Pennsylvania is officially the fourth state in the United States to regulate online poker. On Monday, Governor Tom Wolf signed H 271 into law, legalizing online poker and a myriad of other iGaming to include online casino games, Daily Fantasy Sports (DFS), tablet gaming, and online lottery ticket sales.
While this passage was epic for Pennsylvania, it is also just what the regulated US market needed as Pennsylvania has risen to keystone status in the regulated market. The passage of online poker in Pennsylvania very well may result in a flurry of new states entering the regulated market and bring the US closer to the what online poker was pre-Black Friday.
Not best legislation…some issues w/it…but to see #iGaming cross the finish line in PA after years of hardwork and research feels good!— Bill Thomas (@billkdr) October 26, 2017
When Will Games Be Available
Before we jump ahead of ourselves, let’s look at what the immediate future will hold for the Pennsylvania market. First, state regulators need to start taking applications. There’s no timeframe for when this will begin.
Once regulators start taking applications, existing casino license holders will be able to apply exclusively for 120 days. Afterwards, it is open licensing. The Gaming Control Board is required to approve or reject applications within 90 days from accepting it.
After licenses are approved, sites will then need to develop and test their sites prior to taking real money bets. The final step is bringing games online. It is unclear whether PA will launch all sites at once or go the route of Nevada and launch sites as they are ready. We expect to hear more about that in the near future.
We estimate that Pennsylvania online poker will be available in the later part of 2018. We wouldn’t be surprised to see sites launch on the one-year anniversary of the bill’s passage. One year should be ample time to fully vet operators and conduct testing to ensure games run smoothly.
Which Sites Will Offer Online Poker?
At present, we only expect three or four sites to offer online poker in Pennsylvania. The two big sites we expect to launch are WSOP.com and PokerStars PA. WSOP.com is a given since Caesars operates Harrah’s Pennsylvania. A partner is yet to be announced for PokerStars, but since H 271 is devoid a bad actor clause, we expect The Stars Group to be one of the first in line to apply for an operators license.
Next, don’t be surprised to see PartyPoker partner with a PA casino to expand their US offerings. Their successful launch in New Jersey will likely be expanded into PA, creating a viable third options for online poker players.
Initially, it is hard to image a fourth site operating in PA unless it is offered along with other iGaming offerings. Ongame, Betfair, Pala Poker and others could be potential operators but if they do offer online poker, it will be secondary to other products and will probably have an extremely small market share.
Interstate Networks Become Viable
Interstate compacts are expected from PA operators and initially we expect WSOP PA to join the interstate network that will soon include Nevada, Delaware, and New Jersey. This will not happen until at least mid-2019, but the inclusion of WSOP PA will make WSOP.com the fourth largest online poker site in the United States and the largest regulated network in America.
PokerStars PA will likely join forces with PokerStars NJ to form their own interstate network. While plans have not been announced, it is logical to assume that PokerStars will combine player pools. We also wouldn’t be surprised to see PokerStars act first in combining player pools between PA and NJ. The US PokerStars network would instantly become the 5th largest US network and rival WSOP.com for the fourth spot.
Something not really considered is a potential combining of player pools between PartyPoker NJ and PartyPoker PA should the site offer online poker in Pennsylvania. Should PartyPoker operate in PA, combining player pools would be vital for their operations. While the site will not have the same numbers as the WSOP network or the US PokerStars network, it will still be a viable legal and regulated option for players in PA and NJ.
The Regulated US Market Continues to Expand
Now that Pennsylvania has regulated iGaming, expect several other states to follow suit. West Virginia lawmaker Shaun Fluharty has already spoken out stating that the state must pass legislation quickly or risk falling behind other states.
That’s a sentiment that you will begin hearing much more frequently, especially from states in the Northeastern United States. With Delaware, New Jersey and Pennsylvania all now offering regulated online poker, states in that region of the country are on notice and will certainly look to take action.
POLL: Now that Pennsylvania has passed HB 271, which state will be the next to regulate online poker?— Lance Bradley (@Lance_Bradley) October 26, 2017
New York, New Hampshire, and Massachusetts have already examined online gambling in the past two years and it is entirely possible they make a push to regulate iGaming in 2018. We’d put New York at 80% to pass iGaming with Massachusetts about 60%. West Virginia we only put at 50% as there’s yet to be a significant rallying cry for online poker legislation in the state.
New Hampshire legalized online lottery sales this summer and presently has a shell bill under consideration. However, we don’t expect serious discussion about iGaming until next year. This is another state we give a 50% chance to pass iGaming.
Michigan and Illinois is a pair of states that should be on next year’s watch list. They are both still in play in 2017 but with time running out, one should expect them both to make a strong push towards regulation in 2018. Both states look to be considering both iGaming and DFS regulation as part of a combo package, which bodes well for their chances.
We give Michigan the better odds for passing iGaming next year as they seem more serious in discussions. We put Michigan at 75% with Illinois at about 55%. Should a combo bill in Illinois start gaining significant traction, we will up those odd to match Michigan.
Finally, there’s California. The state that should have been the fourth state to pass online poker legislation is now not even in the discussion because of ongoing fighting between parties. The passage of Pennsylvania online poker legislation will certainly reignite the discussion in California but until parties can come to some type of consensus about bad actors, this bill will not move forward.
One of two things have to happen in California. Either lawmakers will have to bend to the demand so Indian Tribes regarding bad actors or PokerStars has to withdraw their interest. As long as PokerStars has a reasonable and viable interest in operating in California, the bad actor debate will not die down. Should they withdraw or their coalition collapse, then the matter will move forward.
Even if California restarts the conversation, we put their passing iPoker at about 15%. Should one of the two above scenarios happen, those odds jump to 90% or better as there will be no significant roadblocks left to pass a bill.
Our prediction is that two states will regulate online poker in 2018. At the moment we predict those states to be New York and Michigan. This prediction could change depending on how certain circumstances play out over the next 3-6 months. Regardless, the regulation of online poker in Pennsylvania will inject new life into the regulated US market and begin a new wave of regulation that should allow the market to enjoy increased expansion over the next five years.