PA Casinos Sue PA Lottery Over Gambling Turf War

According to several Pennsylvania casinos, the Pennsylvania Lottery has gone too far. The group is suing the state over the Lotto’s online instant games/

Things are about to get real between seven Pennsylvania casinos and the Pennsylvania Lottery.

Earlier today, seven casinos announced they are suing the Pennsylvania Lottery for offering casino-like games on their website and app. The casino’s defense team released a statement detailing their grievances:

“The actions of the Pennsylvania Lottery are illegal. To make matters even worse, the agency is promoting casino-style gambling to teenagers. Pennsylvania casinos must follow very stringent regulations on underage gaming or face millions of dollars in fines. Meanwhile, the Lottery is openly violating the law and marketing these games to anyone as young as 18. Not to mention, any loss in casino revenue will hurt Pennsylvania’s tax collection for property tax relief and local improvement projects funded by gaming tax dollars.”

The seven casinos involved in the lawsuit are:

Dispute focuses on gambling expansion law

The beef isn’t merely jealousy. It is a legitimate argument based on the text of the state’s 2017 gambling expansion bill, Act 42.

The section in question is in Chapter 5 of the act, lines 22-27. There, legislators provide the definition of iLottery games:

“‘iLottery Game.’ Internet instant games and other lottery products offered through iLottery. The term does not include games that represent physical, internet-based or monitor-based interactive lottery games which simulate casino style lottery games, specifically including poker, roulette, slot machines or blackjack.”

And despite the outcry from the aforementioned statement,  which focuses on the fact that the casino-like offerings from the iLottery can be played by 18-year-olds, the base of the argument focuses on the likeness of iLottery games to online casino slots.

Here is an excerpt from the petitioners’ petition for review:

“iLottery offerings are casino-style games that mimic the look, sounds, and feel of slot machines. Several games offered by iLottery — including Volcano Eruption, Reveal, Robin Hood, Super Gems, Slingo, Big Foot and Monster Wins — are the same titles and or themes as games offered on Petitioners’ gaming floors.”

The petition goes on to say that “several of the iLottery games” use “bet” terminology consistent with slot machines. They also feature a “spin function” that resembles slot machines, as well as the capability to play game after game, much like one would play consecutive rounds of a slot machine.

Casinos want casino-style iLottery games shut down

The petitioners concluded their arguments with the following paragraph:

“Petitioners now bring this action for a declaration that the Department’s iLottery offerings violate the clear prohibition of Act 42 and the State Lottery Law … Petitioners request permanent injunctive relief to preclude the Department from offering iLottery games that simulate casino-style games and slot machines.”

Basically, the seven casinos are asking the Department of Revenue to shut down anything resembling casino-style games.

The apparent motives behind the lawsuit two-fold: to protect teenagers from casino-style games and to ward off the competition that the iLottery provides.

Ironically, no PA casinos have launched online gambling. This may be a move to cut away revenue leeches before they launch. After all, the state will tax PA online casinos at a staggering 54 percent. Meanwhile, the Lottery pays no taxes for revenue generated from its iLottery games.

PA Lottery’s Xpress Sports Can Whip Up Football Games In A Jiffy

Pennsylvania bars and restaurants can now offer non-stop football and stock car action thanks to PA Lottery’s Xpress Sports.

Doldrums no more.

Sports fans now have the chance to bet on virtual, fictional football games and car races every five minutes through a pair of new Pennsylvania Lottery games: Xpress Football and Xpress Car Racing by Scientific Games.

This past week, the Lottery launched the two games. Lottery Executive Director Drew Svitko said in a press release that the dual launch is part of the organization’s effort to boost revenue and stay relevant.

“We expect that our Xpress Sports games will also be a big hit with our players,” Svitko said. “These games are part of our continuing mission to modernize our business and generate new funds to benefit older Pennsylvanians.”

Both games simulate real sporting events via monitors at participating location, with bettors given the option of choosing the outcome of the drive or race.

Xpress Football: The details

Per the PA Lottery, gamblers can make one of 16 bets for each round of Xpress Football. New rounds start every five minutes.

The round begins with a fictional team driving on the 20-yard-line. Bettors can choose one of 16 outcomes:

  • Touchdown pass on 1st, 2nd, 3rd, 4th or 5th play and beyond
  • Touchdown run on 1st, 2nd, 3rd, 4th or 5th play and beyond
  • Turnover 1st, 2nd, 3rd, 4th or 5th play and beyond
  • Field goal

Once the bet has been made at a PA Lottery location, bettors can watch on a big screen as the action unfolds. The pregame sequence includes stats about each team’s pass TD/run TD/turnover/field goal percentages, although a promo video notes that the stats have nothing to do with the outcome of the game.

After the pregame sequence, the action picks up “on or within” the 20-yard-line, where the team on offense runs plays until they score a touchdown.

Prizes range from $120 (turnover on 1st play) to $8 (field goal).

Xpress Car Racing: The details

In Xpress Car Racing, bettors get to choose from one of five different bets based on a 12-car, two-lap race around an oval track:

  • 1st-, 2nd- and 3rd-place finishers in exact order
  • 1st-, 2nd- and 3rd-place finishers in any order
  • 1st- and 2nd-place finishers in exact order
  • 1st- and 2nd-place finishers in any order
  • 1st-place finisher

Much like Xpress Football, there’s a pre-race screen that reveals race data: car number and racer name, as well as the results of the past seven races.

Those race results, the PA Lottery notes, are not predictors of future finishes.

Races begin every five minutes. The actual race is in the vein of video-game stock car racing. Racers jockey for position around the track and the race is over relatively quickly.

Payouts are according to the following tiers:

  • Trifecta: $250
  • Three finishers in any order: $40
  • First two finishers, correct order: $20
  • First two finishers, any order: $5
  • First-place finishers: $2

PA Lottery expansion continues

Since this past May, the PA Lottery’s future started to unfold but not as quickly as some had hoped. Pennsylvania’s 2017 gambling expansion law provided the legal framework for the lottery to expand its operations to include online lottery games as well as in-person games like keno and virtual sports.

While it was anticipated that virtual sports would be part of the May roll-out, it wasn’t. Keno stole the headlines and, for a short time, was the primary sign of augmented lottery life in a post-gambling-expansion area.

That soon changed when the PA Lottery announced the launch of its iLottery, through which gamblers could play instant win games.

With this past week’s announcement of what amounts to a pair of virtual sports games, the lottery continues its methodical roll-out of new forms of gaming.

Big News For Big Beaver, The New Home Of Mount Airy Pittsburgh

The second mini-casino to actually have construction plans is Mount Airy Pittsburgh. The resort-style satellite property will call Big Beaver, PA home.

Big Beaver, PA, it’s time to celebrate.

Earlier today, Mount Airy Casino Resort announced that the cartoonishly-named township will be the site of Mount Airy Pittsburgh, a Category 4 mini-casino.

“For over a decade, Mount Airy Casino Resort in the Poconos has paved the way as one of the nation’s most dynamic, upscale destination casino resorts,” managing trustee and owner Lisa DeNaples said in the release. “Our thoughtful expansion into the Pittsburgh and tri-state area represents a huge milestone in our effort to do what we live and breathe every day: provide award-winning customer service and luxury amenities to more people.”

The news makes Mount Airy the second casino to announce the exact location of their mini casino. Stadium Casino LLC is the other, having announced this past month their plans to put their casino in a Westmoreland County mall.

Mount Airy’s satellite is the anti-mall casino

Whereas Stadium will integrate a casino into an existing mall, Mount Airy is starting with a clean slate. Here’s what we know the property will feature so far, based on Mount Airy’s press release:

  • 750 slots and 30 table games
  • High-limit area and sports bar
  • The Friedmutter Group will design the property
  • Property will create around 700 jobs

Based on the press release, it seems as though Mount Airy hopes to recreate the high-end experience they’ve popularized in the Poconos.

The Friedmutter Group is a world-renowned design firm. Their resume includes The Cosmopolitan in Las Vegas.

According to the press release, the mini-casino is phase one of a two-step project. The second phase will include:

  • A resort-hotel
  • Convention center
  • Fine dining
  • Pool
  • Spa
  • Salon

The following quote from DeNaples summarizes what Mount Airy is hoping to do with their satellite:

“We envision the casino as just the start of building something truly special for the tri-state area. Imagine not just a casino, but a destination that raises industry-wide expectations and standards – serving as a phenomenal gathering space for celebrations and live entertainment and bringing upwards of 700 jobs to regional residents.”

The mini-casino construction should start by the end of this year and finish in late 2019.

Where we’re at with satellite casinos across the state

While Mount Airy and Stadium Casino have found luck with townships who want them, the same can’t be said for Penn National, who holds two mini-casino licenses.

They proposed putting a casino in a mall in York County; residents would have none of it during a public hearing about the possibility of having a casino in their midst.

Parx, the only other satellite licensee, also faced some pushback from residents in two separate townships in Cumberland County.

With Mount Airy and Stadium now on track to break ground on their new casinos, we should see an announcement of similar news from Parx and Penn National during the next month or two.

Shop Till You Drop At Westmoreland Mall’s Forthcoming Mini-Casino

After a lengthy search, Stadium Casino found a site for its satellite casino at Westmoreland Mall. It’s the first casino to announce a satellite location.

Sbarro, Chick-fil-A, Hot Topic … and a mini-casino.

Believe it or not, this week Stadium Casino, a joint venture between Greenwood Gaming & Entertainment and The Cordish Companies, announced that their mini-casino will be located inside Westmoreland Mall, a 1.2 million-square-foot behemoth of a retail complex in Greensburg, PA.

According to a press release from Stadium, the company sees the opportunity as an exciting one for everyone involved. That includes CBL Properties, the company who owns the mall.

“The property is ideally situated in the Region, with excellent infrastructure and road networks in place. The synergy of this new gaming and entertainment facility with the existing retail and dining amenities in the property and surrounding area will be tremendous,” Stadium partner Joe Weinberg said in the release.

Mini-casino will bring jobs, rejuvenation to Westmoreland County

Whether communities love them or hate them, casinos of any size bring jobs and buzz to the area in which they emerge.

State Senator Kim Ward is well aware of this. She offered up the following quote in the aforementioned press release:

“I’ve worked for nine years to expand gaming to allow ancillary casinos, so it’s gratifying to see this finally coming to fruition. This project will bring a sizeable increase in our tax base, a significant number of full-time jobs, and will help revitalize the Westmoreland Mall complex.”

The press release noted that the mini-casino should create 600 jobs and “millions in revenue.”It’s a welcomed spark considering the casino will be filling the space left by soon-to-be-closed department store Bon-Ton.

The Pennsylvania Gaming Control Board will have to review the property plans before a construction timeline can be set forth.

Community voices split on satellite benefits

An article from Pittsburgh’s WTAE shows that opinions from the community can be a bit fragmented.

Some love the idea of a casino. However, others would rather see something different take up the Bon-Ton space. Here are few quotes from Westmoreland County residents about the forthcoming satellite casino:

  • “I think it’s a good thing for gamblers. I don’t know that it’s a good thing for the community.”
  • “I think whenever something new comes, it can cause a little apprehension. But if you look statewide at how these casinos are doing, they’re not crime-ridden.” (Senator Ward)
  • “I would love to see a Trader Joe’s or a Whole Foods go into a space like that, as opposed to a casino.”

These types of opinions are likely to surface as the state’s other four satellite casino license holders reveal the locations of their mini-casinos.

Five total satellites in the works

At the time of publishing, the following casinos have a satellite license:

PGCB regulations state that these satellite properties can house a maximum of 750 slot machines and 30 table games. There will be a 50 percent tax on slots revenue that will go to the state.

Casinos will also pay an additional four percent on slots revenue. The local township and local county will split that revenue. The same 50-50 split applies to an additional two percent tax on table games.

PA On Cloud Nine: All But Four Casinos Apply for iGaming Licenses

After nearly three months of no action a glut of applications came in from PA casinos to offer online casinos and online poker in the Keystone State.

The Pennsylvania Gaming Control Board (PGCB) announced this morning that nine casinos petitioned for a $10 million online gambling license that will allow each casino to offer poker, slots, and table games via their websites, provided PGCB approves the applications.

“The Pennsylvania Gaming Control Board today announced that it has received nine petitions from casino license holders requesting approval to conduct Interactive Gaming (iGaming) in the Commonwealth,” the July 17 release read.

Casinos had until July 16 to submit their petitions. After that, licenses for each of the three types of online gambling are available on an a-la-carte basis for $4 million per license.

Nine casinos include top revenue-earners

The list of nine casinos includes:

This list includes eight operation casinos and one licensed casino that has yet to be built: Stadium Casino.

The four casinos who did not submit petitions for iGaming are Presque Isle, Mohegan Sun, Lady Luck Nemacolin, and The Meadows.

According to the press release, the casinos that petitioned the PGCB for iGaming licenses have to wait up to 90 days to find out if their petition has been approved. From there, they have 60 days to pay the $10 million fee for the trio of licenses.

What’s ahead for the quartet who didn’t petition?

The four casinos who didn’t petition for an iGaming license have 90 days to apply for individual licenses for online table games, poker or slot machines.

It’s conceivable they could apply for all three. However, in doing so, they pay an extra $2 million compared to the $10 million price tag.

With this in mind, one could conclude that these four properties may not want to incur the cost of buying all three licenses. The four casinos who didn’t apply are some of the smallest casinos in the market.

We may see Lady Luck, The Meadows, Presque Isle or Mohegan Sun apply for individual licenses, quite possibly in slots, as slots tend to be the biggest revenue earner for online casinos.

As an example, neighboring New Jersey’s online poker revenue accounts for just 7.7 percent of the overall revenue numbers for online gambling.

Whichever the case, the remaining four casinos have until mid-August to petition for a license.

Three PA Online Casino Applicants, Will More Apply In Time?

Parx, Stadium Casino, and Mount Airy all applied for the comprehensive online gaming licenses, but did any other casinos sneak in before the deadline?

Up until this past week, not a single Pennsylvania casino applied or petitioned for an online gambling license of any form.

That changed on Thursday when Philadelphia’s Parx Casino became the first of three casinos to apply for the $10 million all-in-one online gambling license.  It includes licenses for online table games, poker, and slots.

Casinos had until July 15 to apply for the all-in-one license. With the deadline now passed, casinos must pay the a la carte price of $4 million for a slots, table games, or a poker license.

The three applicants: Parx, Mount Airy, Stadium

One of the more interesting facets of the online gambling applications is the fact that the three casinos which applied reflect three different types of PA casinos.

Parx is the state’s flagship casino. Its revenue numbers consistently reach the top spot. This past June, it was the only casino to surpass $30 million in slots revenue ($34.84 million). It finished over $10 million ahead of over runner-up Sands Casino Resort Bethlehem.

Mount Airy, on the other hand, is one of the state’s lowest-grossing properties. The property brought in $12.85 million in slots revenue this past month. That is roughly 36 percent of what Parx earned in June.

The final applicant is a yet-to-be-constructed property owned by Stadium Casino LLC.

Applicants all have mini-casinos too

Parx, Mount Airy, and Stadium Casino have the distinction of being the only casinos to apply for both an all-inclusive gambling license as well as a satellite casino license.

This licensed triumvirate now has the luxury of earning revenue from three different sources: land-based casino, online casino, and satellite casino.

Exactly how much revenue they’ll earn through these two new streams is a figure yet to be estimated. There’s a good chance we’ll know the online gambling figures sooner than later. After all, neighboring New Jersey has shown that the path from licensure to a fully operational casino can take just a matter of months.

Satellite casinos are a whole different beast. Construction needs to begin, staff needs to be hired, permits need to be secured, and a litany of other small details need to be finalized.

There’s a good chance the first satellite casino won’t be open for at least 18 months.

Down the road: A la carte applications ahead?

With the deadline passed you have to wonder if any other PA casinos will make a move to get an individual license for table games, slots, or poker.

Likely candidates may be casinos who’ve yet to spend money on satellite casinos. These are:

Of these eight casinos, owners of some of these casinos have partnerships in other states with online gambling operators. Others also have deals in place with iGaming providers.

More PGCB Applications Raise More Questions About PA Sports Betting

A new round of applications are open for sports betting suppliers, but we are still waiting on a Pennsylvania casino to seek a sports betting license.

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:

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.

WaWa Wowie! Grocery Store Sells Biggest June Scratch-Off Winners In PA

In June, the Pennsylvania Lottery awarded $167 million in scratch-off prizes, including two $1 million winners who bought tickets at Wawa.

Let’s just say it was a good month to buy lottery tickets at WaWa.

The Pennsylvania Lottery sent out a press release this week announcing that scratchers surrendered $167,335,899 in winnings this past month, including two $1 million tickets sold at WaWas in Lower Macungie and Fairness Hills.

The release also noted that PA Lottery patrons also won four $300,000 prizes.

Power Payday leads the way

According to the PA Lottery’s official list of June $1,000+ winners, $1,000,000 Power Payday was the lucky man’s game.

The scratcher was responsible for a $1 million prize won by “Matthew S.”, a $100,000 prize for “Edwin G.” and a quartet of $10,000 winners.

Power Payday was also quite generous with $1,000 payouts. More than 200 people were listed as winners of $1,000, including three men named “Thomas K”.

Inside perspective on winning $1 million

The PA Lottery features some of their past winners, choosing to include short articles about some of the winners.

A good example of what it’s like to win a million dollars from a scratcher is Shari G., whose PA Lottery story notes she bought the winning ticket in Lebanon.

Shari told lottery representatives she was so excited she couldn’t sleep.

“I got all the way to the last number and when I saw there was a match, I shouted, ‘No way! I threw the ticket down and started pacing in circles. I picked up the ticket, checked it again and said, ‘I think I just won a million dollars!'”

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Eventful spring and summer for PA Lotto

This past June, the Lottery launched its iLottery games per the provisions state lawmakers provided in the historic 2017 gambling expansion bill known simply as “Act 42”.

Crossover between existing scratch-offs and online scratchers was prohibited and, therefore, the launch of the iLottery also was the launch of a variety of new games with dramatic names, including  Monster Wins, Volcano Eruption, and Super Cash Buster.

At the time of the launch, Lottery Executive Director Drew Svitko had this to say in a press release about his organization’s online expansion:

“PA iLottery games are a fun, new way to play and win from home or while on the go. iLottery is a big part of our effort to meet our players where they already are while generating new funds to benefit older Pennsylvanians. We’re partnering with our more than 9,400 Pennsylvania Lottery retailers to encourage players to sign up for iLottery.”

Casinos beefing with lottery

The new iLottery provides new avenues for gambling and is an attractive option for those who don’t want to lace up and head down to the corner gas station to get a couple of scratchers.

Casinos don’t seem too happy with the new iLottery games, though. Because the online instant win games can be played in rapid succession, casinos are arguing that they mimic slot machines, which would be a violation of Act 42, which has a provision to protect brick-and-mortar casinos by banning competing legal games.

Thirteen casino ownership groups signed a letter laying out their concerns for Gov. Tom Wolf. The group threatened legal action if Wolf didn’t take action earlier this month.

The state responded by requiring the Lottery to change its marketing campaign, which previously included comparisons to slot machines.

Surprise, Surprise: College And Pro Sports Don’t Like PA Sports Betting Laws

The pro sports leagues and Pennsylvania’s biggest colleges authored letters to the PA Gaming Control Board about changing the sports betting regulations.

To say the tides turned would be a nice way of putting it.

Pennsylvania is one of a handful of states that have passed sports betting bills that, at one time, would’ve drawn the ire of the country’s top professional sports leagues and the NCAA.  That ire has now turned into an iteration of the leagues’ desire to control sports betting once more.

The Pennsylvania Gaming Control Board (PGCB) released their temporary sports betting regulations on May 31. Since then, the leagues and the NCAA have offered their opinions on why the temporary legislation isn’t sufficient.

Leagues say there aren’t enough consumer protections

One of the narratives that the leagues have pushed leading up to and after the downfall of Professional and Amateur Sports Protection Act (PASPA) this past May is consumer protection. How will states ensure that the information bettors are using to make their bets is accurate?

From their perspective, a team or individual could hide and injury that could influence betting. If consumers don’t have the correct information, they are betting without what should be complete confidence in the data.

Protecting that information is paramount to running a legit sportsbook, the leagues said.

The NFL, MLB and NBA have been the most outspoken about “official data”. Sometime over the past three weeks, the Philadelphia Eagles and Pittsburgh Steelers signed a  joint letter to the PGCB. In that letter, in they said the current laws lack clear regulations for official data.

They requested that the laws include provisions for “fan access to official, reliable league data.” In other words, the leagues would most likely work with a contractor to provide “official data” to sportsbooks.

The continuity aspect of the argument has some merit. That is, assuming the MLB, NBA, NFL, NHL, and PGA use the same data provider.

However, in a practical sense, it is a tough sell to say that official data is necessary. After all, sports sites like Yahoo already provide millions of fantasy sports players in-depth and instant updates on player health, game conditions and other factors that would influence roster decisions or, in this case, betting decisions.

University of Pittsburgh asks for money

What makes this round of letters unique is that the University of Pittsburgh is asking for compensation to cover the cost of staffing and operations to protect student-athletes from gambling scandal.

The compensatory payments are known as “impact fees“.

Pitt’s ask for impact fees is similar to what the Pittsburgh Pirates asked for in their letter to the PGCB earlier this month.

While the Pirates certainly have the revenue to cover the extra hires it would need to protect the integrity of Pirates baseball, don’t get caught up in thinking Pitt is cash poor.

According to a 2017 press release from the university, their endowment stood at $3.52 billion, putting them at #26 among the nation’s colleges and universities.

Pennsylvania Built A Sports Betting Industry And Nobody Came

Pennsylvania has temp regulations in place for sports betting, but so far no casino is interested in the $10 million license to take bets.

Thin margins and high fees; they could be the death of sports betting in Pennsylvania.

On May 31, the state released its temporary sports betting regulations and the following day the Pennsylvania Gaming Control Board (PGCB) started accepting petitions for sports betting from the existing 12 casinos and one casino to come.

Nobody submitted a petition and while it’s hard to say exactly what’s keeping casinos from applying, they may have 10 million reasons why.

High fees could be deterring casinos

Per the state’s sports betting legislation, casinos must pay $10 million and complete an application in order to secure a sports betting license. Once their sportsbooks are up and running, the state will take another 36 percent of each casino’s revenue.

Pennsylvania is, historically speaking, a tax-heavy state. Casinos pay a 54 percent tax on their casino revenue. The revenue money is split four different ways:

  • State tax: 34%
  • PA race horse development fund: 12%
  • Economic development and tourism fund: 5%
  • Local share assessment: 4%

When it comes to sports betting, Pennsylvania will charge a 36% tax on gambling revenue.

This is significant considering that margins are already thin for sports books and Nevada and New Jersey have significantly lower tax rates on sports-betting revenue.

36% tax is steep based on revenue

Nevada sportsbooks have a historic win of around 4.5 percent. While it’s hard to predict how much money sports betting in PA will bring, we can theorize that the average win will be similar to Nevada.

A 36 percent state tax on a 4.5 percent win would drop that win down to 2.8 percent. In terms of dollars, that’s the difference between, say $100 million in revenue and $64 million.

36% tax is steep based on other states’ rates

Aside from the implications, a 36 percent tax has on overall revenue numbers for PA sports books, there’s the issue of other states’ rates.

Nevada charges a 5 percent tax while New Jersey’s tax is scheduled to be 8 percent. The PA sportsbook tax is more than seven times higher than Nevada and more than quadruple New Jersey’s rate.

Comparing satellite casino fees to sports betting fees

Another aspect of the PA gambling expansion was satellite casinos (“Category 4 casinos”). Licenses for these casinos require a minimum of a $7.5 million bid in the PGCB’s auctions.

While the first two licenses went for more than $90 million combined, the past two have dipped below $10 million each, which leads to the question: Why are casinos hesitant to submit sports-betting petitions for $10 million when satellite casinos licenses are just a few million cheaper, have higher tax rates, and require funding for construction and all the expenses related to building a new facility?

The issue may be projected revenue. Satellites will most likely bring in more revenue than sportsbooks.

It seems as though the casinos believe this is the case, as five satellite licenses are off the board with just five remaining. Meanwhile, at the time of publishing, no sports-betting petitions had been filed.

Photo Nick Fox / Shutterstock.com

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