Pennsylvania’s New Law Makes Gambling Bigger, But The Concept Could Be Better

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Pennsylvania’s new gambling expansion law is already paying dividends. However, questions concerning just how good it will ultimately be for the local gambling industry remain.

Allowing PA casino operators to run online casino and online poker sites is making the most headlines. However, the law authorizes a number of other gambling expansion initiatives in the state, including:

  • Online lottery sales
  • Video gambling terminals (VGTs) at truck stops
  • Tablet gambling in airports
  • 10 satellite casinos

The law also removed a provision forcing patrons to use other amenities at casino resorts before they could gamble. This law ultimately forced Valley Forge Casino Resort and Mount Airy Casino Resort to charge a fee for customers who simply came there to play slots, poker, or table games.

The ink was barely dry on Pennsylvania Gov. Tom Wolf‘s signature on the bill Monday when Valley Forge Casino paid a $1 million fee to the state to ensure they wouldn’t have to do that anymore.

The casino resort quickly changed the language on its website as well, claiming it is now open to the public at no cost.

The state coffers got stuffed. At least one casino resort was finally free and all smiles. However, not everyone was happy.

Not all PA casino players are happy

Penn National Gaming is the PA-based casino company that operates the Hollywood Casino at Penn National Race Course. It has been critical of several aspects of the gambling expansion. In particular, Penn Gaming officials say the authorization of satellite casinos is going to hurt its bottom line.

Other opponents of the legislation have been heard complaining it was rushed through the legislature. It certainly passed quickly once it hit the floor. However, those paying attention know most of the gambling expansion measure contained in the bill had been previously debated for months.

Regradless, even some who stand behind most of what the bill contains think it may need a second look.

Chris Grove is a gambling industry strategist. He oversees trade publications and affiliate market websites connected to regulated online gambling in the US, including this one. As a result, Grove has a vested interest in seeing Pennsylvania adopt online gambling laws and regulations. However, even he thinks the legislation that passed could be improved.

According to a Grove-penned white paper recently released by PlayPennsylvania, the state will likely collect $120 million in upfront license fees. It also stands to collect hundreds of millions of dollars more in tax revenue from legalized and regulated online gambling. However, it’s far from perfect.

“Pennsylvania’s unique structure makes it difficult to forecast revenues with precision, but the successes in other states suggest that online gambling will be a significant and reliable revenue driver for years to come,” Grove said.

Tough tax rates may prove prohibitive

However, Grove also said bloated tax rates may prove prohibitive to the growth of online gambling in the state.

“Pennsylvania’s high tax rate will force operators to cut back on marketing and promotion, and could dissuade some consumers from leaving black market sites,” he said. “It is certainly possible that lawmakers will need to revisit the tax rate in order to ensure a market that works best for both the commonwealth and the casino industry that has contributed billions to Pennsylvania’s coffers.”

The online gambling tax rates were heavily debated in the lead up to the legislation passing. PA lawmakers ultimately settled on the very same tax rates brick and mortar casinos in the state are already paying. This includes:

  • 54 percent for online slots
  • 16 percent for online poker
  • 16 percent for online table games

What we’ll see now is how many PA casinos jump at the chance to run online gambling under these rates. And ultimately, if they are at all sustainable.

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Martin Derbyshire

About

Martin Derbyshire has more than ten years of experience reporting on the poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.