Pa Senate Green Lights Online Gambling Bill

Last week, the Pennsylvania Senate passed an omnibus gambling bill that covers a wide range of activities from land-based to online casinos, in addition to internet lottery games, and daily fantasy sports. The bill (H 271) had first passed two committee stages before being accepted by a margin of 38-12 in the Senate, and will now go to the House Rules Committee, before travelling onto the House of Representatives. A full House approval followed by Governor Tom Wolf signing off on the bill could subsequently have a significant impact on poker players located within Pennsylvania, as well as some of the country’s other states.
Focussing further on the online poker aspect of H 271, partnerships would be formed between brick-and-mortar casinos and online operators, who would subsequently be expected to pay a $5 million license fee, and a 16% tax rate in order to offer their products. Nevertheless, certain changes are likely to be made to the bill before it is deemed acceptable by state lawmakers, and as House Majority Leader Dave Reed explains:
“I don’t think that’s the final product at all. The $5 million license fee for peer-to-peer games isn’t going to fly because no one is going to pay $5 million just for poker, as they’d never be able to recoup that money, and I don’t know who is going to buy a non-peer-to-peer license with that tax rate.”
In the meantime, a 54% tax rate has been suggested for online slots and table games, a figure equal to that paid at the state’s brick-and-mortar casinos. However, Pennsylvania’s casino industry sets the highest tax rates in the whole of the country, with analysts predicting a similar rate for a nascent online gambling market would likely chase away any potential interested parties.
The Keystone State is currently grappling with a $1 billion budget shortfall for the rest of the fiscal year, and is facing a $2 billion deficit for next year. If eventually passed in a manageable form, online gambling is forecast to generate a revenue of $230 million in Year 1, increasing to $364 million by Year 5.