On November 18, the state of Pennsylvania made a decisive first step towards legalizing online gambling. House Bill 649 would legalize online poker and casino games and regulate it through the state. The bill has been passed in the House and if it becomes law, either by passing thorough legislation as a standalone bill or as an attachment to the state budget, it could mean millions of dollars’ worth of revenue going to the state of Pennsylvania.
Under HB 649, brick-and-mortar casinos would be licensed by the state to conduct online gaming and would be subject to an $8 million license fee. Significant vendors (online operators that partner with the casinos) would have to pay a $2 million licensing fee. According to Onlinpokerreport.com, it has been estimated that anywhere between 8 and 11 of the state’s 12 casinos would apply for an online gaming license, which would generate about $64-88 million in licensing fees alone. Depending on how much of the “significant vendor” fees actually end up going to the state, that number could be as high as $100 million in the first year after legalization. After taxes, total first-year revenue estimates are around $28 million.
In anticipation of the passage of HB 649, many casino/online operator partnerships have already been confirmed or speculated. Parx Casino, located in Bensalem, has already officially stated that if the bill becomes law, they will be applying for a license under a partnership with GameAccount Network (who will provide the online gaming software for Parx). Mount Airy Casino in Mount Pocono has confirmed that they will be partnering with 888 and All American Poker Network for their online software. Additionally, it is highly likely that Harrah’s Philadelphia Casino will also partner with 888, as Harrah’s is owned by Caesar’s which has an exclusive partnership with 888 in Nevada, Delaware, and New Jersey. It’s also suspected that if HB 649 Is successful, Caesar’s will push hard for interstate gaming, which would link the online gaming activities between the four states.
The one casino that we know will definitely not be applying for a license is Sands Bethlehem Casino. That casino is owned by Sheldon Adelson, who has been an opponent of online gaming since its inception. Adelson has said that he is “willing to spend whatever it takes” to put an end to online gambling, and has even created and bankrolled a powerhouse lobbying group called the Coalition to Stop Online Gambling. Adelson claims he is against online gaming because of “moral” issues, but many suspect that he feels online gaming is a threat to his profits from his brick-and-mortar casinos.
A likely positive result of HB 649’s passage could be that Pennsylvania would usher in PokerStars and PayPal without much conflict. A few months ago, PokerStars made it through the pretty stringent vetting and approval process in New Jersey. While the site won’t officially go live there until early next year, the fact that they’ve already made it through the process might make PokerStars an easier pill for Pennsylvania to swallow.
With PayPal recently starting to accept online poker payment in New Jersey, doing the same in Pennsylvania should be relatively simple, since a lot of the necessary systems are already in place. However, PayPal has been silent thus far and has not made any official comments regarding HB 649 and its role in online gaming in Pennsylvania.
So what would the passage of HB 649 mean for other states? Well, obviously states that have at least considered discussion about legalizing online gaming will have their eye on Pennsylvania. If the industry does well in its first few years, creates a good amount of revenue for the state, and encounters relatively few roadblocks, it could stimulate similar bills in other states, or at least soften the issue enough to allow discussion. The potential revenue alone might be the biggest selling point in a recovering, yet still impacted economy. Also, those casinos and operators that make it through the Pennsylvania state’s licensing system might experience a smoother licensing process in other states that adopt regulated online gaming in the future.
One state that might not be swayed as much by Pennsylvania’s actions is New York. It has a particularly vague set of laws as far as online gaming goes. While it’s not illegal per se to engage in online gaming there, it’s not technically legal either. Players walk a thin line in New York, but as evidenced by last month’s cease and desist order against FanDuel and DraftKings, the current political climate New York is not assumed to be “iGaming friendly.”