Pennsylvania HB 801: A Forlorn Attempt To Stop Online Gambling Legislation

new PA online gambling bill criminalize
The latest plot twist in the long running legislative saga of Pennsylvania online gaming comes with the publication of HB 801 which seeks to prevent the Pennsylvania Gaming Control Board (PGCB) from creating regulations for online gambling.

Rep. Thomas Murt is the bill’s sponsor. Co-sponsors are Reps. Baker, Kauffman, Staats and Tallman.

Beyond preventing the PGCB from regulating online gambling, the bill sets out language that will make it illegal to offer online gambling:

“(d.1) Internet gambling.–No individual or entity shall solicit, invite, collect or accept cash or any other form of currency through the Internet for the purposes of wagering or betting. No individual or entity shall organize, or cause to be organized, any type of gambling event that is held over the Internet.”

New PA online gambling bill unlikely to find traction

In the context of the current debate over online gambling, the HB 801 legislation is less a proposed law than a statement of opposition. It’s a test of strength between those advocating state regulated online gambling and those who oppose it.

In the unlikely event that the bill ever comes to a vote, it would force politicians to choose sides. Politicians rarely appreciate being put on the spot over contentious issues.

Hearing moved PA online gambling debate forward

Pennsylvania SB 477 and HB 392 contain almost identical proposals to legalize daily fantasy sports, online casino, and online poker.

Last Tuesday, March 7, there was a joint committee hearing between the Senate Community, Economic & Recreational Development Committee and the House Gaming Oversight Committee on the impact of online gaming expansion in the state.

With bills for legalization submitted, and a positive committee response from the hearing, the debate on online gambling is moving forward. But then, it moved forward last year as well and no bill was passed.

At the moment there is momentum in favor of regulation, and perhaps that is why Rep. Murt and his co-sponsors felt the need to introduce their opposing bill now.

HB 801 stops short of making online gambling criminal

A notable absence from the bill was any provision to make online gambling illegal for players.

Lawmakers across the country have shied away from taking the obvious step of making online gambling an illegal activity.

Playing online poker at unregulated sites is illegal only in Nevada, New JerseyDelaware, and a few other states, including Washington.

In the rest of the US it is only providers of gambling who are subject to prohibitions, not players themselves.

This has left an untenable situation where the primary providers of online gambling in the US are unlicensed and unregulated. They are offshore companies that pay no US taxes and comply with no US laws.

And in almost the entirety of the US, it’s completely legal for players to play at these gray or black market sites. No player, even in states where there are prohibition laws, has ever been prosecuted for playing at an offshore gambling site.

The lawmakers, through the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, have criminalized the financial transactions of such providers. But almost all US players who deposit or withdraw from these sites are not breaking the law.

The upshot is that US lawmakers have managed to criminalize the activities of operators outside of US jurisdiction, while not criminalizing the activities of the players who use their services.

The end result is that most law-abiding operators have left the US market. This has left customer demand to be satisfied by less scrupulous gambling companies.

There is a lack of logic here.

State-regulated online gaming works

The experience of the three states that have legalized online gambling is powerful evidence that state regulation works.

New Jersey online gambling revenues exceed $500 million

New Jersey is the most successful regulated US market. NJ offers a model that permits both online poker and online casino games.

Gambling tax rates and license costs at levels comparable to successful regulatory regimes in the rest of the world.

New Jersey’s casinos were suffering from increased competition and in a state of decline before lawmakers authorized NJ online gambling in 2013. Since then, revenues from regulated online gambling have provided significant tax income and employment.

The latest figures from the New Jersey Division of Gaming Enforcement (DGE) show that its licensees have now broken $500 million in total revenues.

Land-based casinos benefit from online gaming

Research commissioned by the state has not shown an increase in gambling addiction and the casinos haven’t seen a cannibalization of their customer base. On the contrary, online customers are new customers, many of whom have visited a land-based casino for the first time.

Caesars’ SVP of Government Relations David Satz told the joint House and Senate hearing that 80 percent of online signups at Caesars’ online casino were not existing customers in the company’s nationwide Total Rewards database.

Testimony from the Golden Nugget supports Caesars’ experience.

Rush Street Interactive President Richard Schwartz and SugarHouse Casino General Manager Wendy Hamilton told Pennsylvania legislators that 89 percent of the players who have registered at the Golden Nugget’s online casino in New Jersey were new customers.

These players were formerly unknown to the casino.

Opponents of online gambling have lost the argument. Now they are relying on political factors unrelated to the gaming issue to try to halt the progress of legislation.

If Pennsylvania can successfully implement online gambling, the barriers to other states following suit will be a little lower. And players will no longer be subject to the uncertainty and risk that comes with playing on unregulated offshore sites.

Joss Wood

About

Joss Wood writes for a number of publications in the online gambling sphere. With a special focus on international markets, he writes for LegalSportsReport.com, OnlinePokerReport.com, and others. He also centers on sports betting, esports betting, and the emergent regulated US online gambling industry.