Pennsylvania Gov. Tom Wolf vetoed a Republican-backed budget proposal on Tuesday, perhaps giving new life to efforts to legalize and regulate online gambling in the state.

Veto = good for internet gambling?

While the discord between Pennsylvania’s democratic governor and the heavily Republican legislation has not been good for budget negotiations, it might be good news for interests who would like to see online gambling in the state. Movement on any of the five bills that would regulate online gambling had come to a halt previously, and new gaming measures had not been included in the spending bill sent to the governor’s desk.

Right now, the two sides currently don’t see eye-to-eye on how the budget should be constructed. From an Associated Press story on the budget impasse:

As the state began the new fiscal year without even a partial budget in place, both sides said discussions would begin Monday in hope of bridging the vast gap between Wolf’s plan, which would raise taxes and substantially increase education funding, and the GOP plan that had no new taxes and much more modest school spending.

Wolf’s veto means the state missed a soft deadline for funding the state government, although it will not result in massive shutdowns.

At this point, Republicans and Wolf are going to be looking for ways to create revenue so that they can avoid future deficits that could range from $1 billion to $2 billion. They also need to find middle ground on tax increases that Republicans want to avoid and new education spending that Wolf campaigned on.

One of the easy ways to generate revenue would appear to be the introduction of online gambling, which has not been very contentious in the legislature, at least as a general idea, if not in its actual implementation. Both Democrats and Republicans have introduced bills that would regulate online gambling, with the frontrunner to advance coming in the form of Sen. Kim Ward’s SB 900.

A little bit of momentum

So far, there hasn’t been any direct talk of bringing Ward’s gaming bill — which also includes other changes to Pennsylvania’s brick-and-mortar casino industry — back to life. But it doesn’t take much of an imagination to see it as part of a budget compromise. Between licensing fees and taxes, online gambling has the potential to add tens of millions to hundreds of millions to state coffers, depending on the estimate you side with.

One state senator — Lisa Boscola — said she believes the Ward bill has a chance to make it to the governor’s desk, although she opposes the bill. She said that in comments for a story at Lehigh Valley Live:

Legislative committees in recent weeks have been holding hearings on new bills, and Boscola, D-Lehigh/Northampton, believes the interest may be there to legalize online gaming soon.

“It’s gaining a lot of traction because of the structural deficit in our budget,” she said. “It’s not going to be that easy to get passed, but it’s got momentum.”

Boscola hasn’t been really involved in the online gambling debate so far, but has been lobbied by Sands Bethlehem; the Sheldon Adelson property is against online gambling regulation.

An unscientific poll posted at Lehigh Valley Live shows that 80 percent of respondents are in favor of online gambling. While the results probably aren’t terribly important, in the grand scheme of things, it at least doesn’t give the opposition more ammunition to oppose an online gambling bill.

Still hurdles for bill to clear

The bill, as currently composed, is still not really ready to go directly to the governor’s desk. A proposed tax rate of 54 percent is far too high and would need to be reduced to make online gambling viable in the state. Seven casinos have come out against parts of SB 900; they have made a proposal to drastically reduce the proposed tax rate.

Republicans seem to be behind the bill, at least in concept, as leadership in both houses have supported online gambling legislation. Whether Wolf would sign an internet gambling regulation bill — either on its own or as part of a budget — is an open question. But if it’s something that adds money to the budget and he’s not vehemently against it in principle, you have to figure the bill has a chance to get past Wolf as well.