Could Pennsylvania be first to legalize iGaming?

PAULYPOKER · 02-03-17, 09:12 PM

Pennsylvania

PENNSYLVANIA
Perhaps the first domino to fall will be Pennsylvania. The new chairman of the state Senate committee in charge of gaming issues has estimated that there is enough support among lawmakers to pass a bill legalizing online gaming, daily fantasy sports and other gaming expansion measures by March.

“Sometime in March, we’ll have something done and passed in the House and Senate,” state Senator Mario Scavello told CDC Gaming Reports. “It looks like online gaming has the support to pass. We can look at other expansions.”

Pennsylvania lawmakers formally begin their new session today.
The legislative package currently being examined by the state Senate would regulate online gaming sites owned by the land-based licensees, and includes expansion measures beyond iGaming and DFS such as slot machines or tablet gaming at airports and off-track betting parlors, as well as a new provision for a revenue tax to benefit local host communities to replace the original provision declared unconstitutional by the state Supreme Court in September.

Lawmakers have asked the Supreme Court for a 120-day extension of the deadline given to replace the host community tax, which the high court ruled was in violation of the uniformity clause of the state constitution. The court gave the legislature a January 26 deadline to replace the fee, struck down because the provision—2 percent of revenues or a minimum of $10 million—imposed a disproportionate tax on smaller casinos.
Changes are likely to be made in the current Senate legislation, sponsored by minority leader Jay Costa. Many lawmakers view the tax rate envisioned by the bill—25 percent on iGaming and DFS revenue, plus a licensing fees of $10 million for iGaming and $2.5 million for DFS—as excessive, even for the big DFS companies. Moreover, the expansion measures such as slots at airports are still opposed by many, and the fact they were attached to an emergency bill replacing the host fee was the main reason that bill never came to a vote during the November lame-duck session of the State Assembly.

However, it appears the iGaming and DFS portions of the bill have enough support, notwithstanding the taxes and fees, which are likely to be amended. “I think it’ a natural progression of gaming in Pennsylvania,” said Costa, according to the CDC report. “To some degree, both (iGaming and DFS) are already present, particularly fantasy sports. What we’re doing is regulating it. I think the people of Pennsylvania believe this is something that’s appropriate right now.”

The state budget passed for the 2016-17 fiscal year, which began July 1, counts on $100 million in projected revenue from online gaming. Costa has estimated his bill would generate $137 million this fiscal year in licensing fees alone.

Those rates would need to be reconciled with whatever new bill is passed by the state House. The House passed a bill last year that included much lower taxes and fees—16 percent for iGaming and 12 percent for DFS. Senators also are expected to revisit provisions of a separate Senate bill sponsored last year by Senator Kim Ward, which would remove the $10 access fee charged to patrons of the state’s two small resort casinos and target casino revenue for economic development in counties without casinos.