After a frenetic two days of action in the General Assembly, Pennsylvania has joined Nevada, New Jersey, and Delaware in the fraternity of states that have regulated and licensed online casino gaming and/or poker.
As reported by my friend and colleague Dan Katz yesterday, the Keystone State – faced with the end of a legislative session that still had not passed a budget – kicked off on Wednesday when the Pennsylvania Senate acted on HB 271. After debate, the Senate (which had always been more open to expanding gaming in the state) decided by a vote of 31-19 to pass the House bill, putting the onus back on the House to complete a deal that has been in the works for more than 18 months.
Thursday saw another lengthy debate session on HB 271, with many in the House decrying not only the expansion of gaming in the state but also the rushed nature of the nearly 1000-page bill. In the end, the vote went to the ayes for expanding gaming in the state by a tally of 109-72, barely beating the close of the legislative session this Friday. HB 271 now heads to Governor Tom Wolf, who has stated in the past that he will sign the expanded gaming bill and bring several gaming options to Pennsylvanians.
Once Wolf signs the bill, complete online gaming – slots, table gaming and other house banked games – would be offered to the citizens of the state. Online poker will also be offered to the customers as well as daily fantasy sports (DFS). One of the things that was holding up passage of the bill, video gaming terminals in bars and airports, ended up not causing any issues as it was included in the bill. Furthermore, there will be 10 “mini-casinos” allowed to open throughout the state and, should the federal government drop laws preventing the states from doing so, online and live sports betting would be authorized.
When it comes to licensing for business in Pennsylvania, three separate licenses will be offered. The first will be for slot gaming, the second for house-banked games and the third for online poker. The casinos in operation in the state will have the first option as to whether they want to participate in the newly born industry, with a $10 million cost for licensing across all three platforms and a $4 million licensing fee for each individual product. After 120 days, the industry is opened to outside businesses and licenses will go for $4 million.
There are still some issues with the taxation on the different operations, ones that could cut the industry down before it even gets started. A 54% taxation rate on slot gaming might be too big a bite for online operators to even enter the market (although legislators have said the live games are taxed at that rate and online operators will just have to live with it). Online poker is a bit more realistic, taxed at 16%, but that is still higher than neighboring New Jersey.
The debate over online gaming dates to 2015 when legislators, looking to plug budget deficits that have totaled upwards of $2 billion, entertained the options of opening for online gaming. It was actually penciled into the budget in 2016, but gridlock in Harrisburg and the reluctance of legislators on both sides to expanding gambling in the state kept the legislation from being passed. With the passage of the legislation on Thursday, Wolf now has 10 days to sign the bill. If he does not sign it, it automatically becomes law and chances of Wolf vetoing the action, especially after the lengthy period that it took to pass the bill, are slim.
If (once?) Wolf signs the bill, then there will be a 90-day period in which the Pennsylvania Gaming Control Board will be accepting licenses from qualified entities in the state. After that period has elapsed, then the next key date would be 120 days after that for accepting license applications from non-Pennsylvania gaming operations. If everything runs smoothly, it is likely that approximately a year from now (if not sooner), Pennsylvania will join Nevada, New Jersey, and Delaware as the only states in the U. S. to regulate online gaming and poker.
