iGaming Bill Passes PA Senate For First Time In History

Legal Pennsylvania Sports BettingIn a monumental step for the Keystone State, a wide-ranging gambling bill that includes iGaming has passed through the Pennsylvania Senate. This marks the first time in history that a bill legalizing online gambling has advanced.

Less than 24 hours prior to its passage, the gambling bill quickly made its way through the Senate Community, Economic & Recreational Development Committee (CERD) and the Senate Appropriations Committee. On Wednesday, PA HB 271 went before the full Senate and was cleared 38-12.

A Closer Look At PA HB 271

PA HB 271 is a comprehensive gambling bill, covering nearly every type of gambling with the exception of sports and horse racing betting. Here is a brief overview of the provisions featured in the bill:

iGaming – perhaps the most groundbreaking aspect of the bill is the inclusion of regulatory measures for online gambling. All existing casinos would be given 3 months to buy licenses for online roulette, blackjack, poker, and slots. After the 90 day window, outside operators would be able to buy licenses for an initial fee of between $5 million and $10 million, plus $250,000 every five years. All online gaming comes with a 21 or older age limit.

Airport iGaming – Casinos and other licensees could enter into agreements with airports to provide iGaming kiosks. The fees for such partnerships would be between $250,000 and $5 million, depending on the size of the airport.

iLottery – The state would be able to offer lottery tickets over the internet, with an estimated $18.9 million profit to the Department of Revenue.

Fantasy Sports – Licensees in the state would be permitted to offer fantasy sports contests to patrons. The license would cost $50,000 with a 12% tax on revenues. Players must be at least 18 years old to play.

The House Responds To High Taxes On iGaming

The 12% taxes imposed on fantasy sports is reasonable, but PA HB 271 imposes an exorbitant 54% tax on land-based casinos that would offer iGaming.

The CERD Committee, which implemented this provision, reasoned that this is the same tax rate applicable to land-based casinos in PA. Chairman Mario Scavello stated that if revenues move from physical casinos to online casinos, the state would receive fewer funds if taxes were lower. He even mentioned that casinos would urge customers to use their online sites in order to evade taxes.

The bill will be heading to the House for approval, and several lawmakers have already expressed their conflicting views of the proposed rate and fee structures within the bill. In response to the sentiments given by Scavello, House Rep. George Dunbar had the following to say:

“There’s some potential for a minor amount of cannibalization, but also the potential of reaching a new, younger customer. The margins online are not nearly as lucrative as people want to believe, and it has been proven in Atlantic City how online gaming is helping their brick and mortars,” said Dunbar.

“Casinos are never going to push patrons online because there are a lot more to casinos than just gaming. Casinos want them in the building, where they can use some of the other amenities, stay in the hotel, use the restaurant, drink at the bars.”

The House has also recognized other potential pitfalls of the high tax rate, including a barrier to entry for operators and failure of the state to reach budgetary goals.

There is obvious contention between the Senate and the House but it remains unclear what actions the House will take. They will most likely amend PA HB 271 with a more favorable tax rate, however, that leads to the question of what will happen once the amended bill goes back to the Senate.

Dunbar expressed that the bill was meant to put the ball in the Senate’s court in order to gain momentum on gambling reform. In P.A., any bill that generates revenues must come from the House, but the last two gambling bills were rejected by the Senate.

“We’re a step further than we’ve ever been,” Dunbar said. “It’s not a great step, but it’s a step.”

This bill has been a success in starting the dialogue that will hopefully result in gambling expansion of sports betting for Pennsylvania.

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