The PA House Says ‘Yes’ To Online Gambling Bill, But Changes Threaten Future In Senate

The PA House of Representatives passed a massive gaming package that included the legalization of online gambling and daily fantasy sports late in the evening.

Two weeks after the state Senate passed a gaming bill — with iGaming included — the House has unveiled its counter-proposal, making several amendments to H 271.

Hours after the amended bill was approved by the House Rules Committee, it was passed by the entire House of Representatives. The vote was 102-89. The bill heads back to the Senate for concurrence.

There are only a few points of contention between the two pieces of legislation. Unfortunately, two of the most critical components involve provisions where the House and Senate diverge drastically from one another.

The biggest stumbling block for the bill is the reintroduction of provisions allowing video gaming terminals at private taverns.

Where the bills agree

The two bills contain many of the same elements.

Both bills will:

• Fix the local share tax issue;
• Legalize and regulate online gambling;
• Legalize and regulate daily fantasy sports;
• Authorize the Pennsylvania lottery to sell products online;
• Authorize tablet gaming at certain Pennsylvania airports; and
• Remove the Category 3 amenity requirement for a one-time fee.

Schism on online gambling tax rate

One of the biggest points of disagreement between the House and Senate has to do with online gambling licensing fees and tax rates.

The House bill imposes an across-the-board 16 percent tax rate on online gambling. It also requires a single up-front licensing fee of $8 million.

The Senate’s gaming package calls for an unwieldy 54 percent tax rate on online slots and casino table games and a 16 percent tax rate on online poker. The Senate also split the gaming licenses into two, with a casino license costing $5 million and a poker license also costing $5 million.

Video gaming terminals back in play

In addition to a radically different online gambling tax rate, the House added a very controversial amendment: the authorization of VGT’s, or video gaming terminals, which are more or less slot machines.

Under the House bill, up to five VGT’s would be allowed in most places with a liquor license. Up to 10 would be allowed at truck stops and off-track betting parlors.

VGT’s barely passed the House, and will face even more opposition in the Senate. In fact, VGT’s could be a complete non-starter that could kill the entire bill. They’re opposed by powerful casino interests.

8/ Senate GOP leadership spox declined to comment on whether caucus will sign off on VGTs, which Sens. Tomlinson, Costa oppose.

— Chris Krafcik (@CKrafcik) June 7, 2017

12/ If House sends a with-VGTs v. of HB 271 to Sen. 2nite, hearing part of motivation was to get out ahead of Adelson-funded VGT opp. group.

— Chris Krafcik (@CKrafcik) June 7, 2017

Where the bills slightly differ

As expected with legislation of this size and scope, there are also some minor differences between the House and Senate versions.

One example is the daily fantasy sports language doesn’t quite line up. The House sets the tax rate at 19 percent, whereas the Senate sets the DFS tax rate at 12 percent.

It should be relatively painless for the two legislative bodies to find common ground on most of these “easy fix” issues.

Finding common ground on two of the big ticket items in the legislation will be a much heavier lift.

2/ There are massive gaps between what the Senate sent the House and what the House is about to send back. There are also serious …

— Chris Grove (@OPReport) June 8, 2017

3/ … disagreements among pols and stakeholders on key elements (esp VGTs, online gambling in general, and online tax rate specifically) …

— Chris Grove (@OPReport) June 8, 2017

What’s next for PA online gambling?

It’s not entirely clear what the Senate will do with the House version of the bill, but the Senate is off until Monday.

The next likely step is a conference committee, where the two legislative bodies can try to hash out their differences. That would involve members of both chambers meeting to hammer out the final content of the bill.

It seems unlikely that the Senate will approve of VGTs, which have been a “poison pill” in the past. The two chambers also need to find middle ground on the online gambling tax rate.

Online gambling took a step forward on Wednesday, but it is still in a precarious position because of everything else that appears in the omnibus gaming bill.