Gov. Wolf Thinks New Online Games Will Turn Lotto Revenue Around

Pennsylvania Gov. Tom Wolf says online lottery sales projections included in his latest budget proposal should help turn around the fortunes of the declining PA Lottery.

Pennsylvania Gov. Tom Wolf says online lottery sales should help turn around the fortunes of the state’s declining PA Lottery program.

According to Department of Revenue financial statements, the PA lottery posted $1.04 billion in revenue in the last fiscal year. However, that number was down more than $75 million from the previous fiscal year.

Now, in his budget for the 2018/19 fiscal year laid out earlier this month, Wolf claims new lottery games will bring in an additional $71 million. The new games include online lottery and Monitor Games games including  Virtual Sports and Keno.

Wolf announced a plan to launch Monitor Games at PA lottery retailers, bars, and taverns in October 2017.

Later that month, state lawmakers also passed a comprehensive gambling expansion bill authorizing the launch of online lottery sales, online slots, online poker, and online table games.

Improving the fiscal condition of the PA Lottery

The Governor’s Budget in Brief document says the government is taking steps to improve the fiscal condition of the Lottery:

“Act 42 of 2017 enables the Lottery to launch new product lines, including iLottery games and terminal-based games for virtual sports and keno. Both products are designed to appeal to new and younger players. Implementation of iLottery will allow players to access games through mobile devices. Introducing new Lottery players can also benefit existing Lottery retailers, as demonstrated in other states where iLottery has previously been implemented.

“Monitor-based games allow patrons to watch a simulated sports event or a number draw, most often in bars and taverns, again introducing Lottery games to a new group of players. When both products are fully implemented, they are expected to generate as much as $150 million annually to fund programs for older Pennsylvanians.”

The PA lottery plans to launch online lottery games this spring. Pennsylvania Lottery spokesperson Gary Miller told the Capitolwire news and information service (subscription) this week it is all a part of a plan to update an aging lottery program:

“(Online lottery represents) the most significant modernization in our more than 45-year history. We’ve been running on a business model that’s been basically unchanged since 1972. It’s important for the lottery to remain relevant and competitive in a rapidly changing business environment because older Pennsylvanians are counting on it.”

PA Lottery proceeds go to elderly residents

The Pennsylvania Lottery first launched 1972. All proceeds have gone to programs for elderly residents as mandated by the government since that time. This includes underwriting tax and rent rebates as well as prescription drug subsidies for eligible senior citizens.

In January, PA Lottery spokesperson Jeffrey A. Johnson told TribLive.com online lottery sales will generate up to $250 million in new profits over the first five years.

Other major initiatives in the Governor’s $33 billion budget for the 2018/19 fiscal year include increasing funding for public schools and raising the minimum wage. Plus, Wolf plans to place a new tax on natural gas drillers.

The budget takes effect July 1 if approved by the state legislature.

Photo by George Sheldon / Shutterstock.com

In Approving Online Gambling Bill, Gov. Wolf Did The Sensible Thing For Pennsylvania

When Pennsylvania approved legal online casinos, poker, and other gambling expansions last week, it made a solid choice toward balancing the budget.

Even with support from the Pennsylvania House and the Senate, skeptics weren’t sure what Gov. Tom Wolf would do with H 271, the state’s sweeping gaming expansion.

After much tweaking and amending, the Pennsylvania Senate approved the bill 31-19, legalizing online poker and gambling throughout the state. On Oct. 26, the House approved the bill by a vote of 109-72. The governor signed the bill into law shortly before the 10-day waiting period expired, on Oct. 30.

Pennsylvania is the fourth state to legalize online poker and casino games, following New Jersey, Delaware, and Nevada. The government expects additional revenues brought in by this bill are around $250 million.

A key sticking point for Wolf was to make sure that this new revenue did not cannibalize Pennsylvania’s existing gaming industry.

New forms of gaming coming to Keystone State

The bill legalizes online slot machines, online table games, and online poker throughout Pennsylvania. It also regulates daily fantasy sports, sports betting (if federally legalized), online lottery, video gaming terminals at truck stops, and tablet gaming in airports.

Companies like FanDuel and DraftKings were all smiles about the new bill, even considering the tax rate of 15 percent is on the higher end for companies operating daily fantasy sports. The initial license fee is $10,000.

Truckers and truck stop operators seem to have mixed reviews regarding the legalized video gaming terminals. While they would welcome the additional revenue and the occasional break for entertainment, many caution against the dangers of gambling and the lack of space to accommodate any new gaming customers.

It also authorizes up to ten satellite casinos, which are micro-footprint gambling centers set up in lower population zones. Penn National made it clear it is worried that these smaller gaming centers will take business away from its strategic geographic positions.

Additionally, the bill changes Category 3 licenses to remove the membership fee for a higher one-time fee.

In Wolf’s words…

Wolf spoke in blanket terms regarding H 271.

Wolf was quoted in CapitolWire:

“There’s been a lot of pressure from a lot of places in the Commonwealth to actually expand this. We do need some recurring revenue so the goal all along has been to do what is prudent without cannibalizing existing gambling revenues coming to the state. And I think what we are settling on will actually do that.”

While never taking an outspoken stance on the issue, his words regarding Pennsylvania online gaming have always been consistent. His message seems to be that as long as it doesn’t disrupt Pennsylvania’s current gaming industry, online gaming makes perfect sense as a means of adding revenue to the budget.

Not everyone is thrilled about PA gambling changes

Still, opponents of the bill are skeptical of the money it can provide, as well as the claim that it won’t hurt existing business.

Of course, online gaming expansion is just a small part of the larger picture. When the entire state budget is on the line, of course there are going to be some heated arguments.

Maybe the biggest red flag includes the plan to issue $1.5 billion in bonds to cover the remaining shortfall. But that puts online gambling into perspective: It’s one of the best opportunities Pennsylvania has to balance its budget.

Time for legal online casinos in PA has come

Regardless of the political reasons, it is evident that online gaming makes sense for Pennsylvania. Proactively welcoming these online business models to Pennsylvania puts the state in a great position to increase revenue in the future, should the demand of the market dictate that.

In fact, considering that Pennsylvania has the second-highest gambling revenue after Nevada, it would be foolish to deny online gaming companies an opportunity to operate in the state.

Image credit: George Sheldon / Shutterstock.com

Growing Pennsylvania Budget Deficit Is A Good Omen For Online Gambling Legalization

With the state’s budget deficit ballooning to $250 million, it’s imperative that Pennsylvania lawmakers pass a bill legalizing PA online gambling and DFS.

Pennsylvania lawmakers and Governor Tom Wolf are coming under increasing pressure to close a still-growing, nine-figure budget shortfall, which increases from $2.2 billion to $3 billion over the next 18 months.

According to Marc Levy of the Associated Press, the Pennsylvania Legislature’s Independent Fiscal Office “lowered revenue estimates for the current fiscal year by $250 million,” leaving the state $700 million short of being able to properly fund its $31.5 billion budget.

The state has already employed a number of stop-gap measures in recent years, which have resulted in its credit rating being lowered five times.

Legislature has yet to come up with a feasible plan

The Democratic governor Wolf was elected in 2014 on a platform of fiscal responsibility and ending property tax increases. He vowed to balance the budget through, among other things, targeted tax increases.

The Republican-controlled legislature had other ideas, and so far it has won the battle.

While Wolf’s recent proposals focus on the more amenable spending cuts, tax increases can only be ignored for so long. The larger the deficit grows, the more likely sales or income tax increases are back on the table — unless the legislature and the governor can come up with an alternative funding source.

They could also save themselves some time and effort by finally acting on a funding source they already approved in 2016.

PA gaming reform package more necessary than ever

As former California Gambling Control Commissioner and current Bermuda Casino Gaming Commission Executive Director Richard Schuetz said on Twitter, the rising deficit will likely force the legislature to act on a number of gambling reforms that were proposed last year.

Online gambling and daily fantasy sports were part of a gaming reform bill passed by the Pennsylvania House of Representatives on two different occasions in 2016.

The Senate didn’t vote on either bill, but it did include the revenue projections these gaming reforms would generate as a funding source for the state’s budget. This was something most people took as a sign that the Senate would eventually pass the gaming reform package.

The Senate’s failure to act in 2016 was unsettling, but with the budget deficit growing, any holdouts may have to acquiesce.

If the legislature neglects to pass a gaming reform bill (the reforms would bring in an estimated $100 million in the first year thanks largely to the online gambling licensing fees), it would be adding $100 million more to the deficit, since the Legislative Fiscal Office is still counting this revenue in its projections.

The sooner PA online gambling is legalized, the better

Even though the bulk of the money will come from licensing fees, the tax revenue online gambling would generate isn’t exactly trivial. This is why time is of the essence.

It will take time to get the Pennsylvania online casino industry up and running. Even if the legislature passes the bill tomorrow, the first legal online gaming website in Pennsylvania is unlikely to launch before 2018.

Furthermore, it will take time for the industry to mature.

New Jersey online gambling sites generated:

  • $123 million in 2014
  • $149 million in 2015
  • $197 million in 2016

Had the Pennsylvania Senate acted on the gaming reform bill passed by the House last summer, online gambling websites could have potentially been up and running before the end of spring.

Had this occurred, the state would have been collecting tax revenue on top of the licensing fees, and the industry would be six to nine months further along.

Depending on the final tax rate the state adopts for online gambling operators (anywhere from 15 percent to 25 percent), Pennsylvania could be losing anywhere from $3 million to $5 million a month in much-needed tax revenue.

Effectively, every day online gambling remains illegal, the state of Pennsylvania is losing revenue.

Upshot

The legislature’s inaction in 2016 has already cost the state as much as $35 million in revenue over the course of 2017. Continued delays are not only depriving the state or money; they make income and sales tax increases all the more likely.

AGA Voices Opposition To Proposed Tax On Casino Promotional Credits In PA

The American Gaming Association has come out against a recent proposal by Pennsylvania Governor Tom Wolf that seeks to impose a tax on promotional credits handed out by the state’s casinos.

The American Gaming Association has come out against a recent proposal by Pennsylvania Governor Tom Wolf that seeks to impose a tax on promotional credits handed out by the state’s casinos.

The AGA’s position on the tax

In a letter sent to Governor Wolf and key legislators, AGA Senior Vice President of Public Affairs Sara Rayme wrote:

“… the American Gaming Association (AGA) has serious concerns with your proposal to tax promotional credits, a crucial marketing tool for casinos that generates millions of dollars in tax revenues for the Commonwealth of Pennsylvania each year.”

The AGA letter goes on to say that the new tax would likely have the opposite effect the Governor intends; a concern I broached when the governor’s plan was first introduced a week ago. As Rayme notes, “While we appreciate the difficult budget deficit facing Pennsylvania, taxing promotional credits would likely lead to a decrease in tax revenue from casinos – the exact opposite of the intended result.”

If Wolf’s plan were adopted it’s likely the value of promotional credits would reach a tipping point, and many casinos would drastically cut down on the amount of promotional credits they give away. As the AGA notes, this could lead to less visitation and traffic in the state’s casinos and therefore less revenue for the state.

The letter also makes note of the already high tax burden Pennsylvania casinos pay, as 55% of slot machine revenue and 14% of all table game revenue goes directly to the state.

According to the Morning Call, the casinos that would be hardest hit by Wolf’s proposed tax would be AGA members, Las Vegas Sands (Sands Bethlehem), Greenwood Racing (Parx Casino), Rush Street Gaming (Rivers Casino and Sugarhouse Casinos), Penn National (Hollywood Casino), Caesars Entertainment (Harrah’s), and the Mohegan Tribal Gaming Authority (Mohegan Sun at Pocono Downs).

Two of those entities, Las Vegas Sands and Caesars are among the heavy hitters of the casino industry and the AGA.

Wolf’s proposal

Under Wolf’s promotional tax plan, casinos would have to pay an 8% tax on free slot play and match play coupons and vouchers for table games, essentially charging them to run what have historically been considered marketing campaigns to attract customers.  

These giveaways are seen as the fuel that brings day trippers to the casinos by bus from as far off as New York City.

The AGA likened these promotional credits to grocery store coupons, or a BoGo offer sent to specific customers by a shoe store, although I would have compared them to free appetizers at a bar or some other loss-leader. In the letter Rayme made the following case for promotional credits:

“Promotional credit marketing programs in casinos are no different than grocery store coupons, which are widely used to attract more customers to purchase and consume more goods. Direct marketing, which involves sending promotional free play to patrons, is much like a shoe store sending a customer a buy one, get one free coupon. Promotional credits are a critical part of casino marketing because they:

  • Incentivize customers to increase their real-money wagering and spur increased visitation;
  • Empower casino operators to respond to market conditions, customers’ preferences and the broader economic environment; and
  • More than triple the return on investment of issuing promotional credits.”

The bigger picture

It should also be noted that this fight is taking place amid a backdrop of a budget stalemate between the governor and the Republican-controlled House of Representatives that has gone on for over six months. Wolf’s proposal could very well be the governor throwing every idea against the wall to see if anything sticks, since the longer the stalemate goes, the worse it will be for all Pennsylvanians.

The legislature is also considering a massive gaming expansion package that would legalize online gaming in the state; add slot machines to select airports and off-track-betting parlors; make structural changes to casino licenses; and perhaps legalize daily fantasy sports in the Keystone State.

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

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.   

Online Gambling Legislation In Pennsylvania Could Still Be Part Of Final Budget

Some key stakeholders in Pennsylvania believe internet gambling could be part of the revenue package when a budget is finally passed.

As the 2015 legislative session wore on, Pennsylvania was seen as the United States’ best chance to pass an online gambling bill this year. The commonwealth had momentum on its side, and there were only pockets of opposition to online gaming expansion.

But the 2015 window for iGaming appears to be closing as the state legislature and the governor continue to battle over how the state can solve its budget deficit — the state’s budget is now some 50 days past due — and lawmakers began squabbling about the specifics of the bill.

Expansion for iGaming hit a slight speed bump when the Senate bill (SB 900) differed from the bill put forth by the House (HB 649), most notably in the amount of taxes that operators would pay, 54% compared to 14%.

These differences aren’t irreconcilable,  but another issue has been hanging over possible iGaming expansion.

It’s the budget, stupid

The real hang-up is the budget.

The legislature appeared to be hoping that online gambling revenue could be an alternative to one or more of Governor Tom Wolf’s proposals. The governor doesn’t look like he is interested in a straight up tradeoff.

Wolf continues to push for new taxes on natural gas production and cigarettes, as well as comprehensive reform of the state’s income tax code. The Republican-controlled legislature has different ideas, as they are pushing for pension reform as well as exploring new forms of revenue such as expanded gaming options.

The legislature might want to use iGaming as a tit-for-tat proposal, while Governor Wolf appears to see it as an “in addition to” type of measure.

Is gaming expansion even on the table?

Depending on who you ask, the budgetary impasse is either a positive or negative for online gaming, evidenced by a recent GamblingCompliance column (paywall) where opinions were split on what the delayed budget means.

Even though they concede the issue has been pushed aside in the state’s budget talks, some of the stakeholders and the supporters of online gambling in Pennsylvania still feel there is a decent chance iGaming expansion could be included in the final budget.

According to GamblingCompliance’s reporting, several stakeholders and gaming lobbyists believe online gaming expansion (and perhaps the addition of slot machines at OTB parlors throughout the state) is still on the table, even though the negotiators for the governor and the legislature haven’t brought them up “at all.”

The general feeling among the various interests seems to be this: The longer the budget impasse goes, the more likely alternative options will be considered.

Additionally, if the legislature has to cave to some of Wolf’s demands, iGaming could morph into an “in addition to” policy for the legislature, instead of the alternative they hoped for.

Other stakeholders and lobbyists are less optimistic about the prospects for 2015, such as Penn National (which is otherwise bullish on iGaming expansion), and have more or less written off gaming expansion this year.

Furthermore, the governor has recently stated that talks between himself and House Majority Leader Dave Reed have been somewhat productive, and he feels they are “moving in the right direction.” If that is in fact the case, there would be little need to find alternative revenue streams such as gaming expansion.

Will iGaming expansion reappear in 2016?

Even if iGaming is excluded from the final version of the 2015 budget, Pennsylvania will almost certainly revisit the topic in 2016.

The state’s casinos are in favor of iGaming expansion (with the exception of the Sheldon Adelson-controlled Sands Bethlehem Casino) and several have entered into iGaming partnerships.

Representative John Payne, the Chairman of the House Gaming Oversight Committee, is a staunch supporter of online gambling, as is his counterpart on the committee, Democrat Nick Kotik.

Furthermore, several senators emerged as supporters of online gaming expansion when SB 900 was discussed at length at two separate hearings.

It all adds up to the idea that if iGaming fails, it will be back for round two next year.

Photo by StockMonkeys.com used under license CC BY 2.0.

Latest Reports Say Push for Pennsylvania Online Gambling Not Dead Yet In 2015

Proponents of internet gambling regulation in Pennsylvania were treated to some hope that an iGaming bill could still pass the legislature in 2015.

Proponents of internet gambling regulation in Pennsylvania were treated to some hope that an iGaming bill could still pass the legislature this year.

Report: iGaming-only bill possible

A story at EGR North America (paywall) revealed the first concrete indication that an internet gambling measure could be a part of budget talks in Pennsylvania.

Democratic governor Tom Wolf and the Republican legislature have been at an impasse in negotiations for more than five weeks now.

There has been little common ground between the two sides, as they have disagreed on just about everything. That includes how much to spend in the budget, to what to spend it on, how to pay for the budget and how to trim a deficit in excess of a billion dollars.

But the EGR report provided a glimmer of hope, saying “as the budget talks have progressed, the bulk of the proposed gaming reforms have reportedly been scrapped, apart from egaming.”

The story was otherwise bearish on the prospects of a regulatory bill passing, but it is positive in that an iGaming measure isn’t off the table. As politicians struggle to find revenue streams that they agree on, allowing iGaming and taxing it seems to be a point that the two sides could advocate to generate revenue.

Stripping it down to just internet gambling

There had been five pieces of iGaming legislation introduced and considered in the state legislature, but all of those have had gaming elements that affected brick and mortar casinos, as well.

Those measures were largely more contentious than iGaming, although there are questions about implementation and the tax rateThe topic of internet gambling has stayed out of the political theater surrounding the budget impasse.

The fact that iGaming is now a possible standalone concept increases its chances of passage. However, several casinos in the state had earlier opposed legislation that only dealt with internet gambling and removed other issues from the table.

Representative agrees that online gambling is alive

Rep. John Payne — the chair of the Gaming Oversight Committee in the state house and one of the authors of the aforementioned bill — backed up the assessment that online gaming is still in play in Pennsylvania. More from Card Player:

“Nothing is further from the truth,” Payne said of speculation that the window is closing on online gaming legalization in 2015.

Payne said that until there’s a budget agreement “nobody knows” what exactly will happen with his and other gaming expansion bills on the table, which include other ideas to beef up the state’s gaming industry, such as slots at airports.

Penn National Gaming, in its earnings call last month, seemed bearish on the prospect for iGaming in 2015, but even their executives didn’t shut the door entirely.

While Pennsylvania’s budget remains up in the air, it appears that pretty much everything that could be a point of compromise between Democrats and Republicans likely remains in play. What remains to be seen is whether online gambling can be one of those things that the two sides agree should be a part of a revenue package moving forward.

Gov. Wolf Staying Firm On Increased Spending, Meaning Revenue Questions Remain

A month into Pennsylvania’s budget standoff, Gov. Tom Wolf has no plans to reduce expenditures, leaving options like online gambling for revenue.

A month into Pennsylvania’s budget standoff, Gov. Tom Wolf appears to have no plans to reduce the expenditures he has planned for the state, like more money for education.

The takeaway? If he wants to keep his plans for the budget intact, he will have to find a way to fund the expenditures while also appeasing Republicans, who have been adamant about not raising taxes in Pennsylvania.

What Wolf wants to keep

In an impasse that has now lasted a month, there has been almost no progress made in meager negotiations between the Democratic governor and Republican lawmakers in the state.

While the two sides have been talking, albeit sporadically, Wolf, at least publicly has shown little willingness to cut back on any of the funding increases he earmarked in his version of the budget.

In particular, Wolf appears to remain firm that funding be increased for Pennsylvania’s schools, one of the major tenets of his successful campaign. To back down from his promises on education would amount to a major political defeat for Wolf.

Despite the fact that funding for this school year might be affected if a budget isn’t passed soon, Wolf is sticking to his guns. In talking to the York Rotary Club on Wednesday, Wolf had this to say about increased education funding in his budget:

“It may take a little longer to get there,” Wolf said. “There may be some temporary inconvenience to get to a place where all schools, all human services, are in a better place.”

How does the education funding get paid for?

Republicans would likely be happy to approve Wolf’s education funding, but only if it isn’t accompanied by a suite of tax increases that Wolf is also proposing.

There’s been no mention of online gambling as a bridge between Wolf and Republicans on the revenue front. But if Republicans want no new taxes, and Wolf wants more education funding, there is clearly going to need to be compromise on revenue-generating measures.

Internet gambling remains one of those possibilities. Privatization of the state liquor system, which Wolf has opposed, is a Republican-backed plan that Wolf may end up acquiescing to. At the same time, it also seems highly unlikely that Republicans’ hard line on opposing tax increases will continue, either.

No matter what, the two sides will have to figure out how to pay for Pennsylvania’s budget, one way or another, and that has been the most contentious part of the impasse.

No positive signs

The latest nugget of news on the iGaming front came from Penn National Gaming CEO Tim Wilmott, who is bearish on online gaming happening during this legislative session.

Here’s what Wilmott said in an earnings call last week:

“I think there’s more lawmakers here in Harrisburg that are interested in the revenue potential of all these different options. And I think it’s very difficult to predict. We don’t expect anything happening in ’15, but we’ve been encouraged by the hearings that we’ve participated in, in and around the state of Pennsylvania, that there’s more of an appetite to consider these options than there ever has been.”

In the same call, however, PNG Senior Vice President of Public Affairs & Government Relations Eric Schippers did leave the door open for a possible avenue to a deal getting done this year that that would regulate iGaming.

Beyond that, there has been no mention of online gambling by politicians in the state in recent weeks.

At the same time, the budget standoff, which was mostly political theater until now, will start having a real impact on the state soon, as money to some state-funded programs will run out in August or shortly thereafter.

For now, everyone in Pennsylvania is watching and waiting for one of the sides to give some ground, or find a new solution to the issues Democrats and Republicans disagree on. Will online gambling be a part of that solution? While it’s looking increasingly unlikely, it’s not off the table yet.

Photo by Governor Tom Wolf used under license CC BY 2.0.

Pennsylvania Lawmakers Move To Outlaw Casinos From Offering Social Online Gaming

A group of Pennsylvania lawmakers have introduced a bill that would ban social casino games from being offered by casinos in the state.

A group of Pennsylvania lawmakers have introduced a bill that would ban social casino games from being offered by casinos in the state.

No progress on budget, but a bill on social casino games

While little progress on Pennsylvania’s budget has been made since a soft deadline was missed at the start of the month, legislators continue to introduce bills that have nothing to do with balancing the budget, trimming the state deficit, or bridging the divide between Democratic governor Tom Wolf and the Republican legislature.

The new bill from Representative Eddie Pashinski (D-Luzerne) fits into that category. While regulation of online gambling and other changes to gaming law had been on the table before the budget impasse, gaming issues have largely stayed off the radar this month.

The bill (text here, tracking here) is a short one, and simply amends Pennsylvania gaming law to include the following passage:

No licensed facility, principal, principal entity, key employee or affiliate of a licensed facility may hold any financial interest in an enterprise that offers, through the use of communications technology, simulation of an interactive game, including, but not limited to, any simulated gaming that would otherwise be considered a nongambling game not requiring a license under the laws of this Commonwealth.

The bill has eight co-sponsors and was referred to the House Committee on Gaming Oversight on Monday.

Why target social gaming?

Pashinksi revealed his intent for the bill in a co-sponsorship memo he released in April:

Simulated interactive gaming, which includes free-to-play social casino games, have been made widely accessible to our youth.  A recent academic study has found that one in 12 teenagers surveyed had played simulated gaming apps on Facebook and one in 16 teenagers had played such apps on smartphones.  Additionally, the study found that minors who engaged in simulated gambling were over three times more likely to report gambling for real money.  Simulated gaming that is being marketed to our youth by casinos is essentially grooming them for gambling habits.

It’s not the first time that a legislator has taken this stance on social gaming. The conservative forces behind the Restoration of America’s Wire Act — a bill that would ban internet gambling — have previously thought about including social casino games in the legislation.

Social gaming is big business. Late last year, Eilers Research estimated that the industry generated $2.7 billion in revenue.

Bill’s chances moving forward?

The bill does have two Republican co-sponsors, but Pashinski is a Democrat. It seems unlikely in the short term, that the bill could gain much traction in the Republican-controlled legislature.

The legislature has bigger fish to fry than dealing with this bill, which casinos probably would like to weigh in on via a committee hearing. The bill also came a day before Penn National announced it would expand staff for online gaming (paywall).

The GO committee has no upcoming meetings, and unless this somehow gets attached to an overarching budget bill, its chances for this legislative session seem to be virtually nil.