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Regulation of iGaming Gains Momentum in Pennsylvania

PennsylvaniaOnline poker and gambling legislation is getting a closer look by Pennsylvania lawmakers due to the state’s budget shortfall.

A deficit reportedly in the ballpark of $2 billion coupled with a stalemate over 100 days on ways to balance the budget have pushed igaming regulation to the forefront as a possible solution. The Pennsylvania House Gaming Oversight Committee is set to meet on October 27 and indications are that committee members may vote on whether to approve an igaming bill proposed earlier this year.

That sit-down scheduled for next week is entitled a “Joint Public Hearing on Exploring the Potential of Online Lottery/Gaming in Pennsylvania” and will include the House Finance Committee. A day earlier on the 26th, the Gaming Oversight Committee will examine gambling expansion in the form of slot machines at Keystone State airports.

Also on that committee’s agenda for next month is to take a look at “Fantasy Sports & Sports Betting.” The legality of Daily Fantasy Sports (DFS) has become a hot topic as of late following possible improprieties by an employee of DraftKings who was called into question for perhaps using inside information to win large sums of money at a rival site.

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iGaming Hearing

Should a vote take place and igaming legalization find favor among the committee members on the 27th, we can anticipate a full House vote to follow in the near future. Observers have suggested that all signs point to the committee having the required number of ‘aye’ votes due to both the budget deficit and the appointment of several new faces on the House Gaming Oversight Committee who are known to lean toward the pro-online gambling camp.

A number of Pennsylvania legislators are believed to be more inclined to pursuing the raising of revenue from online poker and gambling rather than increasing taxes. While a tax increase is seemingly always considered by lawmakers to make up for an unbalanced budget, it never comes as welcome news to citizens faced with shouldering the burden.

iGaming Proposal

The Internet gambling bill that the joint committees will analyze next week would regulate online poker and casino games. Operators of the sites would be tied to the 12 casinos currently in operation in Pennsylvania.

Those casinos are presently taxed at a rate of 14% on their table game offerings and 55% on slot machines. We can expect similar tax rates for the Internet games hosted.

Expectations are that online gambling could generate more than $120 million in revenue in the first year of operation, with a portion of that collected via licensing fees of $5 million. Annual revenue totals are anticipated to increase in later years, with many hopeful of online poker liquidity sharing agreements with other regulated states such as Nevada and New Jersey.

An igaming hearing over the summer in Pennsylvania pointed to a 9-12 month period before poker and gambling sites could launch following the approval of regulation. But with that large deficit looming, perhaps the time frame could be shortened in order to raise the much needed revenue quicker. We will likely know more following next week’s joint hearing.

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