In a letter to the Pennsylvania House of Representatives, dated November 18, 2016, Pennsylvania State Senator Robert Tomlinson (R-6th District) urges his colleagues to decouple several gaming reforms from the local tax share fix the House passed this year.
Among the reforms are the legalization of online gambling and daily fantasy sports.
The seven-page letter, obtained by Online Poker Report, makes the case against each proposed reform, and when it comes to online gambling the case against is mainly a rehashing of the usual talking points.
Full contents of Tomlinson’s letter here.
Tomlinson begins by saying the “stakes are too high to get it wrong,” when it comes to online gambling, and that the “assumptions and projections offered to date are deeply flawed.”
Tomlinson doesn’t expressly come out against online gambling, instead cautioning against rushing legislation, based on three main concerns.
Tomlinson intimates that online gambling is an unknown, and therefore a risky endeavor, with the potential do serious harm to the state’s land-based casinos.
“We simply must protect and preserve the tremendous success we have already achieved,” Tomlinson writes. “We must protect them – and all of the investment they represent and all of the thousands of our constituents they employ.”
Tomlinson then dives into the long-debunked myth that online gambling cannibalizes land-based casino:
“We face the very real risk the Commonwealth will actually lose revenue as a result of the introduction of Internet gambling (at the significantly lower tax rate proposed) and the potential to siphon gaming dollars away from our bricks-and-mortar casinos.”
Tomlinson’s views are not shared by most of the casino corporations operating in Pennsylvania.
In late October, nine of the state’s 12 casinos sent state lawmakers a letter supporting online gambling legalization.
Mount Airy, Parx, and Sands were the three casinos that did not sign the letter. Of note, Parx is in Senator Tomlinson’s district.
Nor are his concerns borne out by the situation on the ground in New Jersey, where to an operator, every land-based casino views online gambling as beneficial to its land-based business.
Tomlinson tries to strengthen his case against online gambling with the argument that it will provide unfettered access to gambling, what he termed “pervasive accessibility,” thereby putting underage and problem gamblers at risk.
Interestingly, to make his case, Tomlinson points to these same issues, noting the state’s land-based casinos have struggled to curtail from happening.
When it comes to his financial concerns, Tomlinson calls the projections “outlandish,” and points to New Jersey’s failure to meet the absurd projections the state made prior to launch.
It should also be noted that the state’s projections were above even the most optimistic estimates, so, while they may have been off by a factor of 10, several analysts were only off by a factor of about two.
Furthermore, the Pennsylvania online gambling projections are based largely on the actual performance of the New Jersey market. Analysts aren’t going to make the same mistake twice, and now have legal markets to use as models.
Finally, there is a serious lie by omission in Tomlinson’s online gambling argument.
Tomlinson correctly notes online gambling revenue to the state is projected to be around $100 million in Year 1, which is way above what the market would generate in tax revenue even several years in. But what Tomlinson omits is Year 1 would produce revenue on another front: licensing fees.
The reason Year 1 revenue is projected to be $100 million has little to do with online gambling tax revenue, and everything to do with the hefty licensing fees the state will charge operators.