The Pennsylvania legislature last week voted down Governor Tom Wolf’s proposed budget by a final count of 127-73. The takeaway for proponents of gambling expansion in the commonwealth? No budget means that online gambling still isn’t off the table.
Budget impasse keeps going, and going…
Lawmakers and Governor Wolf have spent the past several months trying to hammer out a budget they can all agree on, but with neither side willing to give in on their core issues, Majority Leader Dave Reed (R-Indiana) decided the best path forward was to hold a vote on the governor’s plan to demonstrate how unpopular it is in the legislature.
The state is facing a severe budget deficit that could continue Pennsylvania’s disturbing trend of ever-increasing property taxes in order to make up for a lack of public education funds.
The governor’s plan is to create new taxes on tobacco sales and natural gas producers, and most notably, reformation of the state’s income tax code that would lead to an increase on top earners.
Online gambling returns to the debate
The legislature continues to push for alternative solutions. And in an article in the Morning Call, the topic of online gambling was once again broached, with reporter Steve Esack writing:
“Earlier, Reed and other GOP leaders said Wolf should “think outside the box” by adopting GOP ideas to sell the state liquor store system, reduce public pensions and approve Internet gambling as new sources of revenue instead of relying on tax increases.”
Online gambling was a hot topic in Pennsylvania during the first six months of the year, but once the budget talks began, the issue was seemingly pushed to the back burner, with only passing references to its possible inclusion in a final budget deal. But throughout the budget impasse (which is now more than 100 days old), nobody has been willing to write off iGaming expansion. As All American Poker Network CEO David Licht put it, “$100 million is a lot to pass up.”
With the legislature easily voting down the governor’s proposal, online gaming may be resurrected. With a substantial vote shortfall, Wolf may now have to acquiesce to some of the legislature’s budget fixes, and the one that seems the least controversial for both sides is online gambling expansion.
Will Wolf let online gambling through?
Earlier this year Wolf said he would consider legalizing online gambling, but didn’t feel it would have an immediate enough impact to warrant a tit-for-tat trade with one of his proposals, as revenue would be unlikely in 2016. He may have to reconsider, and the numbers tell a slightly different story.
It would certainly take time for Pennsylvania to get an online gambling industry up and running — likely close to a year. But that doesn’t mean the state wouldn’t realize a revenue windfall from online gambling in 2016, as up-front licensing fees would be collected, which I’ve estimated would tally $50-$75 million. Furthermore, there are other fiscal benefits to adding iGaming, as casinos would have to bring in dozens of new, highly skilled workers, to get their iGaming websites primed.
Online gambling revenue may not roll in until late 2016, but the state would be leaving tens of millions of dollars on the table if it passes on online gambling expansion this year.