Penn National Gaming Will Offer Sports Betting In MS This Week
Penn National Gaming, the ninth largest gambling brand in the world by revenue (and fifth largest in the US), has made their post-PASPA sports wagering plans known. On the heels of their excellent Q2 earnings call, Penn National CEO Tim Wilmott has stated in no uncertain terms that his company plans to launch their sportsbook product in at least two states by the end of 2018. In fact, Penn’s Mississippi sports betting initiative should be publicly-facing within just a few days, and their West Virginia sportsbooks should open within the next few weeks. This would bring Penn’s sports betting products in their largest markets to the forefront in time for the beginning of the lucrative NFL season, which starts in September.
In Mississippi, which is actually seeing its first sportsbooks go live today, Penn National Gaming operates 5 casino facilities. These include the Boomtown Biloxi, the Hollywood Casino Gulf Coast (Bay St. Louis), the Hollywood Casino Tunica, the 1st Jackpot Casino Tunica, and the Resorts Casino Tunica. With Penn competitor MGM opening its sportsbooks this morning at the Beau Rivage (Biloxi) and the Gold Strike Casino (Tunica), Penn National lost the race to be first out of the gate, but that hardly matters, and all indications are that the company will open their first MS sportsbook sometime within the next week or so.
In West Virginia, Penn National operates the Hollywood Casino at Charles Town Races. This venue, while not the flagship in the state when it comes to gambling in general (that distinction belongs to the ultra-exclusive Greenbrier resort), is extremely popular, and word is that on-site sports wagering at the Hollywood is going to go live on or around the first of September.
In the Penn earnings call, Wilmott also indicated the possibility of the company launching a sportsbook in Pennsylvania (where Penn National is based) by the end of the year, though the hurdles there are considerably more challenging than the regulatory compliance necessitated in MS and WV. Penn’s presence in Pennsylvania is limited to the Hollywood Casino at Penn National Race Course (Grantville), though getting geared up for sports wagering at this venue will likely cost Penn as much or more than instituting sports betting at all of its other 27 US locations combined.
Pennsylvania was one of the first states to approve sports betting legislation and legalize the practice, though it will be the last state among the so-called “first wave” to have actual sports wagering available to the public. This is because, in order to receive a sportsbook license in PA, each venue must pay a one-time $10 million fee upfront and then pay a 36% tax on all sportsbook revenue in perpetuity (which, combined with the federal sports wagering tax of roughly 5%, works out to a total tax hit of some 41% on all sports betting in the state). Even for wealthy gambling companies with favorable quarterly earnings – like Penn National Gaming – these are extremely unfavorable numbers.
For perspective, SportsBettingPennsylvania.com knows Mississippi’s cost of entry into the sports betting industry is negligible, as the state will issue sportsbook licenses to existing gambling license holders. There will be processing fees (likely in the several-thousand-dollar range), but nothing at all on the order of PA’s requirements. Additionally, MS sportsbooks will pay the state a tax of 12% on all sports betting revenue (defined as handle minus payouts).
West Virginia’s licensing fee is $100,000, renewable for the same amount every five years, and WV bookmakers will have their revenues taxed at 10%. As you can plainly see, these are far more achievable and attractive terms than what Pennsylvania is asking for, and it makes things quite difficult – from an accounting and planning perspective – for companies like Penn National Gaming to actually take the Quaker State plunge.
Still, according to the Penn National Gaming CEO, the company seems poised to bite the bullet and accept PA’s terms, possibly alleviating the requisite big hit thanks in large part to the very friendly regulations in the other states – like West Virginia and Mississippi – where the company does business.
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