Emissaries from numerous Pennsylvania casinos were on hand in Harrisburg last week for a public hearing held by Senator Kim Ward’s Community, Economic and Recreational Development Committee.
A large portion of Wednesday’s conversation surrounded online gaming legalization, an effort which now appears to command sizeable support among both state lawmakers and casino representatives.
In attendance at the hearing were delegates from Pennsylvania’s Sugarhouse, Rivers, Meadows, Penn National, Sands Bethlehem, Harrah’s, Parx, and Valley Forge casinos. Each casino supported online gaming regulation to some extent, with the exception of Sheldon Adelson’s Sands which, predictably, opposed the bill outright.
Absent from the conversation were Mohegan and Presque, as well as Live! Hotel & Casino, which is still under construction and slated to open next year in Philadelphia.
Debating SB 900
The hearing represented a growing legislative trend of support for online gambling in Pennsylvania.
Five regulatory bills have already been introduced in 2015, and SB 900 is the latest such effort from state lawmakers. Sponsored by Ward, SB 900 was the immediate cause for last week’s committee hearing, which also delved occasionally into questions of tavern gaming and liquor laws.
SB 900 included language championed by Parx boss Bob Green, which would require online players to register in-person at a casino. Even as Green reiterated his support for live registration at Wednesday’s hearing, others in attendance condemned the approach as impractical and potentially costly.
The caveat was a central cause for SB 900’s initially cold reception, but at the hearing, Ward noted the terms of the bill were not yet finalized. Such a requirement could become a sticking point that has a chance of derailing PA online gaming legislation.
Casino execs support legalizing PA online gambling
“We are in favor of online gaming, as long as it’s affordable and the details are ferreted out,” said Meadows General Manager Sean Sullivan. “We have to be considerate of what the fee of entry is, and what the taxes are.”
Sullivan said land-based casinos in nearby West Virginia and Ohio are currently “pillaging” business in the state.
Caesars Vice President Michael Cohen told lawmakers online gaming would attract a huge, younger demographic not currently drawn to brick and mortar establishments. Four-fifths of online registrants are entirely new players, Cohen said, of which fifteen percent then venture into live casinos for the first time.
“Acquiring new players is the lifeblood of the industry,” said Richard Schwartz of Harrah’s, who also spoke out against the live registration system proposed by Green, comparing the process to registering for Netflix at a movie theater.
Legalized online gaming would counteract the “poaching” of Pennsylvania players, Schwartz said, adding it would lead to “little overlap” with land-based receipts.
Tax questions remain
For Pennsylvania casinos to compete in the online marketplace, Schwartz emphasized a need for finalized legislation to mandate a tax equal to or below that of New Jersey, noting that many offshore operators are subject to tax rates as low as one percent.
But Senator Robert Tomlinson, a member of Ward’s committee, condemned Schwartz’s call for a tax rate of 15 percent or lower. Casinos would capitalize on higher online profit margins, Tomlinson argued, and divest from brick and mortar operations.
“If you see an advantage in the tax rate, you’re going to take advantage of that,” Tomlinson said. “If we give you a tax rate that incentivizes you to give people a cell phone and an app and go home, that’s a scary point to me.”