Pennsylvania is one of a handful of states that have given serious consideration to legalizing online gaming, and the Keystone State seems to be one of the most likely candidates to join Nevada, Delaware, and New Jersey.
But is Pennsylvania really ready to take the plunge? That may depend on the state’s new Governor, Tom Wolf.
Pennsylvania’s newly elected governor Tom Wolf ran on a platform of overhauling the state’s income tax code in order to halt the state’s rising property taxes. The question is, will Wolf’s plan be enough to reach the 40% education funding he is shooting for without finding other revenue streams – such as online gambling?
Additionally, will the legislature go along with Wolf’s plan without asking for a few concessions of their own?
Based on his public comments, Wolf seems opposed to gaming expansion, but if it’s part of a larger fiscal policy that helps him reach his campaign promises he may be willing to compromise – at least that’s the hope.
Overview of gaming in Pennsylvania
Pennsylvania has quietly become the second largest gaming market in the United States behind Nevada, but like virtually every other locale with legalized gambling, the Pennsylvania gaming industry has started to experience year-over-year declines as more and more states expand their gaming options.
Pennsylvania first expanded their land-based gaming in 2004 via the Pennsylvania Race Horse Development and Gaming Act of 2004, which allowed the Pennsylvania Gaming Control Board to issue up to 14 slots licenses – Up to 7 would go to existing racetracks, turning them into Racinos; 5 would be set aside for standalone casinos; and 2 for resort casinos. A third resort casino license could also be awarded in 2017 at the discretion of the PGCB.
By 2010, 13 of the 14 slot licenses had been awarded.
The state underwent further land-based gaming expansion in 2010 allowing currently licensed casinos to add table games. And in just a few short years the state surpassed all others, with the exception of Nevada, in terms of total gaming revenue, jumping over Indiana and New Jersey.
Past and present online expansion efforts
Pennsylvania’s interest in online gaming expansion began fairly recently, in 2013, but the state has made tremendous strides in just a short period of time.
In April 2013 State Representative Tina Davis introduced a bill (HB 1235) which sought to legalize online gambling in the Keystone State. Davis’ bill only procured 11 co-sponsors and was left to die in committee.
However, Davis’ efforts did spark the conversation, and in December the legislature voted to commission a study (SR 273) covering the state’s potential gaming expansion options. The results of the study (carried out by Econsult Solutions) were made public on May 7, 2014 and made it clear that online gaming was the state’s best option for expanded gambling.
The Pennsylvania legislature also hosted two hearings that addressed the topic of online gambling in 2014. The first hearing took place in early May (prior to Econsult’s report) in front of the House Democratic Policy Committee. The hearing was both impromptu and informal, but did feature several important speakers including Parx Casino Chairman Bob Green.
The second hearing occurred after the legislature had received the report from Econsult on June 2, 2014. The hearing was held in front of the Senate Committee on Community, Economic and Recreational Development, and featured most of the state’s major gaming interests, including Las Vegas Sands spokesman Andy Abboud, who unsurprisingly opposed online expansion on behalf of his boss, Sheldon Adelson.
Two weeks after the hearing State Senator Edwin Erickson introduced an online gaming expansion bill, but with little time before the state’s budget was due the bill was unable to gain any traction.
At this time no one has introduced an online gaming expansion bill in Pennsylvania for 2015, but it would be quite surprising if this didn’t occur at some point during the legislative session.
Pennsylvania has been systematically progressing towards online gaming expansion, and unlike California, where rival factions and special interest groups have prevented the legislature from acting, in Pennsylvania the gaming interests are pretty much all on the same page – with one notable exception: Sheldon Adelson.
Adelson’s company, Las Vegas Sands, operates one of the most profitable casinos in Pennsylvania, the Sands Bethlehem Casino, and with a stake in the state’s gaming industry it’s likely the anti-online gambling crusader will spend plenty of money to defeat any potential online expansion bill that comes about.
Another issue the state will have to deal with is making sure Bob Green, the Chairman of the Parx Casino, doesn’t join Adelson. Green’s comments regarding online gambling indicate he will be a reluctant participant in the industry, and if Green had his druthers Pennsylvania would not pass an online gambling bill.
If Adelson were to nudge Green into the opposition camp it would likely be the end of online gambling talks in the state.
On the plus side, the Sugarhouse Casino in Philadelphia is putting the finishes touches on a major expansion project that includes the city’s first legal poker room, and would probably welcome the opportunity to add online gambling to their list of offerings. At the June hearing Sugarhouse General Manager Wendy Hamilton wanted to take a wait and see approach to online gambling, almost certainly so the casino could finish its expansion before getting involved with online gambling.
However, even with Adelson complicating things, and Green’s apathetic view of online gambling, in my opinion, Pennsylvania remains one of the best bets for online gaming expansion in the next couple years:
· Bearish forecast for Pennsylvania online gambling in 2015: 5%
· Bullish forecast for Pennsylvania online gambling in 2015: 20%
· Bearish forecast for Pennsylvania online gambling in 2016: 10%
· Bullish forecast for Pennsylvania online gambling in 2016: 33%