Pennsylvania iGaming to Generate $426M in Taxes by Y5

Pennsylvania is currently considering legalizing online gambling, and last month the PA State Rep. George Dunbar introduced his sponsored bill, HB 392, after Pennsylvania Governor Tom Wolf produced a budget in which $250 million seems to have been derived from a potential gambling expansion in the state.
In the meantime, a report has been produced by Play Pennsylvania and Robert DellaFave from Online Poker Report in which it is estimated that the Keystone State stands to make $420 million in tax revenues five years after an online gambling industry is launched. According to their forecasts, $230 million of those revenues would come in year one alone.
Unlike previous inflated estimates that were made before the US launched its first regulated online gambling market in 2013, these figures are rooted squarely in reality, with the example of New Jersey having been used as a test case. In the three complete years that the Garden State has had a regulated iGaming market, it has generated $468.5 million in revenues, and that’s despite getting off to a slow start.
Furthermore, Pennsylvania’s state population of around 12.8 million people is around a third bigger than that of New Jersey, and as was noted in the recent study:
“..the market has grown at a torrid pace, with revenue climbing from $122.9 million in 2014 to $196.7 million in 2016: a growth margin of 60.1 percent. And it hardly appears as though New Jersey has reached maturity – in December 2016, industry revenue was up 30.9 percent year-on-year.”
Key to Pennsylvania reaping the rewards from legalized online gambling is the way in which the industry is set up in terms of licensing fees and tax rates. The report subsequently states that Pennsylvania could automatically receive $126 million in upfront licensing fees, while a 20% tax rate would bring in a further $46 million in year one, rising to $426.3 million by year five. Nevertheless, the only bill that currently exists proposes a tax  rate of just 14%, raising concerns that increasing the tax level too high could have an overall deterimental impact on the state’s online casino and poker operators, who may then be forced to offer less promotions and rewards for their customers.

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