There is a good news for the followers of legal US online gambling. A comprehensive gaming reform bill has been passed by the Pennsylvania Senate, house and has signed into law on October 30th 2017 by the governer! The bill includes clauses (HB 271) that would see online gambling being taxed and regulated within the state lines.
This is a definitive victory for the pro-gambling crowd in Pennsylvania and across the country! In 2018 gambling sites will start accepting players giving them a chance to win real money online in PA!
Online gambling is officially legal in Pennsylvania as of October 30th, 2017! We predict that in mid 2018, the first online casinos in PA will open, and then later in the year, online poker, daily fantasy sports, and online bingo sites will come online for real money gambling in PA!
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The next happening will take place with the legislation making its way back to the House of Representatives. There it is expected to be amended before returning to the Senate. This process should happen in the month of June.
A number of amendments could be made in the House. Some of them may relate to online gambling.
Tax rate: The tax rate is set at a tyrannical 54 percent on every non-peer-to-peer game. It is higher than the land-based rate of 16 percent on table games and 54 percent on slots. It is supposed that the House, which passed the gambling legislation in 2016, will alter the rate.
Licensing fees: The existing legislation calls for separate $5 million amount of licensing fees on both peer-to-peer (online poker) and non-peer-to-peer (online casino) games. The House may attempt to lower the price of entry or have it count against future taxes owed.
Possible non-igaming amendments
It’s also at least believable that the House will try to drive the inclusion of video gaming terminals at bars, OTBs, and truck stops as part of the legislation. It is possible that the House will either send video gaming terminals over as a standalone bill or drop it.
Then there comes the local share assessment fix, which is coupled with the gaming reforms. The fix that was devised in response to last year’s Supreme Court ruling was constitutional. Hence, it will take into account the requirement of casinos to pay an amount of $10 million a year to local governments.
At present, the LSA fix is the most pressing issue (the soft deadline is May 26). It is possible that if lawmakers strike down on the particulars of other gaming reforms soon, the House will decouple the fix from the rest of the legislation.
There is no need to say that a decoupling would not be a good look for online gambling legalization.
Obviously, if legalization of gaming reform doesn’t take place by PA by the end of the budget year (June 30), then it will be leaving the $100 million earmarked for expanded gaming in this year’s budget unfulfilled.
What will final tax rate on online gambling look like?
It’s hard to comment. Firstly, if the House lowers the tax rate on online gambling by a significant level of degree, then it will result in the flipping of some Senators from Yes to No. As a result, lose enough votes and the legislation fails to pass.
Secondly, if the rate of tax remains closer to 54 percent than 16 percent, then the industry will find it nearly not possible to thrive, particularly if the high rate of tax is paired with a sizeable and non-refundable upfront licensing fee.
To be honest, it’s uncertain that whether Pennsylvania will enjoy the same lenient rate of tax as New Jersey’s online gambling operators of 15 percent. It is a rate that we feel is optimal for both state and operators. It is likely that the two houses will meet somewhere in the middle with 30 percent on balance. Thereby, creating a difficult environment for license holders, but not impossible one.
There is no exaggeration in saying that this week in Pennsylvania casino news was a landmark one. Online gaming regulation is closer than ever before following a gambling expansion bill cleared by the Senate. The bill is now on its way to the House, but do not get too excited just yet.
Needless to say, this is certainly great progress. However, the current bill is far from ideal. We hope that the House will find a way to meet in the middle on some vital issues, but that is easier said than done.
For the time being, business decisions in the state’s casino market could result in a shift in industry support for the bill.
There are a lot of moving parts, so here is a sum up of a busy week of news. This would help you understand how much progress online gambling is making, as well as how far it still needs to go:
Busy week in Harrisburg for online gambling
Obviously, there is one story that dominated the headlines in Pennsylvania. The state Senate returned from recess and wasted little time taking action on the gambling expansion legislation.
Those who were inside the industry expected progress this week. After all, the state was days away from the court-imposed deadline in order to resolve its casino host fee problem.
Progress indeed. Here is a rundown of the week of legislation, as well as what expected to be made after the Memorial Day.
The gambling expansion bill HB 271 was passed through committee with resounding votes of 24-2. It also underwent a number of changes.
Most notably, the rate of tax for online casinos came in. Many worried the tax rates would parallel brick and mortar standards, with 54 percent of slots and 16 percent of poker and table games. Those rates would be a hurdle for online casinos to succeed.
It turned out that the rates were even worse than expected. The table games were slated at the rate of 54 percent, instead of 16 percent. The taxes, combined with hefty fees on multiple licenses, made it effectively impossible to run a profitable online gambling site for some people.
MGM/Sands sale fail throws a wrench in online gambling progress
Both MGM Resorts and Sands Corporation never confirmed the $1.3 billion sales of Sands Bethlehem Casino, but many sources within the state gave confirmation that it was happening.
Not anymore though.
The sale allegedly fell through this week. There is no definitive reason as to why MGM is backing off the sale, but there is plenty of speculation.
The local media speculates somewhat in HB 271 gave MGM cold feet though. It could be something to do with host fee negotiations, but the idea MGM does not want online gambling in the state does not make much sense.
Either way, it definitely sounds like the apparently done deal is no more.
This is an interesting development for the legislation. The question is, with Sands remaining in the state, will it become a vocal opponent of the measure like Parx Casino. If so, the top two casinos in the state would oppose the crux of the bill. It would make the road to regulation much bumpier.