circumstances for approval
of gaming projects where the ordinances do not
specifically authorize the uses in the desired
districts, without the need to amend the ordinances.
Even in districts where gaming uses are allowed by
local ordinance, if special exception or conditional
use approval is required, the zoning hearing board
or governing body has the right to impose
reasonable conditions on the use to safeguard the
community, implement the purposes of the
ordinance and protect the general welfare. The
question of “reasonableness” of proposed
conditions often inspires debate, and sometimes
litigation, among the parties to Pennsylvania
zoning proceedings, and undoubtedly will be an
issue of significance in the development of some
gaming operations. E.g., what roadway or
intersection improvements may a municipality
reasonably require to address the increased traffic of
a project?
3 JULY 2005
Where a proposed gaming development is not in
conformance with the criteria stated in a zoning
ordinance for uses in the specified district, e.g., with
respect to building height, setbacks or density of
use, variance approval will be required. In effect, a
variance is permission, granted by the zoning
hearing board, not to comply with a particular
requirement of an ordinance. The standards for
obtaining a variance are difficult to satisfy and
require proof that strict adherence to the ordinance
would cause unnecessary hardship for the applicant.
As noted, zoning and land development proceedings
are public proceedings with opportunity for
participation by persons affected by an application
or aggrieved by a decision. Where uses are
permitted as of right in a particular district, zoning
approval is granted by a zoning officer, with an
appeal allowed to the zoning hearing board.
Zoning hearing boards also hear and decide, in the
first instance, applications for special exceptions
and variances and challenges to the validity of
ordinances, while applications for conditional use
approvals, curative amendments and land
development approval are heard and decided by the
governing body. All decisions of zoning hearing
boards and governing bodies on such applications
are subject to appeal by aggrieved parties to the
county Court of Common Pleas, and thereafter to
Commonwealth Court and, with permission, the
Supreme Court of Pennsylvania.
The zoning and land development process in
Pennsylvania can be complicated. Applications for
larger projects (such as the development of a
gaming facility) typically require submission of
detailed and extensive applications and site plans,
are subject to a public notice and hearing process
and rights of appeal, and take multiple months (or
years) to complete. With the decision in PAGE,
developers of gaming operations are now subject to
this process and the uncertainty, cost and delay it
may create for their projects. The implications of
this for any particular project may vary, but should
KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP
be evaluated in detail from both the legal and
construction/engineering perspective at an early
stage of development planning.
Developers also should evaluate the need for, and
potential benefits of, a community relations
program to provide timely, accurate information to
the community about a proposed project, in order to
avoid or minimize project opposition that
sometimes develops on the basis of misinformation.
While the potential for local opposition to gaming
operations has been a concern for some time, the
PAGE decision opens a significant new outlet for
such opposition. Development and implementation
of sound strategies to inform municipal officials
and the community of the impacts (benefits and
costs) of a project and to navigate the various local
approval processes that now apply will be critical to
the ultimate success of a project.
Christopher R. Nestor
717 231-4812
cnestor@klng.com
Pierce Richardson
412 355-6786
prichardson@klng.com
Craig P. Wilson
717 231-4509
cwilson@klng.com
If you have questions or would like more information about K&LNG’s Betting and Gaming Practice, please
contact one of our lawyers listed below:
Harrisburg
London
David R. Overstreet
Warren L. Phelops
717.231.4517
+44.20.7360.8129
doverstreet@klng.com
wphelops@klng.com
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