PA gaming bill moves to House, which has twice approved online gambling

PA Online Gambling Closer To Being A Done Deal After Senate Passes iGaming Bill For First Time Ever

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The Pennsylvania Senate passed a bill including the legalization and regulation of online gambling in the state for the first time ever.

The Senate passed the bill by a wide margin: 38-12. The legislation now moves to the House of Representatives, which will likely take up the legislation and amend it in June.

What’s in the PA gambling bill

The bill — H 271  — contains a number of provisions affecting casinos and gambling law in the state.

But a major piece of the puzzle is the authorization of online gambling. The authorization of PA online casinos — if the state enacts a law — would be expected to generate hundreds of millions of dollars for the state’s casinos and the state government in the coming years.

The bill also authorizes PA to conduct online lottery games and regulate daily fantasy sports, among other things. The legislation also aims to fix the local share assessment which had been struck down as unconstitutional last year. This helps funnel tax revenue from PA casinos to casino host jurisdictions,

More on the specifics of the bill here.

Senate passes online gambling with high tax rate

The bad news for online gambling proponents — and those hoping to realize the highest possible revenue for the state — is that the bill still contains high taxes and fees for casinos and operators.

Online casino revenue would be taxed at a rate of 54 percent under the bill, the same as the rate for land-based slot machines. (Online poker would be taxed at 16 percent.)

The bill was amended on Wednesday on the Senate floor, but there do not appear to be any material changes affecting iGaming. The tax rate and license fee structure ($5 million for online poker licenses, $5 million for online casino licenses) remained intact.

There are myriad possible problems with high tax rates, including:

The backstory on PA online gambling

The PA House twice passed bills with provisions legalizing PA online poker and online casinos in 2016. The state Senate had never approved a bill containing online gambling previously.

The Senate vote came after the bill quickly sprang to life on Tuesday, with online gambling and a number of other gaming provisions added in. It then passed two lop-sided committee votes in quick succession.

Legislation has been floating around the legislature for several years now, but it seems like this will be the year that the statehouse finally acts.

What will the House do with online gambling and the gaming bill?

It seems unlikely that the House will simply rubber stamp the Senate version of the bill. The House in the past has considered and approved much more reasonable tax rates for online gambling.

Will the House amend the bill to lower the tax rate? That appears likely. But how much is unknown.

There is likely a direct correlation between lowering the tax rate and deterioration of Senate support. Go too low on online gambling taxes and a majority of state senators might flip from supporting to opposing the bill.

Of course, online gambling is just one facet of the bill. The legislature seems well aware that the state needs new revenue, as it promised to provide to the budget from gaming expansions almost a year ago. Pennsylvania faces a budget shortfall reaching into the billions without new revenue sources, cuts to existing programs and/or increased taxes.

The legislature is also wary of delaying too long on a fix for tax benefiting casino hosts, which faces a soft deadline of May 26. A final bill will not be sent to the governor by then, but that variable and time concern is helping push forward the entire gaming effort.

All of that means online gambling is likely to stay in the mix. What it will look like in the final bill is still up in the air.

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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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