With the stroke of a pen, online poker and gambling will become legal in Pennsylvania. The bill lies on a desk awaiting the signature of Gov. Tom Wolf, who has ten days to sign it.
On Wednesday, Oct. 25, after several years of tweaking and amending, the Pennsylvania Senate approved H 271 which legalizes online poker and online gambling in PA. Today, the House approved that bill by a vote of 109-72. All that remains for the bill to become law is for the governor to lend it his autograph.
Pennsylvania would become the fourth state to legalize online poker and gambling, following New Jersey, Delaware and Nevada. Estimates for additional government revenue brought in by this bill are around $250 million.
What the PA gaming expansion bill does
The bill would legalize online slot machines, online table games and online poker throughout Pennsylvania. It also regulates daily fantasy sports, sports betting (if federally legalized), online lottery, video gaming terminals at truck stops, and tablet gaming in airports.
It also authorizes up to ten satellite casinos, which are smaller template gambling centers set up in lower population zones. Additionally, the bill changes Category 3 licenses to remove the membership fee for a higher one-time fee. The government outlines its fiscal estimates on the bill here.
Online gambling licensing in Pennsylvania
After the bill is signed into law, the state’s existing 12 casinos would have 90 days to apply for a discounted license to operate all three forms online gambling (poker, slots, and table games). The discounted price is $10 million, which after 90 days increases to $4 million per license.
Only after the existing PA casinos decide whether or not to apply for a license can out-of-state entities apply to be an online gambling operator.
Will it get signed?
Wolf has historically maintained a cautiously open-minded approach toward online gaming legislation. But confidence is high that he will sign it.
His main hesitation has been that online gaming should not steal revenue away from Pennsylvania’s current legal casinos and gaming outlets. The bill’s tax rate would be 16 percent for poker and table games. Online slot machines would be set at 54 percent to match the current rate set for land-based slots in the commonwealth.
About those tax rates…
It appears legislators have come to an agreement that these are suitable tax rates that they believe will not impact local gaming businesses, but others disagree. Eric Schippers of Penn National, which operates the Hollywood Casino, has been quoted saying it is considering suing to stop the bill.
“We’re considering our legal options because this would have a uniquely punitive effect on our casino, more so than any other casino in the state,” Schippers said.
Penn National’s issue with the bill centers around the fact that the company believes satellite casinos will impact its business more than other casinos throughout Pennsylvania. In an earnings call Thursday morning, Schippers saw “significant flaws” in the bill, noting the 54 percent tax rate for slots.
“We’re going to have to weigh all our options, and we’re going to have to dissect the 970 pages and go from there,” Schippers said.
Other critics of the tax rate have come forward to say that if $10 million is the price tag, no one will pay it. With razor thin margins in New Jersey for online gaming, there are few if any who would risk $10 million for such a slow and uncertain return on investment.
With questionable trends in Pennsylvania’s slot machine performance, a high tax rate may not be the appropriate solution to declining revenues.
The journey begins for legal online gambling in Pennsylvania
Time money will tell if the current tax rate will make sense for Pennsylvania. One thing is certain. If Wolf signs the bill, it will only be the end of the beginning of online gaming’s legislative struggle.