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Pennsylvania House Passes iGaming Bill to Set Stage for Final Negotiations with Senate

Exactly two weeks after the Pennsylvania Senate voted to pass a comprehensive gambling bill, one which would regulate online casino games, slots, poker, and daily fantasy sports (DFS), the state’s House has done the same.

In a vote held on June 7, the full House voted 102-89 in favor of passing H-271 – an omnibus legislation package which expands Pennsylvania’s land-based casino industry, while creating a new regulatory framework for legal online gambling.

The next stage in the legislative process sends the bill back to the Senate, which passed its own version of H-271 by a 38-12 margin on May 24. But despite an apparent agreeance between the two bodies on the issue of iGaming regulation, the version of H-271 passed by the House differs in several major ways from the Senate’s previous attempt.

The Senate’s preferred model would see annual revenue generated by online slots and table games taxed at a rate of 54 percent, with the tax dropping to 16 percent for online poker.

Under the Senate’s plan, Pennsylvania would also charge online casino operators a licensing fee of $5 million, while online poker operators would pay a secondary licensing fee of $5 million – bringing the total cost to $10 million for most major iGaming companies which connect both platforms.

The text of H-271 as passed by the House modifies this taxation scheme – which is much higher than the 17.5 percent rate successfully implemented by neighboring New Jersey – to institute a flat 16 percent tax on all online gambling revenue. The dual licensing fee plan has also been modified, with the House seeking a one-time payment of $8 million to cover online casino and/or poker operators.

The partisan breakdown for the House vote saw 24 Democrats break ranks to join 78 Republicans voting for H-271, while 38 GOP lawmakers added their names to the list of 53 Democrats standing in opposition.

As reported by PennLive, Representative Dave Reed (R-Indiana County) – who serves as the House Majority Leader – discussed the higher revenue projections attached to the adjusted H-271:

“This is building upon the Senate proposal and will actually enhance revenue a little further.”

Initial revenue projections tabbed the potential increase from H-271’s passage at between $109 million and $147 million, under the Senate’s higher tax rate. But with many major iGaming operators already balking at the 54 percent tax, going on record to say they’ll simply sit out rather than join Pennsylvania’s new market, Reed’s prediction of “enhanced revenue” is based on attracting the industry’s most established operators to the state.

According to the House’s own revenue projections, the new version of H-271 would generate between $250 million and $300 million in new revenue for the state.

That increase of more than double takes into account the most controversial aspect of the House’s amended bill, which allows for casino gaming via video gaming terminals (VGTs) to be installed within non-gaming locations like airports and cafés.

Even so, Reed told PennLive that the House is actively seeking to avoid the sort of inflated revenue forecasts that have plagued states like Massachusetts and New York during similar iGaming legislation discussions:

“We want the most conservative estimate possible. We don’t want to overestimate revenues and I know that was a request of the administration and the governor’s office as well.”

Rep. Gene DiGirolamo (R-Bucks County) told PennLive that the inclusion of VGTs could be a potential deal-breaker for lawmakers who already had reservations about gambling expansion:

“This has the potential to be a disaster for our children, our families and our communities.”

Following the House vote, the Senate will now reevaluate the text of H-271 – with tax rates and the VGT issue chief among the negotiating hurdles. Should the two bodies reach a compromise, the final text of H-271 would then be sent to Governor Tom Wolf to be signed into law.

For his part, Gov. Wolf has remained on the proverbial sidelines during the extended debate, offering no public statements for or against H-271.

That trend continued after the House vote, as a spokesperson for Gov. Wolf offered only a noncommittal comment on the matter:

“(The Governor) is committed to continuing to work with all four caucuses to reach consensus on a gaming proposal.”

If and when Pennsylvania pushes its iGaming legislation through into codified law, the Keystone State will become the fourth in America to legalize and regulate online gambling – joining Nevada, New Jersey, and Delaware.

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