After a frenetic two days of action in the General Assembly, Pennsylvania has become the fourth state to regulate and license online gaming and poker within its borders.
The action in the Keystone State kicked off on Wednesday when the Pennsylvania Senate acted on HB 271. After a significant amount of debate, the Senate decided by a vote of 31-19 to pass the House bill, putting the onus back on the House to complete a deal that has been in the works for more than 18 months (more on this in a bit). The bill was passed out of the Senate so late that the House wasn’t in session to consider it, instead having to come in on Thursday to take up action on the bill.
Thursday saw another lengthy debate session on HB 271, with many in the House decrying not only the expansion of gaming in the state but also the rushed nature of the nearly 1000-page bill. In the end, the vote went to the ayes for expanding gaming in the state by a tally of 109-72. The legislation now heads to Governor Tom Wolf, who has stated in the past that he will sign the expanded gaming bill.
There is a litany of products that would become legal for Pennsylvanians once Wolf signs the bill. Complete online gaming – slots, table gaming and other house banked games – would be offered to the citizens of the state. Online poker will also be offered to the customers as well as daily fantasy sports (DFS). One of the things that was holding up passage of the bill, video gaming terminals in bars and airports, ended up not causing any issues as it was included in the bill. Furthermore, there will be 10 “mini-casinos” allowed to open throughout the state and, should the federal government drop laws preventing the states from doing so, online and live sports betting would be authorized.
When it comes to licensing for business in Pennsylvania, three separate licenses will be offered. The first will be for slot gaming, the second for house-banked games and the third for online poker. The casinos in operation in the state will have the first option as to whether they want to participate in the newly born industry, with a $10 million cost for licensing across all three platforms and a $4 million licensing fee for each individual product. After 120 days, the industry is opened to outside businesses and licenses will go for $4 million.
There are still some issues with the taxation on the different operations, ones that could cut the industry down before it even gets started. A 54% taxation rate on slot gaming might be too big a bite for online operators to even enter the market (although legislators have said the live games are taxed at that rate and online operators will just have to live with it). Online poker is a bit more realistic, taxed at 16%, but that is still higher than neighboring New Jersey.
There are plenty of people who are wondering who will be the major players in the new online gaming and poker industry in Pennsylvania. First, the casino operations already in the state have first blood on any licensing. This means that such operations as Caesars Entertainment (owners of Harrah’s in Chester), Parx Casino in Bensalem and Rivers Casino in Pittsburgh will be among the favorites to go for a full three-platform license. Strangely enough, the Sands Bethlehem would also be eligible, but they would be unlikely to enter the fray due to its owner, the Las Vegas Sands Corporation and its founder Sheldon Adelson, and their stance against online gaming.
For the non-Pennsylvania gaming factions, both major DFS sites are probably going to just on the bandwagon. Both DraftKings and FanDuel are very quick to get into areas that have passed DFS legislation, but other smaller operations might find the cost of a license to be too much. The big question will be whether PokerStars will enter into the market due to its actions in the U. S. following the passage of the Unlawful Internet Gaming Enforcement Act (UIGEA) of 2006.
The debate over online gaming dates to 2015 when legislators, looking to plug budget deficits, entertained the options of opening for online gaming. It was actually penciled into the budget in 2016, but gridlock in Harrisburg and the reluctance of legislators on both sides to expanding gambling in the state kept the legislation from being passed. The current legislative session was scheduled to end on Friday in Harrisburg and getting a budget operating for the state of Pennsylvania was of paramount importance, hence the passage of HB 271 (Wolf has 10 days to sign the bill or it becomes law automatically).
If Wolf signs the bill, then there will be a 90-day period in which the Pennsylvania Gaming Control Board will be accepting licenses from qualified entities in the state. After that period has elapsed, then the next key date would be 120 days after that for accepting license applications from non-Pennsylvania gaming operations. If everything runs smoothly, it is possible that approximately a year from now, Pennsylvania will join Nevada, New Jersey, and Delaware as the only states in the U. S. to regulate online gaming and poker.
