There’s no shame in being eager.

This past week, Rep. Frank Farry sent an official letter to the Pennsylvania Gaming Control Board (PGCB) dated May 23 asking the board to implement the proper regulations for sports betting as soon as they can.

“I strongly encourage the Gaming Board to adopt the appropriate regulations as soon as possible. Legalizing sports wagering will serve as a job creator in the Commonwealth as well as provide much-needed revenue to Pennsylvania,” Farry said in the letter.

Farry sees revenue opportunity in wagering

One day after his letter, Farry posted an article on his website providing some more insight. His initial letter was brief and did not elaborate on the reasoning behind his request.

The article indicated that Farry’s PGCB ask was based on two things: the

  • Revenue that sports betting brings
  • Lost revenue being gambled illegally

“Between license fees and tax revenue, sports betting has the potential to be a lucrative revenue source for the budget and priority programs such as education, human services and public safety,” Farry said in the article. “It will also serve as a job creator in the Commonwealth.”

The American Gaming Association (AGA) estimates that legalized sports betting will create around 152,000 jobs nationwide. The organization also projects $5.3 billion in tax revenue.

Pennsylvania will most likely be among the states with the highest tax revenue dollars from sports betting. Act 42, the legislation that expanded gambling in Pennsylvania, provided a preliminary framework for sports betting that could make the state one of the first to implement sports betting.

As for curbing illegal gambling, Farry said “millions of dollars are being wagered illegally on sporting events in Philadelphia,” and that it’s important to end that with legal betting.

He concluded his quotes with another strong admonition for the PGCB:

“We have an opportunity to be on the forefront of a sustainable revenue option that would benefit the state and our communities, and I encourage the Gaming Control Board to act quickly in establishing the necessary guidelines.”

High taxes ahead for PA sportsbooks

Pennsylvania has long had a reputation for being a high-tax state for casinos. According to numbers from the AGA, it’s typically in the top two for tax revenue from commercial casinos.

The state charges a 54-percent tax on slots and video poker. Meanwhile, Nevada charges a 6.75-percent tax on gambling wins.

The proposed tax rate for sports betting is 34 percent. These high taxes will make life a little more difficult for sportsbooks, especially considering that Nevada sportsbooks’ average win is around 4.5 percent.

A 34 percent tax on that win rate would reduce a sportsbook’s take to 3.02 percent.

In years where big underdogs win on the big stage, that 34-percent tax could sting. For example, it’s estimated that Las Vegas sportsbooks could lose $5 million if the Las Vegas Golden Knights win the Stanley Cup.