SUNY Report: Pennsylvania Headed For Tough Times If Online Gambling Bill Passes

A new report suggests that Pennsylvania land-based casinos should expect revenue decline, even as the state of PA looks to pass online gambling legislation.

Big revenues today don’t equate to big revenues tomorrow.

That’s the conclusion of a recent State University of New York (SUNY) report about the Pennsylvania gaming industry. In the 40-page document, SUNY Rockefeller Institute of Government analyst Lucy Dadayan said while the state’s gambling-tax revenue is a boon for the budget now, history says that revenue will decline over time.

The report, titled “State Revenues from Gambling: Short-Term Relief, Long-Term Disappointment,” comes in the midst of the proposal of HB 649, a bill that would legalize and regulate Pennsylvania online gambling.

Bad times call for more gambling

According to Dadayan, history shows expanding gambling is one of the tools of choice for states who are struggling with revenue.

“States are more likely to expand gambling operations when tax revenues are depressed by a weak economy, or to pay for new spending programs,” she wrote.

Dadayan went on to point out “many states” augmented the gambling sector in response to the Great Depression.

Wallets more frugal after economic downturn, competition increases

The report said a couple of other factors that have soured long-term revenues are:

  • Consumers coming off the Great Recession are tighter with their discretionary spending.
  • Those consumers are more prone to dial back the money they put toward casinos and racing.
  • The continued expansion of gambling operations in Maryland, New York City and Ohio will continue to cut into Pennsylvania’s gaming revenue

Dayadan’s final conclusions were not positive. She said Pennsylvania’s gambling revenues “are short-lived and create longer-term fiscal challenges for the states as revenue growth slow or declines.”

Gambling revenues in the context of HB649

As mentioned earlier, the release of the study comes at an interesting time. The Pennsylvania House of Representatives Gaming Oversight committee approved HB 649 with a vote of 18-8 in November. However, the bill never made it through the House.

In December, the bill was tabled, the legislative equivalent of an airplane holding pattern.

Lawmakers “untabled” the bill this past March and now it is open for discussion once again. The most outspoken legislative proponent of the gambling bill is Representative John Payne, a Republican from Dauphin, Penn.

Payne leads the oversight committee which first approved the bill, and he is the prime sponsor of the bill.

Payne points to revenue as reason to pass bill

In an interview with The Morning Call, Payne said his main argument is that the bill will inject millions of dollars into Pennsylvania’s budget. He scoffed at Dadayan’s claims that gaming revenue isn’t sustainable over the long haul.

“We know people are going to gamble, so we might as well regulate it and tax it. I hope they didn’t waste too much taxpayer money on that study,” Payne was quoted as saying. “What we need to do is give casinos the tools to compete with other states.”

Payne’s disregard for the study was evident when he questioned whether or not the author had ever heard of Las Vegas.

Keystone state pulls in second-most tax revenue in nation

However, it’s easy to understand why the politician would feel confident that expanding the state’s gaming sector would bring in enough money to alleviate the state’s $2 billion budget gap.

According to numbers provided by The Morning Call, Pennsylvania lottery, land-based casino and off-track betting tax revenues rank second in the nation. Only New York earns more in those three areas, but around two-thirds of the state’s $3.2 billion take comes from lottery sales.

One of the big factors behind the state’s hefty tax revenues is its 55 percent tax on slot machines, a huge number compared to sub-10 percent rates in New Jersey.

Report says uncertain future ahead despite big tax revenues

Despite Payne’s optimism about the bill, Dadayan’s research points to skepticism. Revenues for several states dropped significantly between 2008 and 2015.

Though that time frame includes the recession, Dadayan said competition from new casinos in competing states played a sizable role taking a few states’ big revenue and distributing it to states with expanded gambling laws.

How Pennsylvania Might Regulate Daily Fantasy Sports: A Tale Of Two Approaches

Pennsylvania will likely see two dueling approaches to regulating the daily fantasy sports industry surface sometime this year.

Pennsylvania is still waiting on an actual bill that would regulate the daily fantasy sports industry. But when the state legislature finally sits down to look at the issue in earnest, it may be faced with two different ways of approaching DFS.

Pennyslvania lags far behind the majority of states, which have already introduced bills focusing on daily fantasy sports.

Approach No.1: Regulated like gambling

The idea of treating DFS much like the regulated gambling industry — either the land-based casino model or online gambling — is an idea that has been floating around Pennsylvania for months.

The idea of tying DFS to casinos actually came up nearly a year ago, when a bill that would allow casinos to offer fantasy sports contests surfaced. That bill, however, had no oversight for the industry as it exists currently, and it never went anywhere.

When lawmakers have talked about the issue, it has largely been through the lens that it needs to be treated like gambling. To wit:

What the final language of this approach to DFS will look like is unknown, but it appears that it would include heavy licensing fees and taxes on gross revenue, and controls much like already exist for PA casinos (or like what exists for New Jersey online casinos).

The biggest issue might be calling DFS gambling instead of a game skill, something the industry has vehemently opposed. That is something that would be rectified in the opposing approach.

Approach No.2: The fantasy industry model bill?

The more recent effort — which is still in the formative stages, as well — is a potential bill from State Sen. Anthony Williams.

His bill would classify DFS as a game of skill. Here’s what else we know about it, from his co-sponsorship memorandum:

Operators of websites would be required to register with the PA Gaming Control Board and to remit taxes based on gross revenues earned from play in the state. Following the lead of Virginia, this industry-supported legislation would also protect players over 18 from engaging in problem gambling, protect their personal information, and prohibit employees of fantasy gaming companies from profiting off of “insider information.”

If it takes the form of the Virginia legislation — which became law in March — it would be much like the legislation that has been pushed by the Fantasy Sports Trade Association in a variety of states. However, the Virginia law is only truly applauded by the two largest operators — DraftKings and FanDuel — as a licensing fee of $50,000 is too high for most smaller operators to afford.

The bill, without seeing the actual language, seems like it would be far less onerous for fantasy sports operators to comply with, both from a monetary and logistical standpoint.

Which DFS bill will win?

If one were handicapping the two approaches, the gambling approach seems more likely to win out. The state’s lawmakers have had little interest, so far, in performing gymnastics in regards to vocabulary — i.e. calling something they believe to be gambling a “game of skill.”

However, Pennsylvania has been moving slowly and thoughtfully on the matter of DFS. The idea that DFS operators may pass on Pennsylvania because they can’t afford to be called a gambling product (from a legal standpoint in the U.S.) could give legislators reason to pause.

Is it possible some sort of hybrid approach surfaces — one where DFS is classified as a game of skill but is still treated like other forms of regulated gambling — end up being the winner? That might be the smart bet.

The Keystone State Is Leading The Charge To Legalize Online Gambling

There are many states that come up when talk turns to which will be next to allow legal online gambling. One state that is always mentioned is Pennsylvania.

The hopes of gamblers across Pennsylvania have received a shot of adrenaline recently as the state directly to the north, New York, is implementing a budget provision that would legalize online poker.

Gary Pretlow, the Chairman of the New York Assembly Racing and Wagering Committee, is ready to tackle the issue according to an article by Gambling Compliance (paywall).

Pretlow plans to make the issue public, once New York’s land-based casinos get on board. Pretlow is documented as saying, “I don’t want to throw competition at them before they have evened opened their doors.”

What does this mean for Pennsylvania?

The leading advocate for legalizing online gaming in the Keystone State is state Representative John Payne, who chairs the House Gaming Oversight Committee.

Payne made it clear in 2015, during his first push for legalization, that his focus is keeping Pennsylvania from turning into an “Atlantic City situation.”

Payne’s concern is on keeping Pennsylvania competitive with surrounding states with casinos which include New York, New Jersey, and Ohio.

Payne has reason to be nervous. New Jersey is is sending a measure to voters in November that would allow gambling in the northern part in the Garden State, not just within Atlantic City. Additionally, Massachusetts and New York have solidified plans to add a total of six new casinos in the coming years.

2016 the last chance for PA?

It is also important to note that Payne, the driving force behind the plan, will retire in 2016. Along with Payne, Nick Kotick, co-chair of the Gaming Oversight Committee, also plans to call it quits by the end of the year.

The element of the unknown after these two depart could make the passing of the legalization bill (HB 649) even more interesting.

All in all, efforts in both New York and Pennsylvania to legalize online gaming have a chance of becoming a reality sooner than later. The question being asked is who first? Both states’ lawmakers have gained traction recently on the race to the finish line.

The race between these two states is currently neck and neck but could also spill over into surrounding demographic areas such as Massachusetts, Ohio, and Maryland. Only time will tell which of these states will hit the jackpot and legalize online gaming first.

As of right now, this race is anyone’s guess.

Online Gambling Not In 2015-16 PA Budget, But Could Be In New Budget That Is Due Soon

Even though Pennsylvania online gambling and poker won’t be a part of the recently completed budget, legislation has a real chance in 2016.

Pennsylvania’s budget for the 2015-2016 fiscal year is finally complete — even though said budget was nine months late.

The bad news for those hoping to see online poker and gambling in Pennsylvania? Regulation of iGaming was not included in that budget.

The good news? The new budget is due in a few months, and it still appears that online gaming will be seriously considered this spring.

The old budget and online gambling, not meant to be

Online gambling was a real part of Pennsylvania budget negotiations for at least a short time in the fall.

The bill that was originally an online gaming-only bill — HB 649 — became an omnibus gaming expansion package and passed a committee vote in the fall. The bill made it to the full House, but never saw a vote.

Rep. John Payne — the bill’s sponsor and the chairman of the House gaming committee — explained at the time that some members of the Republican majority had seen the gaming package as a way to fund the current year’s budget.

That idea, while it gained traction in the short term, was quashed, and the discussion was put off to a later date. Part of the problem was that some of the bill’s provisions faced an uncertain future in the Senate, including a provision allowing video gaming terminals in taverns.

Meanwhile, online gambling continued to be a non-controversial part of the discussion.

The new budget: Discussions have already begun

The budget for fiscal year 2016-2017 is due by the end of June, and talks between Gov. Tom Wolf and Republicans have already begun. As Pennsylvania has proven, however, that June 30 deadline is all but meaningless.

Whether online gambling will be a part of the budget talks moving forward is unknown right now, but it’s certainly a possibility. While the original intent of online gaming was to move forward independent of the budget process, there’s also a very good chance online gaming and other gambling expansions are considered as a way to fund the budget, once again.

Either way, online gaming by itself could account for tens of millions of dollars in revenue just in licensing fees in Year One, so it certainly appears that it’s going to get a real look again this year in PA. After all, the state again appears to be facing a deficit, and all avenues for creating new revenue are being considered.

The states’ lawmakers have already done a lot of the heavy lifting in terms of considering online gambling and its impacts, which could bode well this time around.

Is 2016 the last, real shot for online gambling in PA?

In the background is the stark reality that the two champions of online poker and gambling legislation in the state — Payne and the Democratic chair of the House gaming committee, Nick Kotik — will be stepping down after their current terms are complete.

Without these two at the helm, will anyone in the state still push for online gambling legalization moving forward? While it’s certainly possible, losing both of these proponents of iGaming regulation would be a blow to efforts in Pennsylvania.

Pennsylvania certainly looks like it could get an online gambling bill to the finish line this year. But if it doesn’t, it might face a murky future.

New Proposal Would Increase Taxes On Pennsylvania Casinos

Though a large gaming reform bill is on the table in Pennsylvania, Governor Tom Wolf has put forward a separate idea to tax promotional play at PA casinos.

A new budget proposal (for the FY 2016/2017 budget) by Pennsylvania Governor Tom Wolf would impose an 8 percent tax on promotional play at the state’s 12 casinos. Based on 2015 promotional play numbers, this new tax would create an additional $50.9 million in revenue for the state. But the numbers don’t tell the entire story.

Promotional play vouchers are generally given to active and inactive players in a casino’s database to entice them to visit the casino, and can take the form of a free $10 in slot play (or more depending on the person’s betting habits), or even a $20 match play on table games, where the casino matches a person’s $20 bet. Promotional play is also a huge lure for organized bus trips, where riders receive promotional play dollars that usually exceed the cost of their bus ticket.

The governor’s proposal is universally opposed

The state’s casinos are unlikely to approve of this new proposal, and are already pushing back against the idea.

In response to the news, Las Vegas Sands spokesperson Ron Reese, whose Sands Bethlehem Casino is the biggest purveyor of promotional play coupons, told the Morning Call, “Any time money is taken out, it’s going to affect reinvestment in the property and the creation of future jobs. This proposal is bad for jobs in the Lehigh Valley and beyond. There’s certainly no shortage of taxes already being paid.”

Promotional play is already a loss leader for the casino, and a state-imposed tax will likely curtail a casino’s usage of it. With less promotional play, casinos may see a drop in traffic, which would of course lead to a loss in revenue – revenue the state collects 54 percent of when it comes to slot machines, and 14 percent of when it comes to table games.

Mohegan Sun’s CEO Michael Bean said as much to the Morning Call, indicating that while only an 8 percent tax, it could be the straw that breaks the proverbial camel’s back. “It’s a primary marketing tool for us, but there’s a tipping point,” Bean said. “It’s going to cost us $3.7 million on top of the $125 million we already pay. At some point, if it’s going to be a handicap, you’re going to have to spend less. That’s not good for us or the state.”

Essentially, Wolf’s proposal, meant to increase the state’s tax revenue from casinos, could have the unintended consequence of lessening the amount of money the state collects from gaming overall.

A letter, signed by all 12 of the state’s casinos and sent to the governor last week said as much:

“This tax revenue will never be generated, though, because casinos will simply discontinue using promotional play in the same way and at the same levels.”

Budget problems and other gaming reforms

As noted in the opening, this proposal is for the 2016/2017 Pennsylvania budget, but the state still hasn’t passed its 2015/2016 budget, which was due back in July of 2015, a stalemate that becomes more and more of a crisis with each passing day.

The proposal is also strange considering the state legislature is expected to vote on a massive gaming reform bill that would generate far more tax revenue than Wolf’s proposal, and in a less controversial way. Among the state’s brick and mortar casinos, there is a near unanimous consensus when it comes to the omnibus gaming reform bill, HB 649, which includes the addition of slot machines at designated airports and off-track betting parlors, and the legalization and regulation of online gambling.

However, HB 649 has been earmarked to fix the state’s state pension deficit, and is not being used to solve the state’s budget stalemate – although there have been halfhearted attempts to shift HB 649 into the budget. According to the bill’s sponsor, Representative John Payne, if HB 649 were shifted to the budget it would lead to the legislature having to vote on tax increases to solve the pension deficit.

Payne noted this is something few legislators were likely to do in an election year.

Image George Sheldon / Shutterstock.com

PA Committee Passes Resolution Urging Congress to Repeal Sports Betting Ban

The Pennsylvania House Gaming Oversight Committee passed a resolution that calls on Congress to repeal the Professional and Amateur Sports Protection Act.

The Pennsylvania House Gaming Oversight Committee passed a resolution (HR 619) on Tuesday that calls on Congress to repeal the Professional and Amateur Sports Protection Act (PASPA).

The resolution was introduced by Representative Robert F. Matzie

PASPA is a federal law that prohibits states from legalizing sports betting, with the exception of Nevada, Oregon, Montana, and Delaware.

The repeal of PASPA would, according to a press statement distributed on Monday, “allow Pennsylvania – and all states that authorize, license and regulate casino gaming — to legalize sports betting through its licensed facilities.”

What happened with the PA sports betting resolution

In the press announcement, Gaming Oversight chairman John Payne announced the committee would hold the vote on Tuesday morning. The resolution passed the Gaming Oversight Committee, and is now listed as “reported as committed.”

Largely a symbolic vote, the resolution is unlikely to spur Congress to act on PASPA. However, if more states follow suit, and/or if New Jersey manages to triumph in its sports betting case, Congress’ hand may be forced on this increasingly talked about issue, particularly with the somewhat connected DFS debates that are raging across the country.

For instance, last year Congressman Frank Pallone (D-NJ) called on Congress to hold hearings on daily fantasy sports, which many believe stem from Pallone’s support for the repeal/gutting of PASPA. A repeal would allow his state to offer legalized sports betting at its casinos and racetracks.

In a statement on his website Pallone connected the dots from DFS to sports betting and the need for consistency and clarity:

“The Professional and Amateur Sports Protection Act of 1992 (PASPA) prohibits sports betting nationally, except in states in states that legalized sports betting prior to passage of PASPA.  Online sports betting and online gambling are also prohibited under Federal law.  However, the Unlawful Internet Gambling Enforcement Act (UIGEA) specifically exempts fantasy sports games that meet certain criteria thanks to a loophole that has become known as the fantasy sports “carve out.”  This loophole has blurred the lines between betting conducted through fantasy sports sites and online gambling.”

What resolutions are meant to do

Similar resolutions are passed all the time, in statehouses across the country, on any number of issues. They are largely designed to be symbolic, to bring attention to a particular issue, to commission a study, or in some cases let federal representatives and senators know that the people back home are watching their votes; state level resolutions are more or less official opinions.

For instance, last March, Payne introduced HR 140, a resolution urging Congress to defeat any bill that would ban online gambling. In 2014 it was Representative Mike Sturla who introduced a resolution, HR 1095, that called on Congress to “defeat S. 2159 and H.R. 4301, which prohibit states from authorizing and conducting Internet gaming.”

In October of 2014, the New Jersey Tourism, Gaming and the Arts Assembly Committee passed a similar anti-Restoration of America’s Wire Act resolution which like Pennsylvania’s resolution, urged Congress to oppose the two RAWA bills: SB 2159 and HR 4301.

Race Could Be On For Pennsylvania, New York To Launch Online Poker First

After both Pennsylvania and New York have taken their time in considering online poker, there may be a sprint to the finish for bills in the two states.

After both Pennsylvania and New York have taken their time in recent years considering the legalization of online poker, it’s possible there will now be a sprint to the finish for the two states.

What’s going on in Pennsylvania online poker?

The conversation on online poker in Pennsylvania’s legislature appears to be on hiatus, although an online gambling bill is also not entirely off the table in the state’s ongoing budget battle.

The bill’s sponsor, Rep. John Payne, has indicated previously that the gambling expansion bill that includes regulation and legalization of online casinos and poker would be taken up in the spring. He also predicted that it would be passed in July.

There has been optimistic talk from Payne on online gambling in the past, but it does appear like it will get serious consideration in 2016.

Part of the reason it will get more momentum? Its neighbor to the north is looking into online poker, too.

What’s going on in New York online poker?

New York held an informational hearing about online poker in September, but ever since, the topic has been off the table in the Empire State.

That all changed in recent weeks, as Assemblyman J. Gary Pretlow, head of the Assembly Committee on Racing and Wagering, introduced a bill that would legalize and regulate online poker in the state.

Then, last week, a Senate version of the online poker bill made it onto the agenda of a committee hearing set for Feb. 2.

While New York has been considering online gaming regulation for several years, legislation has never gotten very far.

How serious this effort is remains to be seen, but the quick turn of events suggest that the online poker will get serious consideration in 2016.

Who gets online gambling passed first?

First off, it wouldn’t be a surprise if neither state passed online gambling legislation. (It’s important to note that Pennsylvania’s bill encompasses all online gaming, while New York is for poker only.)

At the same time, as both states are considering regulation, there is value in being first to pass a bill, so they have a leg up on offering it in their respective state.

There’s even a possibility that both states could see the value in passing legislation and entering into an interstate online poker compact that already includes Nevada and Delaware, and that would welcome New Jersey, should it choose to join.

Pennsylvania has done far more public legwork on the online gambling question, and legislation has already seen meaningful progress, making it out of committee. Right now, Pennsylvania would have to get the edge for crossing the finish line first.

Of course, the recent New York effort came nearly out of nowhere. If work has been done behind the scenes by the bills’ sponsors, then all bets are off, and online poker could get passed quickly in New York. We’ll get a better sense of just how serious New York is about online poker this week.

Pennsylvania Budget, Online Gambling Both Remain In Limbo During Impasse

Online gambling appears set to be considered by the Pennsylvania legislature later this year, but not as a part of the budget process.

Online gambling looked like it would have a real chance to pass in Pennsylvania in 2015 — at least for a short period of time.

That enthusiasm died down quickly, as Republican leadership in the state legislature indicated it did not want a gambling expansion package to be earmarked as a part of the state budget.

However, the sentiment about keeping iGaming and the budget separate came at a time when it appeared like the governor and lawmakers had gotten on the same page in ending a six-month budget standoff. After approving a partial budget via a line-item veto, Gov. Tom Wolf showed he and House Republicans are still far apart on a number of important expenditure issues, and how much to spend on the budget.

Where are we now? Online gambling likely remains on the sidelines during the budget impasse, for now, but it’s still very much in play for 2016.

Online gambling, not a part of the budget?

A gambling expansion package was at least a possible part of a budget revenue plan for a short time, in the eyes of some Republicans in the House. That’s according to the sponsor of online gaming and expansion bill, HB 649, Rep. John Payne.

He told Online Poker Report that revenue from gaming is currently earmarked for dealing with a deficit in pension spending; putting gambling revenue into the budget would just create problems down the road, Payne indicated.

More from OPR:

“[Gaming] was like plan 1,000,” for the budget, Payne quipped.

“I know we’re desperate here,” Payne said, recounting a conversation with members of his caucus, “but if we do that then you must be voting next spring for a tax increase for the structural deficit on the pension plan.”

Does that mean there’s no chance online gambling and the larger gambling expansion package makes into the budget framework? Not at all. Given the fluid situation surrounding the budget — the status of which changes almost daily — it would probably surprise no one to see gaming expansion make it back into the conversation.

The odds of that happening are perhaps not great, but they are at least greater than zero.

Gambling expansion bill: Coming this spring?

Even if online gambling, as part of a gambling expansion package, doesn’t come this winter, Payne believes it will be something the legislature considers this spring.

Still, online gambling has now become a part of a larger overall gaming expansion effort in the state, and that brings with it potential pitfalls.

When online gambling has been considered on its own merits earlier in 2015, it was largely noncontroversial. The questions about iGaming were in many ways logistical and practical, not whether the state should or shouldn’t have it.

Now, however, every potential gaming expansion in the state has been lumped into HB 649, which started as an online-only bill. Now it contains far more controversial elements, such as the ability of private establishments to offer video gaming terminals. (The House amended HB 649 to include VGTs, and Senate Republicans indicated at one point that they didn’t have the votes to pass the gaming bill as-is, with VGTs included.)

The final form of HB 649 may well be key to whether we see online gambling in PA in 2016. If unpopular measures remain a part of the plan, then the bill could die in the legislative process. If it’s trimmed down to include measures that lawmakers and gaming interests can agree on, then Pennsylvanians might be playing online poker by this time next year.

Pennsylvania Closer To Online Gambling Than Ever Before With House Vote Looming

The PA House of Representatives appears to be close to voting on a bill that would legalize and regulate online poker and gambling.

The Pennsylvania House of Representatives was expected to vote on a gaming reform package (HB 649) this week that would, among other things, legalize online gambling in the Keystone State.

The gaming reforms contained in the legislation would then act as one of the funding components of the 2016 Pennsylvania state budget, which the legislature and Governor Tom Wolf are frantically working on finalizing before Christmas.

With the reforms in HB 649, most notably online gambling expansion, the state would garner some $300 million in annual revenue, which is why HB 649 is seen by some as a necessary part of the state’s budget, and a key funding mechanism that could bring the governor and legislature together.

Unfortunately, the vote never happened, as a late amendment that added video gaming terminals (VGT’s) to the package was added on Wednesday, and appears to have slowed down the bill in the House.

The House adjourned on Thursday without voting on HB 649, and will not return until Saturday, when they will hopefully pass HB 649 and send it on to the Senate — where the VGT amendment will either be removed or act as a poison pill that kills the bill.

The VGT problem

The reason the VGT amendment (or some other unknown change) could act as a poison pill is, all of this is taking place at lightning speed.

Both the Senate and House have proposed budgets in place (the state budget is nearly six months past due; a historic delay), and in addition to reaching an agreement on the budget, the legislature is also busy passing bills that fund the budget. But with time running out, the slightest hiccup, such as the VGT amendment, could upset the entire process.

The amendment passed by a whisker on Wednesday, (96-93) in the House, and by all accounts has even less support in the Senate where it will likely be eliminated. The amendment would allow VGT’s in specified private establishments, something the casinos in the state do not support.

One possible scenario for HB 649 is for the Senate to remove the VGT amendment from the bill and send their version of HB 649 back to the House for another vote. Considering the small margin by which the amendment was initially passed, the House could simply accept the Senate version in what would likely be another close vote that could go either way.

Another option would be a joint committee to quickly craft a compromise and whip up votes in the House and Senate, but there might not be enough time for this to happen.

The real concern in the iGaming community is that the Senate might make other adjustments to the bill, such as increasing the tax rate on online gaming operatorsThis would be very troubling, as there simply isn’t enough time remaining before Christmas break for the two legislative bodies to hash out an agreement on multiple issues, and iGaming would likely be taken off the table and replaced by some other funding vehicle.

History of HB 649

HB 649, sponsored by House Gaming Oversight Chair John Payne, and cosponsored by House Gaming Oversight Democrat co-chair Nick Kotick, began as an online gambling expansion bill back in February.

The bill had broad support in the House and from the state’s potential iGaming stakeholders, but as the year wore on it was the Senate’s bill (SB 900) that garnered more attention. SB 900 was a comprehensive gaming reform package, and even though the online gambling component was less appealing to stakeholders due to an exorbitant tax rate, the potential revenue from iGaming and the other reforms pushed HB 649 to the sidelines.

However, SB 900 never gained traction, and with budget talks at an impasse, HB 649 was resurrected in November — complete with an omnibus amendment package attached with other gaming reforms. The bill easily passed the House Gaming Oversight Committee, was mentioned as one of the funding mechanisms in the House budget, and is waiting for a full floor vote — which will hopefully take place on Saturday.

Why HB 649 needs to pass

The question a lot of people have is; why does the legislature need to pass HB 649 if it’s going to be included in the state budget anyway?

The answer is procedural.

Every state (and the federal government) has their own way of doing things, and Pennsylvania is no different. When the Pennsylvania legislature crafts a budget they must explain how much money they need for each department and program and explain precisely where that money is coming from. However, the Pennsylvania budget only appropriates the money to pay for these programs; the funding mechanism, in this case HB 649, must still be passed by the legislature on its own accord.

Essentially, the budget outlines where they plan on getting the money from, but the funding source (assuming it’s a new source) must still be passed by the legislature and signed into law by the governor.   

Pennsylvania Online Gaming Bill Has New Life, Passes Committee Vote

A Pennsylvania House committee passed a bill that would allow casinos to operate online casino games and poker rooms.

Pennsylvania could be on its way to becoming the fourth state to legalize online gaming.

A bill that would permit the state’s casinos to operate poker and casino games over the Internet passed out of a house committee this morning. The bill, HB 649, is sponsored by Rep. John Payne, chairman of the Pennsylvania Gaming Oversight Committee.

HB 649 passed the committee by an 18-8 margin.  It now heads to the full Pennsylvania House for a vote.  If it passes, it would then head to the state Senate.

The bill may also be attached to a state budget, which is 130 days past due.

What HB 649 permits

HB 649 would permit online poker and casinos games in the state. Pennsylvania casinos would operate regulated online games. Outside companies could provide software to Pennsylvania casino licensees.

Casinos would pay $5 million in licensing fees under HB 649. Software providers would pay $1 million to get licensed. The tax rate would be 14 percent of gross revenues.

In addition to online poker, any casino game legal at Pennsylvania casinos would be permitted over the Internet at licensed sites. This includes slots, video poker, blackjack, roulette, craps and a variety of proprietary table games.

Three states already permit licensed online gaming. Nevada became the first state to regulated online poker in April 2013. Delaware and New Jersey launched online poker and casinos games in November 2013.

Poker Players Alliance reaction

John Pappas, executive director of the Poker Players Alliance, released this statement:

“With the passage of H.B. 649, the House Gaming Oversight Committee has proven their commitment to providing Pennsylvania residents with a safe and regulated place to play online poker within their own borders. The PPA thanks Chairman John Payne and the Committee for their leadership. Now this bill needs to become law. The safety of consumers and the fiscal health of Pennsylvania will be vastly improved when Internet gaming is appropriately licensed, regulated and taxed. It is our hope that the legislation will be enacted on its own or as part of the state’s 2016 budget by the end of this year.”