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Jonathan ZaunMarch 15, 2018

Pennsylvania’s Online Gambling Market Should Launch in 2018 as License Applications Begin in April

In comments made to the Pennsylvania House of Representatives, the state’s top gaming regulator said online gambling operators can begin the license application process next month.

Kevin O’Toole, who serves as executive director of the Pennsylvania Gaming Control Board (PGCB), delivered the news during a routine House budget hearing.

According to local news outlet CBS Philly, O’Toole told lawmakers that the PGCB is currently drafting iGaming regulations in compliance with House Bill 271, the comprehensive gambling expansion package which was signed into law late last year. O’Toole also provided a tentative timeline for the first round of license applications:

“And that will probably be mid-April.

So that first 90-day period will be mid-April and will go through mid-July.”

A press release issued this Wednesday confirmed that timeline by establishing April 16 as the first day for license applications to be submitted.

The 90-day window O’Toole mentioned refers to the timeframe wherein Pennsylvania’s 13 land-based casino and slot machine parlors can take advantage of prioritized application.

Under the terms of H-271, iGaming licenses will be divided into three product groups – slots, table games, and poker – coming at a cost of $4 million each. But within the opening 90-day window, applicants can pay $10 million for a special license encompassing all three iGaming verticals. Thereafter, between day 91 through 120 of the process, Pennsylvania casinos can apply for individual product licenses at the original fee of $4 million per.

Should any of the 39 licenses available remain unclaimed after the first 120 days of the process, operators licensed by the three other iGaming-legal jurisdictions in the U.S. – Nevada, New Jersey, and Delaware – would then be eligible to apply.

When the PCGB’s own 90-day window to review applications is factored in, Pennsylvania’s first licensed iGaming sites could be approved for launch by this winter.

The divide between in-state licensees and those with no preexisting presence in Pennsylvania has already sparked an ongoing debate over iGaming “skins” – or the frontend branding used by different websites operated on the same network.

In a letter dated January 30, Bryan Schroeder – the vice president of regulatory affairs and chief compliance officer for Greenwood Gaming and Entertainment – wrote to the PCGB on behalf of Parx Casino.

The Greenwood-owned venue located in Bensalem has developed into a regional poker powerhouse since opening in 2009, and per Schroeder’s letter, Parx believes licensed operators should only be permitted to offer a single skin:

“The Board should establish a limitation on the number of interactive gaming skins an Interactive Gaming Certificate Holder (“Certificate Holder”) may operate, and that limitation should be one skin per Certificate Holder, with the different categories of interactive games the Certificate Holder is authorized to offer on that single skin limited to the different categories of interactive games approved in its Interactive Gaming Certificate(s).”

As argued by Schroeder and Parx, allowing multiple skins per license holder – a system modelled after the successful iGaming industry established in neighboring New Jersey – nullifies the PCGB’s authority by giving operators the power to sublicense:

“The contrary scenario … creates a sublicensing regime that essentially transfers licensing authority from the PGCB to the Certificate Holder.”

In a response sent to the PGCB, 888 Holdings – the only iGaming operator licensed in Nevada, New Jersey, and Delaware – deployed chief executive officer Itai Frieberger to argue in favor of the multiple-skin model:

“Since multiple brands will be associated with a single licensee (as opposed to allowing the online operators with those brands to make an independent offering to players in the state), a diversified offering backed by additional marketing spend and associated with reputable brands will increase overall profit for licensees and the overall size of the internet gaming market.”

Under licenses held by Caesars Interactive Entertainment, the 888 platform is used to power the WSOP.com online poker in Nevada and New Jersey, 888Poker and 888Casino skins in New Jersey, and Delaware’s three state-operated online casinos.

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