To begin, in 2017, the long-awaited Pennsylvania gaming expansion legislation finally came to fruition.
According to PlayPennsylvania, at the start of 2019, only three retail sportsbooks existed. In addition, gambling was confined to traditional brick-and-mortar casinos.
Currently, in the Keystone State, there are:
- Eight online sportsbooks
- 12 retail sportsbooks
- Five online casinos
- One online poker site
However, a Department of Justice (DOJ) memo released in January 2019 sought to expand the scope of the Wire Act. The DOJ opinion asserted that prohibition of inter-state gambling applied to all forms of online wagering, rather than only sports betting as was previously declared.
Thus, a monkey wrench was thrown into PA’s lofty plans for gambling expansion via the internet.
Getting up to speed on the Wire Act
In the first place, the New Hampshire Lottery Commission (NHLC) filed suit quickly after the DOJ memo. Then, the New Hampshire District Court issued a favorable opinion to online gambling interests. Mainly, that the Wire Act only applies to sports betting.
As of now, the fight over the Wire Act is far from over. The DOJ filed an appeal to the First Circuit Court of Appeals in the summer. While the gaming industry waited with bated breath, the government managed to file an opening brief in the last hour before their deadline.
As a result, it is now on the NHLC and the lottery providers to file a brief. The original deadline was Jan. 21, but they now have until Feb. 26. Thereupon, the government will likely file a response.
In addition, other interested parties like the Sheldon Adelson-backed Coalition to Stop Internet Gambling (CSIG) have the opportunity (or, in this case, already took the opportunity) to file amicus briefs.
How exactly is the Wire Act opinion controversy affecting PA online gaming expansion?
Despite the DOJ’s memo on the Wire Act, the Pennsylvania Gaming Control Board (PGCB) decided to push ahead with online gambling. However, it was not without a caveat: The PGCB required potential state casino operators to address the new memorandum and ensure compliance within 30 days.
In essence, operators and game providers are required to maintain separate servers in Pennsylvania and could not share servers with New Jersey as planned initially.
Consequently, this pushed back the launch date of a number of operators. For example, only two iGaming operators launched on July 15 (Hollywood Casino and Parx). Also, the casinos’ inauguration was minimalistic, due to PGCB’s new compliance regulations, with only a few meager game offerings, unlike in New Jersey.
The market has since experienced growth, but not at the initially hoped for pace. There are now five online casinos in PA offering online slots and table games, while just one also has online poker.
Wire Act decision hangs over online poker, too
Online poker revenue has been faring quite well in PA, given that it is in its third month of operations. In fact, with almost $2.5 million in revenue in December, PokerStars PA brought in almost as much as online table games did across five operators.
If not for the contested Wire Act opinion, shared liquidity (meaning a shared player pool with New Jersey, Nevada and Delaware) would be a stronger possibility in PA. Bigger player pools equal bigger prize pools and greater interest in poker, generally speaking. In fact, adding PA to the inter-state gambling pact would effectively double the player pool of the three states due to PA’s much larger population.
If not for the Wire Act and all its headaches associated with compliance, online poker would have likely launched much sooner than it did. There would also probably be more online poker operators in the state already, along with more online casino game offerings.
How does the future of the Wire Act affect PA?
Well, don’t expect the PGCB to roll back its stringent regulations if the First Circuit rules favorably toward NHLC. No matter how the First Circuit rules, there is a strong likelihood that either side will petition the Supreme Court on appeal.
It is likely nothing will change until litigation is concluded on the Wire Act, which could be quite a long time from now.