Long-awaited action on the legalization of online gambling in Pennsylvania was finally taken by state lawmakers. The Senate passed on Wednesday H 271 by a considerable margin. The legislative piece will now be considered in the House of Representatives.
The legislation calls for a sweeping reform of Pennsylvania’s gambling industry, including the legalization of online casino games and poker, online lottery sales, and daily fantasy sports.
Online gambling has been discussed as an important topic in the state Legislature for several years now. Pennsylvania is in a big, if not desperate, need for additional revenue sources and according to some lawmakers, iGaming may be one such source.
Last year, the House approved a similar legislative effort not once, but twice. Although it reached the Senate, the state’s upper legislative house never voted on it. This is why the Wednesday positive vote may be described as a big, very big, achievement in Pennsylvania’s iGaming legalization push.
However, online gambling proponents should not get too euphoric as H 271 in its current form calls for the implementation of a 54% tax on revenue from online slot and table games and a 16% one on online poker. While the poker tax may be considered a reasonable one, the one for casino games is so high that if imposed, it may hurt the profitability of the state’s online gambling market.
Very few operators would agree to enter a newly regulated market with such a high tax rate and without any guarantee that they would yield any satisfactory results from that same market.
Under H 271, there will be 12 online casino games licenses and 12 online poker ones available, the exact number of land-based casinos currently operating in the state. Aside from the annual gaming revenue tax, each interested operator will also have to pay a license fee of $5 million for both casino games and for poker. Operators that want to offer both casino games and poker will thus have to pay a $10-million license fee.
House lawmakers will now have to approve the amendments made by the Senate in order for the bill to be able to move forward. However, the House has proposed a much lower online gambling tax in previous cases, so it is not likely that it will be very happy with the 54% rate. In other words, the legislative piece will probably undergo further amendments that will then need to be approved by the Senate. The Senate may in turn not be very happy with any lower tax and may eventually withdraw its overall support for the legalization of online gambling.
H 271 in Brief
Apart from the legalization of online casino games and online poker, the proposed bill would allow for daily fantasy sports contests to be held in the state as well as for the provision of online lottery games. It also contains provisions that would authorize tablet gambling options at select airports and would solve permanently a casino host tax dispute dating from last year.
