Poker players in America have their hopes set on Pennsylvania as the next state to legalize and regulate online poker and casino games in the United States. Years have passed since Nevada, Delaware, and New Jersey kicked off the market in an effort to create a new online industry since Black Friday in 2011. But difficulties in states like California have left poker fans disillusioned for years.
Enter Pennsylvania. The state made significant progress last year in pushing a gambling expansion bill that included online gaming, and legislators got off to an early start in 2017. Several lawmakers expressed their interest in legalizing the online games this year and started conversations with casino executives during the first week, before the initial legislative session even began.
However, hearings and discussions have yet to get any legislation closer to a vote in Pennsylvania. And by the middle of March, there have been three bills introduced, which may complicate matters.
House Bill 392
This was the first of the gambling expansion bills introduced in Pennsylvania on February 8. State Representative George Dunbar found seven co-sponsors for HB.392, including Rep. Rosita Youngblood who co-wrote a February memorandum regarding their intention to introduce a bill to regulate the industry for increased revenues and consumer protections.
In addition to online gambling, this bill also included proposals for daily fantasy sports, multi-state progressive slot machines, skill-based slot machines, gaming at airports, loosening of casino restrictions, increase of problem gambling funding, and a court-mandated local tax share fix.
For online gaming, including poker, the details are:
- $8 million first-time license fee, $250K renewal fee for casinos
- $2 million first-time license fee, $100K renewal fee for operators
- 14% tax rate on gross gaming revenue
Senate Bill 477
The second bill was introduced on March 6 by Republican Senators Killion, Reschenthaler, Bartolotta, and Stefano, none of whom were anticipated to be authors of the legislation that is a companion piece to HB.392. This bill proposes the exact same gambling expansions as HB.392, including the same tax rate and licensing details.
Senate Bill 524
This third bill is the second for the Senate to consider and comes from Senator Jay Costa, the legislator who wrote the first memorandum of the year indicating his intention to introduce such a bill. He and three co-sponsors finally released SB.524, which does differ from the other bills in some significant ways.
The gambling expansions in the proposal are the same as those in its predecessors except for the additional inclusion of taking the state’s online lottery online. And the details of the online gaming regulatory requirements are different:
- $10 million first-time license fee, $500K renewal fee for casinos
- $5 million first-time license fee, $250K renewal fee for operators
- 25% tax rate on gross gaming revenue
Senator Costa in Pennsylvania has introduced his version of the iGaming bill. Biggest difference is tax rate of 25% https://t.co/xRuzIBPea6— PokerPlayersAlliance (@ppapoker) March 21, 2017
Complications and Profits
The latest bill to be considered by Pennsylvania legislators pushes all of the fees up to amounts that may be prohibitive for online gaming operators. While many casinos will likely be able to handle the costs, the operators may be put off and unable to see a profitable outcome considering the licensing fees combined with an exorbitant tax burden.
The latest proposal of a 25% tax rate is 10% higher than the original two bills and 11% higher than neighbor New Jersey. In order to compete for business and eventually work toward some kind of online poker liquidity for improved results, the tax rate should be compatible with that set by the New Jersey Division of Gaming Enforcement.
While the inclusion of the online lottery sales in Costa’s bill is appealing, as is the boosted profits the state will see from fees and taxation, it is not a reasonable bill for the online gaming industry. As it is still in its infancy in the United States, and the purpose of legalizing it is to increase profits for casinos and online operators in an industry with great potential for growth, setting the costs too high can stop it before it even has a chance to get off the ground.
Legislators are considering all options and speaking regularly with industry analysts and lobbyists like the Poker Players Alliance. However, the introduction of the latest bill throws a wrench into the mix and may confuse some who don’t have a deep knowledge of the online gaming industry. There is the potential for confusion and arguments over details that could derail the process.
For those hoping beyond hope for another state to begin offering online poker in the US this year, complications like this are frustrating and reminiscent of legislative tiffs that have been keeping states like California out of the mix for years. When politics overshadows the wishes of the people, as in so many situations, the people lose.