The Road to Online Poker Legalization in Pennsylvania
When New Jersey and Delaware legalized online poker in 2013, some Pennsylvania lawmakers became concerned that the state’s brick-and-mortar industry would soon start falling behind. With the Keystone State fearing these neighboring states may cut into state gambling profits, lawmakers started to explore the possibility of online poker as a viable option.
Online Poker in Pennsylvania Needed to Stay Competitive
In December 2013, the Pennsylvania State Senate passed SR 273, a resolution that called for a study of future viability of online gambling in Pennsylvania. The Legislative Budget and Finance Committee (LBFC) was commissioned with conducting the study and they released their findings on May 7, 2014.
According to the 206-page report, iGaming could produce over $307 million annually in revenue with $113 million going to the state in the form of taxes. Online poker in Pennsylvania could generate up to $129 million in revenue while online casino games could generate up to $178 million in additional income.
Following the report, lawmakers worked swiftly to introduce a new bill into the state legislature. In June 2014, SB 1386 was introduced by State Senators Edwin Erickson and Bob Mensch. The bill included:
- Bringing most forms of internet gambling to Pennsylvania, including internet poker
- Prohibiting online poker sites that took bets after December 2006 via the bad actor clause
- Requirements for playing online gambling – players must be over the age of 21 and physically located state borders
- Allowing the state to entire into interstate compacts with Nevada, New Jersey, Delaware and other states that eventually legalize online poker
Unfortunately the bill failed to come to a vote and lawmakers were forced to start all over again in 2015. State Representative John Payne (R-106) emerged as online gambling’s champion in 2015. He filed HB 649 in February with the intention to regulate both online poker and casino games.
The bill is similar to SB 1386 but is devoid a bad actor clause, meaning that PokerStars would have the opportunity to apply for a license. Several hearings were held throughout the year regarding online poker and while there appeared to be plenty of support for iGaming, the bill did not appear headed to a vote.
Things began to change over the summer as the state legislature was unable to pass a budget for 2016. Rep. Payne then began to explore the possibility of adding HB 649 to next year’s budget due to the fact it could generate up to $100 million in tax and licensing revenue for the state during the first year of regulation.
Over the course of committee hearings and debate, Payne was able to convince fellow legislators to add HB 649 to a larger gambling expansion bill for the state to enhance the budget with the additional state revenue. The eventual transformation came to meld online gaming and DFS (daily fantasy sports), along with other growth avenues for state gambling entities, in the form of HB 2150. The updated bill passed through the Appropriations Committee and voted to pass in the House of Representatives on June 28. It was then immediately forwarded to the State Senate for debate and a vote.
Passage through the Senate will put the bill on Governor Tom Wolf’s desk for a final signature and approval.
With recent developments, we believe that it is likely that online poker will become regulated in Pennsylvania by Spring 2016.
Will PokerStars Be Permitted to Operate in Pennsylvania?
PokerStars may be blocked due to the bill’s bad actor clause. The bad actor clause is the result of the Unlawful Internet Gambling Enforcement Act (UIGEA). Passed in 2006, it prohibited banks from processing transactions from illegal gambling businesses. PokerStars was one of a handful of online poker sites still operating after UIGEA’s passage, and eventually indicted by the Department of Justice on April 15, 2011; known to the poker world as Black Friday.
As well, under this clause, a company purchasing assets following the passage of the UIGEA would not be allowed to offer online poker. While PokerStars is now owned by Amaya, Inc, PokerStars is considered a tainted asset and may be banned.
However, in the latest bill, HB 649, there is no mention of the bad actor clause, providing PokerStars the opportunity to to be granted a license when online poker becomes regulated in the state.
Once Online Gambling is Passed, Which Sites Will Offer Poker Online?
Any site wishing to provide online poker services in Pennsylvania must go through the complete licensing process similar to brick-and-mortar casinos. The only exception is if a casino offers a proprietary product. It is unlikely that most will go the route of setting up their own site, so we’ve put together a short list of sites you can expect to find.
Currently Caesar’s does own one casino in Pennsylvania, Harrah’s, located in Philadelphia. This makes WSOP.com a leg-up on entering the online poker market here.
If WSOP.com does open in Pennsylvania, it will most likely combine player pools with New Jersey and Delaware, making it the top site.
888’s All American Poker Network (AAPN) has the opportunity to pick up multiple contracts as there are more than 10 properties in the state it can pick up contracts with. Racinos will also find benefit with the AAPN because of the ready-made platform with a combined player pool.
888 Poker is also the only internet poker provider operating in all three states where it is currently legalized, providing a great opportunity for sharing player pools.
PartyPoker had a very successful return to the U.S. and is currently operating in New Jersey. Penn National and Mohegan Sun are currently looked at as frontrunners to pick up this internet poker provider.
Should Penn National pick up PartyPoker, this could be a precursor to a long-term multi-state partnership between the sites. Penn National operates several Hollywood Casino branded casinos in the United States.
One place where you can be sure online poker will not be offered is Sands Bethlehem. It is currently owned by Sheldon Adelson who is anti-online gambling in the U.S. He created the Coalition to Stop Internet Gambling to portray online gambling in the worst possible light in an effort to gain support. However, currently he doesn’t have the necessary support. When online gambling is legalized in Pennsylvania, the Sands will either be sold or completely opt-out of online gambling.