Pennsylvania Receives First Sports Betting Application

Penn National, which operates the Hollywood Casino Penn National Race Course in Grantville, submitted a 107-page application for a Pennsylvania sports betting certificate on Friday, August 17. In the process, the company also became the first applicant for legally licensed sports wagering in the state since the Pennsylvania Gaming Control Board (PGCB) began accepting applications on May 31.

License Conditions

Penn National will be required to hand over a one-time fee of $10 million assuming it’s approved for a sports betting license, after which it will have to pay state and local taxes amounting to 36 percent of gross sports revenue. The firm will be allowed to run both a brick-and-mortar and online sportsbook, although the internet-based sports wagering part will have to be conducted through a single “skin.” This means that Penn National won’t be able to create multiple websites with different branding to appeal to various market segments.

According to rules in effect in the state, firms must submit their applications at least 90 days before they intend to open their sportsbook operations. This would put Penn National’s sports betting launch date in the middle of November. However, in the paperwork it submitted, the organization claimed that it will be ready to start taking bets on September 30. The PGCB can waive the 90-day requirement and grant early approval if it wishes to, but there are thus far no indications that it will take this step. Therefore, it will likely be well into the middle of the NFL season, which begins September 6, before Penn begins accepting sports wagers from its customers.

Even without a fixed day known for its first bet, however, Penn National’s application marks a milestone in the history of gambling in Pennsylvania, as well as a major development for sports betting across the United States.

Partnership With William Hill

Penn National is partnering with British bookmaker William Hill for its sports betting endeavors. This enterprise has decades of experience not just with its international online sportsbook website but also with running thousands of “High Street” betting shops in the United Kingdom and Ireland.

Through its U.S.A.-facing division, William Hill US, the company also has an extensive presence in the States. It’s the largest sportsbook operator in Nevada with dozens of physical locations and a well-rounded mobile app. It also runs the recently-opened sportsbooks at Monmouth Park Racetrack and Ocean Casino Resort in New Jersey.
In a statement, Penn National’s VP of Marketing Fred Lipkin said:

“Our plan is to locate our sports book in a newly renovated simulcast theater area at Hollywood Casino and the operations will managed by William Hill US, the largest sports betting operator in the United States. Operations are expected to begin later this fall upon final approval by the Pennsylvania Gaming Control Board.”

PA Sports Betting Background

In October 2017, Pennsylvania enacted into law a comprehensive gambling expansion bill. While the legislation did call for more brick-and-mortar gambling, its main focus was online gaming. Casino table games, slots and poker were included. So was sports betting, both live and online, but this portion of the bill was suspended because of the federal prohibition on this form of betting.

That changed in May with the U.S. Supreme Court striking down the federal ban on new state-licensed sports betting in its Murphy v. NCAA decision. The PGCB hastened to adopt new rules for this activity, and it opened the license application process at the end of the month. Each of Pennsylvania’s 13 casino operators has the right to apply for a sports betting license.

Why No Other Takers?

The online gaming landscape is complex, and there are any number of reasons that could be preventing other corporations from pursuing Pennsylvania sports betting, from the fear of too much competition to difficulties in negotiating with software suppliers. However, one element appears to be most relevant in dissuading would-be sportsbook operators: high taxes and fees.

You see, the Quaker State’s 36% tax rate on gross gaming revenue is much more than in other jurisdictions with sports betting. Nevada’s tax on sports gaming revenue, for instance, is just 6.75%, while taxes on sportsbooks in New Jersey start at 8.5% for land-based betting and rise to 13% for online bookies. A federal excise tax of about 5% is added on top of all these state taxes, so the effective total tax rate on Pennsylvania sportsbook gross revenue is a whopping 41%. The upfront licensing fee of $10 million is also much greater in Pennsylvania than in competing jurisdictions.

A Few Companies Willing to Take the Plunge

Despite the costs of doing business in the regulated Pennsylvania sportsbetting economy, there are a couple of other entities that have expressed their intention to start up sportsbooks in the state. In July, Parx Casino in Bensalem revealed that it had signed an agreement with gaming software house GAN to eventually bring sports betting to the casino’s patrons. In August, Mount Airy Casino in Pocono announced a deal with The Stars Group to achieve similar ends.

Nevertheless, these two enterprises have yet to submit their applications for PA sports betting, perhaps because they both wish to prioritize their other online gaming sites, which they have already completed the application process for. Because it will be virtually impossible to begin to offer betting on sports by the start of 2018’s NFL season, they may be waiting untill 2019 to get their sportsbooks all set up.

Full Speed Ahead for Penn National

Pennsylvania is only one of the states in which Penn National, in conjunction with William Hill US, is deploying new sportsbooks. On Friday, August 17, its Mississippi properties Hollywood Casino Gulf Coast and Boomtown Casino in Biloxi began accepting sporting wagers, while Penn National has also signaled its intention to open sportsbooks at three more of its Mississippi locations by the end of the month. In addition, Hollywood Casino Charles Town in West Virginia is set to debut a new sportsbook at the beginning of September. Needless to say, with more than 30 gaming and racing facilities spread across 15 states, Penn National is well positioned to take advantage of the current boom in state-licensed sports betting.