Pennsylvania Online Gambling Expansion Bill Still Hot Topic in Legislature

The legalization of online gambling has been a hot topic in several states over the past year and is likely to be broadly discussed by legislators in 2016 as well. And it could be said that Pennsylvania is the closest to having a legalized iGaming industry than any other of those states.

Pennsylvania lawmakers have been considering the legalization of online poker and casino games in general for almost three years now. First debates started in 2013, when Rep. Tina Davis introduced an online gambling expansion bill. Although the bill was never passed, it started what would turn into prolonged discussions whether iGaming options would be good for the state and its residents.

In December 2013, the Pennsylvania Senate announced that it would commission a study on the current condition of the state’s gambling industry and “the future viability of gaming.” People with knowledge of the matter pointed out back then that the actual purpose of the study was to analyze the impact online gaming would have on Pennsylvania’s gambling industry, tax revenue, and employment at local casinos. It was concluded that the legalization of online gaming would create a major tax revenue stream for the state.

Although some efforts towards the introduction of iGaming options were made, actual discussions started early in 2015, when John Payne was appointed as Chairman of the Gaming Oversight Committee. Payne and Co-chairman Nick Kotick presented HB 649 on February 26, 2015 that called for online gaming expansion.

Mr. Payne’s proposed legislation was followed by talks and discussions, a number of hearings on the matter, and four more proposals for the legalization of iGaming within the state’s borders. Apart from HB 649, SB 900, introduced by the Senate and representing an omnibus gaming reform, was also paid a bit more attention. However, under the bill, online gambling operators were to pay a 54% tax on revenue and it was quickly abandoned.

As for Mr. Payne’s proposal, it gradually turned into the vehicle for the potential legalization of online gambling. Over the course of 2015, certain amendments were made to the bill and it changed into an omnibus gaming reform legislation.

Although HB 649 was seen by many as the resolution to Pennsylvania’s budget deficit, the proposal was not passed by the Legislature in 2015. However, many believe that this would happen this year. Mr. Payne himself has previously commented that the bill would likely be considered by the Legislature this spring and would be taken away from the state’s budget process. Thus, it would be concerned only with the potential legalization of online gambling.

However, other legislators have pointed out that gambling expansion is still considered a possible solution to the budget impasse. The most recent indication to this statement came from Rep. Steven Mentzer who said that “increased tobacco taxes, gambling expansion, increases in the personal income tax, and a sales tax increase and expansion” are among the most broadly discussed topics among lawmakers. He also noted that all of the listed is a possibility regarding funding Pennsylvania’s budget.

Here it is also important to mention that among other things, the state is also looking for ways to keep gambling revenue within its borders. This is why many believe that gambling expansion and online gaming in particular are quite urgent matters, especially given the fact that neighboring jurisdictions are expanding their own industries. For instance, New York is to have three new full-scale gambling venues by 2020 and New Jersey is pushing for the construction of two new casinos in the state’s northern part.

And the opening of new casinos in the region could possibly lead to gambling oversaturation. This, in turn, could have quite a negative effect on Pennsylvania and its casinos. And people involved in the industry believe that online casino and poker products are actually an effective method for staving off bigger losses. The concept has been in practice in New Jersey since 2013. The state introduced online gambling services to complement its land-based offering.

No matter whether independently or as part of a solution to Pennsylvania’s budget issues, Mr. Payne’s bill will likely be widely discussed in 2016. And if it is passed, the state is to become the fourth US jurisdiction where online gambling is legal, with New Jersey, Nevada, and Delaware being the other three. What is more, Pennsylvania’s land-based market is a large one. If and when it comes online, it will be one of the biggest in the country, much bigger than the once-popular gambling destination New Jersey. Last but not least, if it comes into effect, HB 649 will likely prompt other states to become a bit more aggressive in their efforts to have online gaming legalized.

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