Pennsylvania Receives Nine Applications as Phase 1 Licensing Draws to Close

The Pennsylvania Gaming Control Board (PGCB) can breath a sigh of relief after receiving applications from nine of the state’s casinos requesting full online gambling licenses (table, slots, poker) priced at $10 million each. This first phase of licensing was available from April 16 to July 16 for Pennsylvania 13 casinos, but failed to attract even a single application as recently as this month.

That all changed last week after Parx Casino became the first venue to apply for an interactive gaming license after almost three months of the process being open. It was joined a few hours later by Mount Airy, and then Stadium Casino, even though the as-yet-unbuilt casino is not expected to open its doors for business until 2020.

Today, the PGCB further reported that the Pittsburgh’s Rivers Casino, the SugarHouse in Philadelphia, the Hollywood Casino in Dauphin County, Sands Casino Resort Bethlehem, Valley Forge Casino Resort, and Harrah’s Casino have also tendered application for all three gaming licenses. In fact, the only casinos not applying for licenses were Lady Luck Casino Nemacolin, Meadows Racetrack and Casino, Mohegan Sun Pocono, and Presque Isle Downs & Casino.

Parx Casino & GAN

In 2015, Parx Casino used gaming software firm GameAccount Network (GAN) to develop and launch a free-money online casino. As expected, the company will also partner with Parx to create its online gambling products, and already has experience in the US offering real-money online gambling, having worked in the New Jersey market since November 2013. This includes powering Betfair Casino, and more recently the Ocean Resort Casino, which opened for business on June 28, before launching a five day test of its online casino starting July 11th.

Nevertheless, GAN is not well known for its online poker products, and as of yet no announcement has been made concerning a poker partnership with Parx, likely indicating that online poker may not currently be a priority for the horse racing venue, as well as biggest casino complex in Pennsylvania.

Mount Airy & 888

Mount Airy partnered with European gaming supplier 888 back in 2014, with the latter already active in each of the country’s regulated US state. Up until now, however, Mount Airy and 888 have been promotional partners only, although that relationship will become fully operational once the industry is launched proper. Pennsylvania online gambling licenses allow casinos to form partnerships with a number of different operators, though, and at some stage in the future Mount Airy is expected to announce a partnership arrangement with PokerStars, as well.

Stadium Casino

As mentioned, Stadium Casino is currently under construction, with the $600 million facility expected to fill 2,000 permanent jobs once opened in 2020. Nevertheless, it would appear that it intends to be a player in Pennsylvania’s new online gambling market, too, and perhaps made an application ahead of time in order to protect itself from any future licensing price rise.

$10m License Fee No Deterrent

Applications for the PGCB’s all-inclusive gaming licenses were made just before phase one was due to end, with the second phase running until August 14 and offering individual online licenses at $4 million per game. After that, a final phase will open the application process to outside qualified parties interested in becoming a part of the industry.

While the $10 million price tag on offering all three online gambling games ultimately failed to deter applications, the next tender round my prove more challenging, especially considering the hefty 54% tax rate the state intends to impose on its online gambling market. Incidentally, this is the same rate levied on land-based operations, despite their online vertical counterparts offering fewer opportunities to earn extra revenues associated with brick-and-mortar venues.

While the Keystone State’s online poker tax is set at a slightly more reasonable rate, the vertical’s potential profits are considerably lower, presenting yet another major hurdle for the next licensing round going forward.