On Wednesday, the Pennsylvania Gaming Control Board (PGCB) opened up the application period for sports betting operators, manufacturers, and suppliers.
A press release from the PGCB provided definitions of each category of applicant, essentially splitting the categories up into companies that operate sports betting systems, manufacture equipment that’s used in sports betting, or supply manufactured equipment.
Pennsylvania is in uncertain sports-betting times
At the time of publishing, no casinos had applied for a sports betting license, rendering the announcement of the new license application period relatively unimportant.
This absence of applications would lead one to believe that sports betting operations like William Hill, Kambi, and Bet365 won’t be filing their applications any time soon. And they certainly won’t be doing it if their partner casinos have no plans to get in the game.
It’s as if the opening of another application session is like announcing that rental applications are being accepted in a ghost town.
Many point to this lack of momentum as the direct result of Pennsylvania’s astronomically high sports betting tax rate — 36 percent — in addition to a $10 million licensing fee.
One of the more striking moments came early June when William Hill CEO Joe Asher told the Philadelphia Inquirer exactly why William Hill hasn’t jumped on the chance to enter the PA sports betting market:
“Pennsylvania is in a different bucket because of the tax rate. We can’t figure it out. Because of it, we haven’t spent the time or effort in Pennsylvania that we have in New Jersey. The tax rate is such a big challenge.”
Ashton’s reference to New Jersey is a popular one in discussions about Pennsylvania’s tax rate. The Garden State’s sports betting tax is eight percent.
High taxes another bill among many for casinos
Perhaps one of the unintended consequences of the historic 2017 gambling expansion bill was that several prominent casinos in the state — the kind at which you’d expect to see a sportsbook — spent considerable amounts of money on Category 4 (satellite) casinos licenses:
- Hollywood Casino (two): $57.6 million
- Philly Live!: $40.1 million
- Mount Airy: $21.9 million
- Parx: $8.1 million
These licenses allow the casinos to run a satellite with 300-750 slots. It will cost them another $2.5 million if they want to add up to 30 table games, too.
If Hollywood Casino were to add table games to their two satellite casinos, their overall costs just to buy licenses would be north of $62 million, and that’s not even considering the cost of building a new mini-casino.
What will future PA sports betting look like?
If Asher’s quote is any indication of how the global sportsbooks feel about the PA market, then it may be months before we hear of any big names applying for manufacturer, supplier, or operator licenses.
While Pennsylvania’s casinos seem to have cold feet, it may only take one casino to announce a partnership and subsequent sportsbook to convince casinos participating in sports betting is worth the monetary hurdles.