Eyeing “A Large New Source Of Revenue” For Pennsylvania, Rep. Payne Introduces Online Gambling Bill

Pennsylvania’s 2015 attempt at regulating online gambling is picking up steam.

Only days after the House Gaming Oversight Committee announced a hearing on the subject in April, the chair of that committee – Rep. John Payne (R – 106) – introduced an online gambling bill.

The bill is HB649. Payne originally disclosed his intention in a co-sponsorship memoranda.

“We are currently facing a projected $2 billion budget shortfall,” said Payne in a statement.

“I think it’s important we consider all responsible options to boost revenue before we consider asking our taxpayers for more money to fill that deficit.”

Full text of bill is available here.

Bill authorizes online poker plus

HB 649 originally defined “Authorized game” as “any interactive poker game approved by the board under this chapter.”

But a “corrected” version of the bill submitted a few days later updated that definition to “any interactive game approved by the board under this chapter.”

Other details of the bill:

• Minimum age: 21.
• Eligible players: Must be able to be located within borders of state.
• Tax rate: 14% of “daily gross interactive gaming revenue, which shall be payable to the department on a weekly basis and shall be based upon gross interactive gaming revenue for the previous week.”
• Bad actors: No explicit bad actor clause constructed around UIGEA or similar cutoff date.
• License fee: $5m for operators, $1m for “significant vendors.”
• Eligible licensees: Current gaming license holders.
• Interstate player pooling: The bill anticipates such arrangements via the definition of  “Interactive gaming agreement” – “A negotiated agreement between the Commonwealth and one or more of the states or territories of the United States in which interactive gaming is legally authorized that permits persons located in the other jurisdictions to place wagers on interactive games with licensees in this Commonwealth or to permit persons located in this Commonwealth to place wagers on interactive games with licensees in the other jurisdictions, or both.”
• Affiliates: Will need a “significant vendor” license to receive rev share or utilizes certain customer lists to promote regulated online gambling in Pennsylvania.

Full text of bill is available here; read the co-sponsorship memoranda here and sign up for alerts on HB649 here.

Early test of new Caesars / PokerStars partnership

Introduction of a bill in Pennsylvania will provide the first test of the recently-minted alliance between PokerStars and Caesars.

It will be interesting to parse the public statements, testimony and positions of both companies for clues as to just how close the coordination is – and what, if any, larger relationship might be developing between Caesars and PokerStars’ owner Amaya.

To my knowledge, PokerStars has never identified a land-based partner in Pennsylvania, as opposed to New Jersey, where the company plans to operate in cooperation with Resorts.

Pennsylvania an interesting spot for Adelson

The primary counterweight to the pro-regulation advocacy of Caesars and Amaya is, of course, Sheldon Adelson (Parx head Bob Green has also sounded ambivalent notes about online gambling, but stopped short of outright opposition).

Adelson has reportedly been a driving force behind a federal bill – The Restoration of America’s Wire Act – that would ban regulated online gambling.

But Pennsylvania is arguably a trickier theatre for Adelson, whose Las Vegas Sands operates one of Pennsylvania’s most-successful land based casinos in Sands Bethlehem:

• Adelson invites blowback for the land-based casino industry if he’s too aggressively critical of online gambling regulation.
• LVS risks alienating the local market by wading into a political issue that is unlikely to resonate with its land-based customers.
• Pennsylvania is considering regulating online gambling within the context of a pressing budget shortfall. For many state lawmakers, that consideration (and the political pain of alternative means of closing the gap, e.g., taxes) may outweigh whatever Adelson can place on the other side of the scale.

It will be interesting to see how Adelson and his supporters modulate their approach in Pennsylvania, if at all. Their reactions to the bill in the coming days and approach to the upcoming hearing in April will likely provide clear indications of the strategy to come.