PA Senate Blocking Online Gambling Regulation

Pennsylvania Senate Goes Rogue On Online Gambling Legislation As Regular Session Winds Down

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The situation surrounding the legalization of online gambling in Pennsylvania has been extremely fluid in recent weeks, with the pendulum swinging back and forth between positive and negative developments on a near-daily-basis.

This isn’t overly surprising.

Issue consolidation complicates the picture

By itself, online gambling would be a prickly issue, and online gambling isn’t being dealt with as a standalone issue.

The legalization of online gambling became a multifaceted problem when online gambling was rolled into a comprehensive gaming reform bill that also included other land-based reforms, and later added daily fantasy sports legalization to boot.

More recent extenuating circumstances – the Pennsylvania Supreme Court ruling part of the tax language contained in the 2004 Gaming Act unconstitutional – further complicated the situation.

Support for initiative remains

But as complicated as the situation might be (and it continues to grow more and more complicated), legalizing and regulating has a lot of support.

Here’s where online gambling was at heading into what was supposed to be the last legislative session day before the elections (the House and Senate have decided to add a session day and reconvened at 9 AM October 27th):

  • The House of Representatives passed the gaming reform bill and has been urging the Senate to pass it.
  • The House and the Senate earmarked some $100 million in projected revenue from legalized online gambling as a funding component of the state budget.
  • Governor Wolf’s office has called on the Senate to pass the online gambling bill.
  • 11 of the state’s 12 casinos have supported online gambling to some extent throughout the process.

Nine casinos send a letter to Harrisburg

On Wednesday, nine Pennsylvania casinos sent a joint letter to the legislature urging them to pass online gambling in conjunction with the local tax share fix.

The casinos suggestion would expand the number of communities that receive a portion of the local tax monies without raising the casinos’ tax burden – an option I suggested earlier this week.

The nine signatories of the letter were:

  1. Hollywood Casino at Penn National Race Course
  2. Harrah’s Philadelphia Casino and Racetrack Rivers Casino
  3. Valley Forge Casino Resort
  4. Rivers Casino
  5. Sugar House Casino
  6. Lady Luck Casino Nemacolin
  7. Presque Isle Downs & Casino
  8. Mohegan Sun Pocono
  9. The Meadows Racetrack and Casino

Mount Airy, Parx, and Sands were the three casinos that did not sign the letter.

On the issue of the local tax share fix, the letter reads:

“Beyond the restoration of the local share assessments, we understand that other communities that do not host casino licensees are desirous of receiving local share payments and that a figure of between $2.5million and $5 million has been discussed. We further understand that you are considering additional taxes/assessments against the casino industry to pay for this in lieu of pursuing a revenue enhancing activity that could be used as a “pay for”. We want to make it abundantly clear that such additional taxes/assessments are entirely unfair and would have devastating impacts on our businesses, our employee base (which would need to be reduced to deal with the additional cost), and our communities. Indeed, a tax like this several years back in Illinois led to layoffs, less capital investment, less tax revenues and less activity in communities. We urge you to reject any new tax which would be the third new tax on the industry since this summer (e.g. 2% increase in table tax and the new assessment).”

The letter goes on to clarify the nine signatory casinos’ stance when it comes to online gambling, citing misinformation floated around Harrisburg.

“We understand that some have suggested that some or all of the undersigned would rather pay a tax than have internet gaming to pay for additional local share. We want to make it abundantly clear that while we all may have differing views on internet gaming, we would all much rather accept internet gaming in lieu of any additional tax. Internet-gaming would provide a new source of funds to assist surrounding communities and it protects consumers from the existing illegal market.”

The letter also addresses another point of agreement among the nine, the removal of admission fees at Category III casinos for a one-time payment to the state.

“We do not object to the removal of the Admission fee for Cat III licenses,” the letter states.

Senators decide to go their own way

But the letter, and the House’s and Governor’s calls to action have apparently landed on deaf ears.

Yesterday the Senate added local tax share language to HB 1887, a bill originally intended to reform responsible gaming administration and enforcement policies.

The tax language added to HB 1887 encompasses 20 pages, and is not for the faint of heart, as it references Category 1, 2, and 3 casinos and designates host and surrounding counties and communities from Class 1-4.

The amendment is not without issues.

First, it would only temporarily fix the local tax share issue as it would begin on January 1, 2017 and sunset in May 2017. In addition to kicking the can down the road on the tax issue, the Senate also punted on online gambling or any other gaming reforms.

Furthermore, it does little to change the amount of tax casinos would pay (and upon first reading I’m not sure it fixes what the Pennsylvania Supreme Court found unconstitutional, as there still appears to be a $10 million floor casinos must pay regardless of revenue), but it does widen the distribution range to counties and communities that were previously excluded from receiving local tax share funds.

What happens next?

The situation is extremely fluid at the moment, but I’ve heard from several sources the House intends to amend the bill and send it back to the Senate.

This could happen today, as both chambers added an extra session day, but more than likely this will be broached during the lame duck session after the November 8 elections.

- 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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