Pennsylvania’s journey toward online gaming legalization took another major step forward Wednesday, as the state’s Senate passed a modified version of H 271 by a sizable 38-12 margin, just one day after the bill passed two key Senate committees. The bill now returns to the House of Representatives for some possible last-minute changes and a subsequent vote.
Tax Rates and Licensing Fees Still High
While the bill’s passage is considered positive news by most iGaming advocates, some of the actual nuts and bolts of the legislation put a damper on the overall picture for online gaming in the state.
H 271 imposes a 54 percent tax rate on online slots and table games, the same as what’s paid by the state’s brick-and-mortar establishments. Land-based casinos, however, have other avenues of revenue that help offset those costs, such as restaurants, hotel rooms and spa treatments.
The tax rate, more than triple that of nearby New Jersey, has left industry folks highly skeptical that the state will get many applicants for the 12 online casino licenses proposed in the bill.
Revenue from online poker, a smaller market overall, would be taxed at a rate of 16 percent. Online casino and online poker license fees remain at $5 million each in the Senate’s final version of the bill and are not expected to be modified before a final vote in the House.
Bill Tackles More than Online Casinos and Poker
The omnibus bill also aims to regulate daily fantasy sports (DFS) in Pennsylvania, allow for the state’s lottery to offer online ticket sales and instant lottery games, and authorize Pennsylvania’s six international airports, including Harrisburg and two regional airports with at least 50,000 passengers each year, to install interactive online gaming devices.
Just as important, the bill would address the state’s long-standing conundrum involving local share payments that casinos pay to their host communities. Pennsylvania’s legislature has been under a state Supreme Court-imposed deadline of May 26 for amending the current structure, which was declared a violation of a constitutional provision barring unequal tax rates.
DFS contests will be limited to residents 18 years of age and older, and operators will pay a 12 percent tax rate on adjusted revenues. Revenue from airport online gaming devices will be taxed at a rate of 34 percent.
The Senate Appropriations Committee estimates that combined revenue from H 271 would total $109-$147 million annually for the Keystone State.
If the amended bill passes the House and is subsequently signed into law by Governor Tom Wolf, its provisions would take effect within 60 days from that date.