The history of Pennsylvania online casino and poker legislation is replete with failed bills, but legalization appears to finally be within reach in 2017.
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PA Online Gambling Legislation Updates:
- 9/29/2017: According to Gambling Compliance Research Director Chris Krafcik, a compromise is in the works on the Video Gaming Terminal issue, one of the main remaining points of contention as the House and Senate work toward a budget compromise that would in all likelihood include iGaming legalization.
- 6/9/2017: House Passes iGaming bill, Markedly Different From Senate Version
- 5/24/2017: Pennsylvania State Senate PASSES online gambling bill
All signs point to the passage of legislation in 2017 that would finally bring comprehensive online gaming to the Keystone State, culminating what has been a four-year journey.
Pennsylvania Gambling History Traces Back Over a Decade
Pennsylvania’s gaming history traces back a bit further, as slots were legalized in the state in 2004. Commercial casinos were first licensed in 2006, and table games followed in 2010. Presently, Pennsylvania is the second largest casino market in the country, trailing only Nevada in gross gaming revenue.
Representative Tina Davis (D) of District 141 pioneered the earliest official effort to legalize online gaming in the state back in April 2013 with the introduction of House Bill 1235 (HB 1235). The provisions in HB 1235 enabled existing casinos and slot machine license holders to apply for supplemental licenses that would have allowed them to set up online operations. Licensees would have been subject to a $5 million non-refundable authorization fee and would have paid a 28 percent tax on revenue from internet gaming.
HB 1235 would have authorized all manner of “table games, slot machine or any other game the Pennsylvania Gaming Control Board deems suitable for play on the computer.” Games of chance the likes of bingo and keno would have been the only exceptions.
HB 1235 made it as far as the House Gaming and Oversight Committee before stalling. Reportedly, concerns about the possible detrimental effects of gaming expansion – as well as a high degree of uncertainty at the time about how successful New Jersey’s then-nascent online gambling industry would be – led to what amounted to a tabling of the bill for the balance of the 2013-14 legislative session.
2015 Brings Revival of PA Online Casino Legislative Efforts
With the state facing increasing budget issues, 2015 saw the revival of the online casino and poker topic, with both House (HB 649) and Senate (SB 900) bills being introduced. The latter proposed a particularly onerous 54 percent tax rate that was slated to be the highest in the world for regulated commercial online gambling.
HB 649 was co-sponsored by Representative John Payne (R) and his Democrat co-chair Nick Kotick, who was the new chair of the Gaming and Oversight Committee at the time, and set the minimum age requirement for players at 21. The bill called for a 14 percent state tax, plus a 2 percent local assessment fee, on gross online-gaming revenues. A one-time $5 million licensing fee for operators was also established, along with a $1 million fee for what were termed “significant vendors”.
SB 900, sponsored by Senators Kim Ward, Robert Tomlinson, Elder Vogel and Joseph Scarnati, was never able to gain true traction due to the aforementioned excessive tax rate. Other provisions in the bill included a “permit fee” of $10 million that would cover an initial five-year period, and a $1 million renewal fee thereafter. SB 900 also provided the Pennsylvania Gaming Control Board with the authority to determine which games were acceptable to offer.
In addition to these two main bills, there were two additional put forth in the House and one other proposal in the Senate:
- Representative Nick Miccarelli’s HB 695, which sought to solely legalize online poker, called for a licensing fee of $5 million per operator, and taxed all interactive gross gaming revenue at 14 percent;
- Representative Tina Davis second go-around on a gaming bill, HB 920, which called for the state’s Gaming Control Board to regulate all manner of online gaming, set an “authorization fee” at $5 million per operator, sought to “establish a reasonable tax rate that takes into account overhead and cost of operation for the casinos”, and directed that all proceeds from online gaming would be split between the Property Tax Relief Fund and the State Lottery Fund;
- Senator Sean Wiley’s comprehensive proposal that designated the cost for a license at $500,000, set the tax rate at 36 percent, mandated that all online poker rooms would be operated by the state’s land-based facilities, and created a Casino Reinvestment Grant Fund that would receive all proceeds above $10 million annually in order to effectuate a school property tax freeze for the state’s senior citizens.
HB 649, after undergoing some facelifts courtesy of numerous amendments over time, made it the furthest. However, it ultimately was not passed during the 2015 session.
Pennsylvania Online Casino Bill Came Close in 2016
Two House-sponsored bills, HB 1887 and HB 2150, dominated a large share of the online gaming legalization debate in 2016. HB 1887 twice passed the House, with the second occasion having come later in the year after some amendments, including a temporary local tax share fix, were added.
Meanwhile, HB 2150 was a comprehensive gaming reform bill that additionally sought to regulate daily fantasy sports, authorize mobile gaming tablets at airports, and making the aforementioned temporary tax share fix permanent. The bill called for an $8 million license fee for Pennsylvania online casinos and $2 million fee for “significant vendors.”
Although there was palpable optimism late in the year that HB 1887 would be the subject of a vote in the Senate, it ultimately stalled as well.
Renewed Optimism for Legal Pennsylvania Online Casinos
The new calendar year brings renewed hope that legalization of online gaming in Pennsylvania will finally become reality.
State Senator Jay Costa of Pittsburgh, who is the chamber’s Democratic leader, kick-started the wave of optimism when he authored a memo regarding his intentions to present a legalization bill early in the Legislative session. The memo, which was posted the day before legislators took their oath of office, called for, among other things, allowing all forms of casino gambling online, regulating daily fantasy sports (DFS), and launching a five-year test of tablet gaming for travelers at the Philadelphia and Pittsburgh airports.
As per the memo, Pennsylvania would stand to generate $137 million in revenue from online gambling for the state’s 2016-17 budget solely from licensing fees. Under the bill, the internet gaming license that would be required and only made available to the state’s 12 large casinos and racinos would carry a cost of $10 million.
The bill also includes an array of other licensing/start-up fees, including $5 million each for internet gaming vendors, an airport tablet gaming fee in Philadelphia and Pittsburgh of $2.5 million apiece, and a $2.5 million license fee for DFS operators.
The memo also details that taxes on revenue from online gaming and DFS would be 25 percent, a significant reduction from the current 54 percent tax on slot revenue and 16 percent tax on table game revenue in the state’s land-based casinos, but a notable bump up from HB 1887’s online tax rate of 16 percent and DFS operator rate of 12 percent. Costa’s proposal would allow all casino games, including slots and table games, to be available online, although Internet gaming would be prohibited on casino property because of the difference in tax rates.
His proposal also would authorize iGaming tablets at the Philadelphia and Pittsburgh airports for a five-year pilot period and permit online lottery games.
Meanwhile, over in the House, Republican senators Kim Ward and Mario Scavello reportedly will work with other Republican leaders in the Senate on putting together a co-sponsorship memo on a comprehensive gaming bill that may also legalize ancillary slot facilities and allow gambling for travelers in the state’s airports.