Seven Pennsylvania casinos announced that they oppose parts of a proposed gaming act and asked for a lower internet gambling tax rate, perhaps complicating regulation of online gaming in the state during this legislative session.

Who wants work to be done on gaming bill?

Gambling Compliance first reported (paywall) a letter sent by a group of casinos that oppose SB900 — a bill introduced by Sen. Kim Ward that would legalize and regulate online gaming in the state. Internet gambling is viewed as one of the ways potentially to chip away at a deficit of more than $2 billion in Pennsylvania. The state budget is supposed to be due in just a few days, on June 30, but lawmakers and Gov. Tom Wolfe remain at an impasse.

While the letter doesn’t seem to be a death knell for a gaming act passing this year, it certainly illustrates that there are issues that likely need to be resolved before such a bill passes. While brick-and-mortar casinos in the state are generally behind online gaming, interested parties in the state differ on the tax rate associated with the bill.

The group of casinos that penned the letter — which you can read at Gambling Compliance — runs the gamut across Class I, II and III casinos and accounts for half of the current B&M locations in the state:

  • Harrah’s Philadelphia
  • Mt. Airy
  • Nemacolin
  • Presque Isle Downs
  • Rivers
  • SugarHouse
  • Valley Forge

Earlier, Sands Bethlehem — of the Sheldon Adelson empire — voiced its displeasure with the online gambling portion of the bill.

What the casinos want

On internet gambling, the casinos suggest a much lower tax rate than the proposed 54 percent tax rate — which would be among the highest of any regulated jurisdiction in the world. From the letter:

We support internet gambling at a fair rate of taxation (15%) and a reasonable upfront fee;  available to all Classes of licensees on the same terms.  The industry needs to avoid the fate of other industries that have ignored the Internet (record industry, book stores etc.).  Based on experiences to date in regulated U.S. jurisdictions, online gaming is likely to increase – not cannibalize – overall revenues and taxes. And, it will create cross marketing opportunities for licensees and improve distribution channels for operators to all customer segments.

The tax rate, though, appears to be far from the most controversial portion of the bill, at least from the perspective of these casinos.

The casinos are also against provisions in the bill that would:

  • Allow slots at off-track betting facilities
  • Allow video-style gaming at bars
  • Create an admission fee for Category III licenses

In the letter, the casino group offered this:

The positions set forth are tied together as a collective package and the failure of one of the components would impact the group’s ability to collectively support the remainder of the issues.

And later:

If these proposals cannot be adopted as an entire package, we would respectfully ask that opening the Gaming Act be deferred at this time and we commit to work with leadership in the next session to find a workable solution.

Despite a lot support for some sort of online gaming regulation in the state and the revenue it would create, it appears casinos will not back a carve out just the internet gambling portion of the bill. Other than differences of opinion on the tax rate and questions on implementation, getting to a “yes” on online gaming would seem to be much easier than passing an over-arching bill.

Bill is not done, yet

There has been little movement on the gaming bill since a hearing in front of Ward’s Senate Community, Economic, and Recreational Development Committee last week. And Ward even said in an interview last week that she does not think her gaming bill has a chance of making it into this year’s budget. But a story at the Daily Times painted a slightly more optimistic view on the chances for online gaming regulation.

In reality, little progress has been made on anything associated with the budget. A Penn Live editorial says the Wolf and the Republican-run legislature are still “miles apart” on many key issues. At this point, a budget passing by the June 30 deadline appears unlikely — “hope is waning” for that possibility, according to an Associated Press story.

That may give casino interests and lawmakers time to get on the same page on the gaming act and online gambling. Either way, however, time is running out for the possibility of internet gaming regulation to pass in 2015.

Photo by Mark used under license CC BY 2.0.