Revenue For PA Online Casinos Would Surpass $200 Million In Year One

PA Online Gambling Legalization Could Generate Nearly Half A Billion Dollars For The State In Just Over Five Years

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A new white paper about the potential of Pennsylvania online gambling indicates that it would take just over five years for the state to realize nearly half a billion dollars in tax revenue.

The state legislature is currently considering whether to include online gambling in an omnibus gaming expansion package.

Online gambling is likely to be discussed in a joint House-Senate committee hearing next week.

The white paper on PA online gambling, at a glance

Industry analyst and Online Poker Report writer Robert DellaFave compiled the analysis, which you can find here.

The top-line takeaways:

  • The analysis estimates that the legalization of online gambling in PA would generate $230 million in revenue for casinos in year one.
  • By year five, that figure will rise to more than $360 million.
  • The state will have realized more than $420 million in tax revenue after five full years of online gambling operation.

New Jersey online gambling as a guide

The New Jersey online poker and casino markets offer insight into what the PA market will look like, and how it might evolve. New Jersey, of course, legalized online gambling more than three years ago.

From the white paper:

Much of our optimism stems from the strong performance of the New Jersey online gambling market.

Although New Jersey initially underperformed its exaggerated expectations, the market has grown at a torrid pace, with revenue climbing from $122.9 million in 2014 to $196.7 million in 2016: a growth margin of 60.1 percent.

And it hardly appears as though New Jersey has reached maturity – in December 2016, industry revenue was up 30.9 percent year-on-year.

DellaFave goes on to note that NJ is not a perfect comp, and that PA has advantages its neighbor to the east did not have at launch.

What is clear: New Jersey is realizing real tax revenue as the online casino market has matured, and so will PA.

It all depends on the tax rate

A lot of the future of legal PA online gambling depends on the tax rate the state legislature agrees upon.

The percentage of iGaming revenue the state will take is far from a settled matter, as a variety of rates have been discussed over the past two years. The only current bill that exists calls for a 14 percent tax rate.

More from the analysis:

Extraordinarily high tax rates or license fees could change the narrative significantly, especially for prospective online poker operators, who may find the cost prohibitive and choose to opt out of Pennsylvania.

Online casino operators too would be forced to tighten their belts, resulting in poorer promotions, tighter games, and (perhaps) fewer operators.

No matter what happens, though, it’s clear the legalization of online gambling would be a boon to both the state and its casinos.

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- Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner. He has played poker recreationally for his entire adult life and has written about poker since 2008.
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