Pennsylvania’s Politicians Can’t Forge Clear Path to iGaming Legislation Despite Budget Gap

In the early months of 2016 progress on Pennsylvania’s prolonged iGaming debate appeared to be imminent, but as of now that momentum has stalled.

Last year, the state’s House of Representatives passed two bills to authorize online gambling, but they both died amidst stalling by the Senate. In February of this year, a pair of identical bills were put forth, with SB-477 and HB-392 both replicating the omnibus iGaming legislation that previously sailed through the House.

But while members of the House favor a 14 percent tax rate on gaming revenue – a figure which aligns closely with neighboring New Jersey’s thriving iGaming industry – several Senators have insisted on much higher taxes of between 25 and 54 percent.

Accordingly, many land-based casino operators which would ostensibly be applying for iGaming licenses have balked, stating that they won’t participate under such onerous taxation.

This standoff between the House and Senate over tax rates has threatened to derail the once promising legislative agenda in Pennsylvania – along with the state’s budgetary viability.

Governor Tom Wolf has specifically tabbed $250 million from proposed gambling expansion to fill holes in the 2017-18 budget. That infusion of cash can only be made possible through the multimillion dollar cost of interactive gaming licenses which underpin each of the previous proposals.

A third bill was introduced by Senate Minority Leader Jay Costa (D-43) on March 20, with his SB-592 co-sponsored by three of Costa’s fellow Democrats. The bill, like SB-477 and HB-392 before it, would authorize comprehensive iGaming regulation to legalize online casino games, poker, and daily fantasy sports (DFS).

Under Sen. Costa’s proposal, however, gaming revenue would be taxed at a 25 percent rate, while online lottery sales would also be legalized. Furthermore, SB-592 would raise the licensing fee for land-based casinos from $8 million to $10 million, while the fee for industry vendors such as software providers and iGaming operators would rise from $2 million to $5 million.

Further complicating matters, a fourth bill known as HB-271 was passed by the Senate Community Economic & Recreational Development (CERD) Committee in an overwhelming 13-1 vote.

HB-271 was introduced by a coalition of 10 representatives in the House, with a stated goal of legalizing tablet-based gaming at airports, but it really serves as an open slate response to the Senate’s budget-based stalling last year.

One of the bill’s sponsors, Rep. George Dunbar (R-56), recently spoke with Online Poker Report to explain the impetus for HB-271:

“We put in one thing, tablets in airports, and basically said, ‘You load it up with what you want in it. It puts the ball in their court.

We sent up the bill for them to load up along with the budget for them to figure out this is what we need to do to get this done. It’s up to them to change the budget or send the bill back to us with everything on it.”

Despite its 13-1 passage, HB-271 was immediately returned to the House CERD Committee for further budgetary tinkering.

Finally, the legislative waters were muddied once more on April 25, when Sen. Joe Scarnati (R-25) took to Twitter and suggested that cooperation from the state’s land-based casinos may not be needed at all:

“It appears that the PA Lottery could administer iGaming more efficiently than the gaming industry & still make substantial profits.”

Sen. Scarnati’s proposal has already been assailed from parties on both sides of the debate, as shifting from a casino-based to lottery-based operational model would forfeit the state’s right to charge lucrative licensing fees.