Pennsylvania County Overhauls Casino-Funded Grant Program After Oversight Investigation

Dauphin County, Pennsylvania is overhauling the gaming grant program funded by tax revenue from Hollywood Casino at Penn National Race Course after a PennLive investigation exposed lax oversight and grants routed to politically connected businesses. County officials announced the sweeping reforms in late July, ending a system that had distributed more than $150 million since 2008.

Under the new rules, private businesses will no longer be eligible for gaming grants at all. Funding will now be limited exclusively to nonprofits and government entities, and the same restriction extends to the county’s separate tourism grant program.

What the PennLive Investigation Found

The five-part investigation, published in April, detailed how the county awarded nearly 100 gaming grants to private businesses over the years, some of which were tied to public officials or their family and friends, while nonprofit and municipal applicants for essential services were often underfunded or turned away entirely. Reporters cited specific examples, including a $40,000 grant that went toward a public official purchasing a luxury truck and a $5,500 grant awarded to a barber shop owned by a county commissioner’s brother.

The reporting also found the county routinely waived follow-up requirements such as progress reports and project audits, leaving it unclear whether grant money was used as intended or whether some funded projects were ever completed. At least two grantees were found to have hired their own companies to perform grant-funded work without disclosing the arrangement.

The fallout was immediate. Commissioners tabled a scheduled vote on that year’s grant awards after reporters began asking questions, and the county official who had overseen the program’s administration submitted his retirement notice within hours of a reporter attempting to interview him.

How the Program Is Changing

The reformed program, announced by Chief Clerk Eric Hagarty, gives the county new authority to revoke grants if projects never materialize, recover assets purchased with grant funds, and claw back money when necessary. Grant recipients will now be required to certify that funds were used appropriately, submit progress reports every six months, disclose conflicts of interest with contractors before receiving payment, and provide close-out reports once a project wraps. If serious questions arise, grantees may also be required to submit a formal audit from a certified public accountant.

The county is also digitizing the entire application process for the first time, with plans to publicly post applications, progress reports, close-out reports, and aggregated scoring results from the Gaming Advisory Board online. Previously, that documentation was accessible only through public records requests.

A new scoring matrix, worth up to 102 points, shifts priority toward public need and community benefit (20 points) and project scope, budget, and cost-effectiveness (15 points), while reducing the weight given to a project’s connection to Hollywood Casino to just 10 points. County commissioners have also set strategic funding targets across categories: 35% for public safety and emergency services, 25% for facilities, infrastructure, and transportation, 20% for health and human services, and 20% for other public-interest projects.

“These reforms mark a significant step toward greater transparency, accountability and public trust for the gaming grant program,” Commissioner Justin Douglas said.

The grants are funded by the county’s share of gaming revenue from Hollywood Casino, which has generated $266 million for Dauphin County since 2008, with half of that total legally required to go toward the grant program. The next round of applications opened August 1 and is due by November 2, giving nonprofits and municipalities their first shot at funding under the new rules. As states continue to lean on gaming tax revenue for public programs, oversight failures like the one uncovered in Dauphin County are likely to draw scrutiny to Pennsylvania sports betting and casino tax structures well beyond this one county.