The vote comes after weeks of mounting optimism among online gambling industry stakeholders.
That optimism reached a peak last week after one of the key barriers to passage – authorization of video gaming terminals (VGTs) – was successfully decoupled from the legislative attempt to regulate online casino and poker games.
The inclusion of VGTs in any online gambling bill was widely regarded as a poison pill, as Pennsylvania’s land-based casinos – the primary advocate for online gambling – made it clear that VGT authorization was an absolute non-starter.
The momentum garnered by HB 2150 on the House side certainly augurs well for the fate of online gambling in the Senate.
But passage is far from assured.
In the past, we’ve seen powers in the Senate offer visions of regulated online gambling that clash in significant ways with HB 2150. And as recently as a year ago, key voices in the Senate held material doubts about regulating online gambling.
Should the bill clear the Senate, it would then head to the desk of Gov. Tom Wolf.
Wolf has perpetually occupied something of a middle ground on gambling expansion in general, and online gambling specifically. But Wolf has generally left room for supporting online regulation if it serves the greater purpose of mending Pennsylvania’s budgetary woes.
His latest comments on the subject came via a response to the Poker Players Alliance:
— Chris Krafcik (@CKrafcik) June 27, 2016
2/2 … such discussion "must be part of a larger revenue plan to help solve the state’s deficit."
— Chris Krafcik (@CKrafcik) June 27, 2016
HB 2150 appears to be positioned as a funding source within the House budget plan.
Broadly speaking, Pennsylvania would authorize both poker and casino games for regulated online play in the current version of HB 2150.
In terms of what that will mean in practical terms, much of the specific slate of available game types will be left up to the Pennsylvania Gaming Control Board (PGCB).
There’s little reason to suspect that the game selection at launch will closely mirror the available options in New Jersey’s market, especially given the substantial overlap between the two states when it comes to operators and suppliers.
There are a number of ways things could play out if a bill is passed this summer.
New Jersey took about eight months from bill passage to launch date. That was considered an incredibly rapid timetable.
But Pennsylvania will not be starting from the same terra incognito that New Jersey was working from. With the experiences of Delaware, Nevada and New Jersey to draw from, Pennsylvania could chart an even faster course to launch.
The range recently provided by PGCB head Kevin O’Toole: 9 to 12 months following enactment of the authorizing law. That would put the launch in early-to-mid 2017.
In any case, it seems highly unlikely that Pennsylvania will be offering online poker and casino in 2016.
The predictions for the size of Pennsylvania’s online gambling market vary – not as dramatically as pre-launch estimates for New Jersey, but there’s still a broad delta between the high and the low:
|Source||Econsult||Academicon||Eilers Research||Simple NJ model||Penn National||OPR|
|Poker Year 1||$77||$45||$38.9||$42.7||n/a||$42.5|
|Casino Year 1||$107||n/a||$125.7||$128.2||n/a||$121|
|Total Year 1||$184||n/a||$164.6||n/a||$250||$165|
Our estimates call for Pennsylvania to take in roughly $90 to $120mm in upfront licensing fees from online gambling.
If HB 2150 passes in current form, the state would also receive 16% of the gross gaming revenue generated by online gambling.
Based on New Jersey’s experience, one would expect Pennsylvania to realize roughly $35 – $45mm annually in additional tax revenue in the early years on the market.
These estimates are roughly echoed in a fiscal note attached to the bill.
This is an open question. The bill allows for such agreements, but Pennsylvania is only one side of the equation. The state would also need other markets to partner with.
Currently, Nevada and Delaware have a functioning system for sharing poker liquidity.
New Jersey has yet to join that network or propose one of its own, but NJ regulators have referred to conversations around the topic with regulators from other jurisdictions – including the UK.
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