High tax rate for PA online casinos is a concern as senators consider legislation

PA Senate Committee Announces Vote On Gaming Package; Will Online Gambling Appear?

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It looks like we are finally going to see action on online gambling in Pennsylvania.

A meeting notice sent to members of the PA Senate Community, Economic & Recreational Development Committee indicates a vote on an amended version of H 271 could take place as soon as Tuesday.

According to the memo:

“Please be advised that the Senate Community, Economic & Recreational Development (CERD) Committee will hold a voting meeting to consider House Bill 271 (Ortitay) with amendment. The meeting will take place on Tuesday, May 23, off the floor in the Rules Room. The amendment and meeting materials including a summary of the bill and amendment summary will be provided as soon as possible.”

Gaming bill puts ball in Senate’s court

H 271 originally passed the House back in April.

Unlike the comprehensive gaming packages the House has been pushing for, the bill would only authorize tablet gaming at specified airports.

However, as Rep. George Dunbar told Online Poker Report at the time, this was by design. Frustrated with the Senate’s inaction on prior bills passed by the House, the lower chamber decided to send the Senate a “clean” bill, and let the Senate fill in the blanks.

What an amended H 271 might look like

The Senate’s gaming package is expected to deal with a number of topics.

The bill will touch on everything from minor issues like Category 3 license reforms to major issues like the local share tax fix the legislature is under the gun to pass.

The amended version of the bill is also likely to include a provision legalizing and regulating online gambling in the Keystone State.

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Online gambling structure is the core issue

The big question in regards to the online gambling component is how the tax rate will be structured.

In its bills, the House has routinely called for a modest tax rate in the 14 to 16 percent range.

On the other hand, a growing faction in the Senate has been pushing for a bifurcated system with a much higher rate imposed on slot machines. The belief is the online tax rate should mirror, or more closely resemble, the rates imposed on land-based games.

As we’ve outlined many times, an online gambling tax rate in line with land-based tax rates would be less than ideal for Pennsylvania’s online gambling industry. It would lead to a loss of revenue, jobs, and opportunity.

A high tax rate would lead to the following:

If the CERD committee goes through with its planned vote, we will know if special interests or reason and logic have won out.

- 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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