Pennsylvania Proposed Online Poker Tax Rates Too High?

Pennsylvania Proposed Online Poker Tax Rates Too High?The online poker bill set to be introduced in Pennsylvania later this month has proposed a tax rate of 14% on gaming site operators.

Sen. Edwin Erickson is the author of the bill and he undercut the tax rate 1% in his ipoker proposal in comparison to the 15% rate charged on table games in Pennsylvania land-based casinos. While the lesser rate may appear to be somewhat of a bargain for gaming site operators, there are some who believe that the rate suggested by Erickson may still be too high.

At a recent online gambling hearing in Pennsylvania, a Valley Forge Casino Resort chairman testified that any tax rates over 15% would make things difficult for gaming site operators in terms of profitabilty. While Erickson’s proposal comes in under that threshold, it may be a little too close to guarantee sustainability.

New Jersey‘s online gaming scheme imposes a rate of 15%, while Nevada‘s online poker regime charges only 6.75%. In California, the tax rate proposed in a new bill drafted by a tribal coalition is only 5%. License fees must also be taken into consideration when operators analyze the bottom line and the bills in both Pennsylvania and California aim to set those fees at $5 million.

Another interesting comparison between Erickson’s proposal in Pennsylvania and the way New Jersey currently operates its igaming regime is that potential Keystone State online poker site operators will not be permitted to offer their available license opportunities as rentals to other suppliers, eGR reported. New Jersey’s scheme allows this and has used it to their advantage with regard to market share.

A recent gambling study in Pennsylvania found that revenue generated within the first year of launching Internet gambling sites may possibly reach $307 million. But the overall tone of the latest igaming hearing lends one to believe that the casinos remain reluctant to embrace the matter at this time.

While Pennsylvania has certainly been making progress toward regulating online poker with a new proposal on the way and intensive research undertaken, the prevailing “wait and see” attitude may yet win out at least in terms of the approval of regulations in 2014. Lower tax rates on operators may allow the issue to gain momentum and speed, but it is likely that lawmakers will keep the rates similar to those already imposed on land-based gaming operations.

Jacqueline Packett
Jacqueline Packett