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Pennsylvania Lawmakers Defend Slow Pace of Sportsbook Approvals and High Tax Rates

Despite passage of a sports betting regulation bill last October, Pennsylvania has fallen off the pace when it comes to launching the legalized sportsbook industry.

The U.S. Supreme Court repealed the federal ban on sportsbooks outside of Nevada on May 14, and since then, four states have gone live with legal sportsbooks – Delaware, New Jersey, Mississippi, and West Virginia.

Those states sought to open bet shops in time for the college and NFL football seasons, which kicked off two weeks ago, but Pennsylvania appears to be content with a slower approach.

Regulator in No Rush to Approve Books Ahead of NFL Season

After the Pennsylvania Gaming Control Board (PGCB) finalized the state’s policies on sports betting in August – including a $10 million licensing fee and a 36 percent tax on revenue – Penn National Gaming and Greenwood Gaming & Entertainment (GGE) became the first operators to apply.

Penn National Gaming is the parent company of Hollywood Casino chain, which maintains a property at the Penn National Race Course in Grantwood.

GGE is the parent company of Parx Casino, a poker hotspot located in Bensalem.

As part of its licensing application for Parx Casino, GGE asked the PCGB to make its decision in time for the upcoming football seasons:

“GGE respectfully urges the Board to review this Petition and grant its Certificate expeditiously so as to enable GGE to commence sports wagering in a timeframe that enables it to capture as much of the popular fall sports season and events as possible.”

But given the 90-day review period mandated by last year’s gambling expansion law, the PCGB must wait until late November at the earliest to approve Parx Casino’s proposed sportsbook.

In an interview with the Pittsburgh Post-Gazette, PGCB spokesperson Doug Harbach explained why the agency is taking its time to review those applications:

“Our goal is to make sure this is done right, and [that] we protect the public’s interest, and when we think a casino or two is prepared to open a sports book, then we’ll sign off on it.

Yes, there are games to be wagered on in week one of the NFL season, but also in week four and week eight, and when this is launched I’m pretty sure there will be great interest by Pennsylvanians in wanting to participate in this type of gaming.”

On July 30, Parx Casino announced a partnership with the London-based gaming firm GAN, which would run backend operations for the property’s planned sportsbook.

Lawmaker Points to Pair of License Applications to Justify High Tax

Pennsylvania’s gambling expansion law regulated online casinos and poker as well, and of the 13 brick and mortar casino operators in the state, nine have applied for iGaming licenses.

Penn National Gaming and GGE are the only two applicants for a sports betting license, however, and most industry experts attribute that low turnout to the state’s high 36 percent tax rate.

The sportsbook tax in neighboring New Jersey stands at just 8.5 percent for brick and mortar wagers, and 13 percent on bets placed online. The rate in Nevada is even lower at 6.75 percent, while recently regulated markets in West Virginia (10 percent) and Mississippi (12 percent) are also much lower.

State representative Robert Matzie (D-16) – sponsor of the legislation that paved the way for regulated sports betting in the Keystone State – initially proposed an 18 percent tax rate. He later determined that sports wagers were more akin to slot machines, which are taxed at 54 percent, so Matzie simply doubled his original figure.

Matzie told the Pittsburgh Post-Gazette that any applications, even limited to two of the state’ 13 operators, proves that 36 percent taxation isn’t scaring operators away:

“I thought all along it was a non-starter to open anything up [in terms of the tax rate], and I think this pretty much puts the nail in the coffin.

Since the dominoes have begun to fall with the two filings, I think it’s inevitable the rest will also.”