Online Gambling Regulation Still An Open Issue In PA, But Maybe Not For Long

Pennsylvania Remains The Best Candidate For Online Gambling Expansion

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The Pennsylvania Legislature is currently sitting on a comprehensive plan to reform gaming laws in the state.

Despite its scope, the bill is fairly noncontroversial, and the biggest and most impactful reform in the bill, HB 649, is the legalization of online gaming.

Even though the bill has sat untouched – and gone relatively unmentioned for several months – the state is still the most likely candidate to pass a law legalizing online gaming in 2016, and it should have at least two cracks at it.

This column will lay out how Pennsylvania’s online gambling and gaming reform bill can get passed this year. But first, let’s recap how the state managed to get to the precipice of online gambling legalization.

How Pennsylvania got to this point

Online gambling has been on Pennsylvania’s radar for several years, but the process towards the legalization of online gaming in Pennsylvania only began in earnest in early 2015, when Representative John Payne introduced HB 649.

Under HB 649, online gambling would be legalized and regulated in the Keystone State with licenses going to the state’s existing land-based casinos.

After dozens of hearings on online gambling and other gaming topics in both the Pennsylvania House and Senate, HB 649 later morphed into an omnibus gaming reform bill.

In addition to its centerpiece of online gambling, the new and improved HB 649 also included several other provisions, ranging from structural changes (for a one-time fee) to Category 3 license holders, to the addition of slot machines/VGT’s in secured areas of the state’s international airports and at qualifying off-track-betting parlors, also for a one-time fee and a cut of the revenue.

HB 649 in its current form could generate hundreds of millions of dollars in tax revenue for the state, so it was unsurprising when the measure got linked to the state’s stalled budget talks last fall. Despite being hinted at as a potential compromise, HB 649 was eventually shelved when it came to budget talks, as the revenue it would create was already spoken for.

Yes, HB 649 was designed to help close a deficit, but not in the budget.

It’s all about the pension

HB 649’s revenue was meant to fix a budget deficit in the state’s pension program.

And the original plan hasn’t changed, according to Representative Payne, the architect of HB 649, who told in December of 2015, “[Gaming] was like plan 1,000,” for the state budget.

Payne went on to say:

“I was never given instructions by the leadership to hurry up and get this done so we would have it for June’s budget. We always planned on using any revenue from gaming for the structural deficit in our pension; that’s still the plan.”

Payne further commented that anyone considering using the gaming reform bill in the budget would then have to vote for tax increases to fix the pension deficit, and as Payne said, raising taxes is unlikely to happen in an election year.

HB 649’s most likely path forward in Pennsylvania is as a standalone bill with the revenue generated earmarked for the state’s pension program, but it’s not its only path.

The budget could be a contingency plan for HB 649

Even though the legislature and the governor have yet to pass a budget for 2015/2016, in just a few short months they’ll have to start working on the state’s 2016/2017 budget, which is due on July 1, 2016.

If the gaming reform package isn’t used to fix the state’s pension issues, it will likely be revisited during budget negotiations, and this time, it will probably receive serious consideration, as the pension deficit will have either already been solved by some other means, or for whatever reason, gaming will be seen as the wrong structural fix, leaving its potential available for the state budget.

2016 could be the state’s last shot

It’s also important to note that it’s unclear where Pennsylvania will stand on online gambling if a bill isn’t passed in 2016.

Reason being, Representative John Payne has announced his retirement, as has his Democratic co-chair on the Gaming Oversight Committee, Nick Kotick, and there is no guarantee that their replacements will be fans of online gambling, considering Payne took over for a decidedly anti-online gambling GO Committee chairperson, Tina Pickett, in 2015.

This unknown element could lead to added urgency to get HB 649 passed this year.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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