Pennsylvania Is Closer Than Ever To Pulling The Trigger On Regulated Online Gambling

After making tremendous progress on online gambling over the course of 2015, iGaming legalization and regulation has been out of sight and out of mind in the Pennsylvania Legislature over the course of 2016.

However, State Representative John Payne has dutifully kept the bill, HB 649, active, and capable of being acted upon at a moment’s notice.

It appears that moment could be now.

From the beginning, Rep. Payne has indicated that his online gambling bill, HB 649, would be used to help close the state’s pension deficit.

Payne firmly believes if the revenue from HB 649 – which has since morphed into a more comprehensive gaming reform bill – is not used to close the pension shortfall, the legislature will be forced to raise taxes at some point down the road, something he and his colleagues are loathe to do.

This may be Payne’s plan for the bill, but other lawmakers seem intent on using the revenue generated by HB 649 (a number Payne puts in the $300 million – $400 million range) to help hash out a budget agreement between the legislature and Governor Tom Wolf.

If the latest developments on this front are correct, HB 649 could get a vote in the Pennsylvania House of Representatives as soon as today, and both sides might get their wish, as it now appears the legislature is trying to tie all of these things together.

HB 649 and pension reform linked to budget

On Monday, rumors of HB 649 receiving a floor vote began.

Pennsylvania could act on iGaming as early as tomorrow! PLEASE make your voice heard in support ASAP! https://t.co/vgPSn8Xpkh

— Poker Alliance (@ppapoker) May 23, 2016

By the end of the day, the rumors had become far more detailed.

In the afternoon, Rep. Payne’s office confirmed that a vote could happen as soon as today (Tuesday) and that it would be a vote by the full House, not a committee vote.

In the evening, local reporting linked both HB 649 and pension reform to the state budget:

“The House’s voting calendar, always subject to change, says lawmakers are scheduled to take up a bill changing the state pension system for new hires. Another bill on the docket would legalize fantasy sports and online gambling while putting slot machines in airports.”

This development would link online gambling revenue to pension reform, and at the same time roll both into the folds of the budget. It’s a classic kill two birds with one stone approach.

DFS is the glue that binds

Also of note is the inclusion of DFS.

A theory I’ve put forward in the past is that the inaction on HB 649 can be explained away quite easily. The reason HB 649 has sat untouched for the past several months has to do with DFS, and more specifically, Pennsylvania’s desire to include DFS legalization and regulation in HB 649, or as a companion measure to the gaming reform bill.

However, the legislature was waiting for a DFS report by the Pennsylvania Gaming Control Board before it acted on potential DFS legislation. That report was introduced last week, and like clockwork, HB 649, online gambling, and DFS have all risen from the dead.

Potential complications

Like most things, when viewed from 30,000 feet, the gaming reforms being considered have been generally well-received. But when you get to the specifics, problems arise.

Chief among the issues is a controversial part of HB 649 that would expand the presence of VLT’s (slot machines) in the state, as the bill allows for designated off-track betting parlors and airports to add slot machines.

Unlike online gambling, which has but a singular voice of opposition (Sheldon Adelson and the Sands Bethlehem Casino), the VLT amendment has the casino industry in the state split. Most of the state’s racinos are in favor of VLT expansion at OTB parlors, while standalone casinos oppose this expansion.

Furthermore, any measure that expands gambling can always blow up at a moment’s notice, for any number of reasons:

• Last minute, poison pill amendments can be added;
• Politicians could get cold feet and fear the ramifications of expanding gambling in the state;
• Stakeholders could suddenly protest one or more aspects of the bill;
• Lawmakers might try to get a bigger piece of the pie, or divert certain revenue to their districts.

Upshot

Pennsylvania appears closer than ever to passing a bill legalizing online gambling, but until the governor’s signature is on the bill, it’s not a done deal.