PA Budget Counting On Just $100 Million From Online Gambling, Sports Betting Licenses

Pennsylvania is apparently not counting on a huge initial windfall from sports betting and online gambling licenses, with the planned state budget including just $100 million from the two verticals, according to one report.

Neither gaming vertical has launched in the state yet.

The news on PA online casinos

The process of getting to a final budget in the state is usually a contentious one. But this year, it sounds like legislative Republicans and Gov. Tom Wolf might be on the same page for the budget, with an election year in play. The state’s fiscal year starts July 1, and negotiations usually go way past that date.

Anyway, why we do we care from an online gambling perspective? So far, the state has not collected any money from the industry it legalized in October of last year. Despite plans to collect licensing fees in the current fiscal year, that hasn’t happened yet.

Here’s what the AP reported on the budget:

Budget makers are also counting on more than $100 million from licenses to conduct the newly legalized online gambling and sports betting that they hope the state’s casino owners will buy at $10 million a pop.

That seems conservative…

That might seem like a fairly small number, if you recall estimates and the licensing fees for both sports betting and online gambling.

• Full online casino licenses — where a licensee can offer table games, slots and poker — cost $10 million each. There are 13 of these available — one for each of the active casinos and one planned casino in Philadelphia.
• If the full casino licenses aren’t sold out, a la carte licenses for just tables, slots or poker will be available at $4 million apiece.
• Licenses for sports betting cost $10 million each. There are also 13 of these available.

In 2017, lawmakers were counting on $200 million from online gambling alone in the current fiscal year. Almost none of that revenue has been realized.

It’s not clear if the people responsible for crafting the budget are excluding some revenue that was planned from licensing in the 2017-2018 fiscal year, even though it hasn’t been realized.

In either event, the federal sports betting ban was still on the books before New Jersey won its sports betting case in the US Supreme Court. The sports betting licenses were not factored into the 2017-2018 FY budget, and would be included in the budget for the first time this go-round. That, alone, would create $130 million in revenue if all were sold.

The state has moved ahead with PA online lottery in the interim.

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So why so low in PA?

It’s not clear if the people crafting the budget are just being conservative or if the $100 million figure has some basis in reality.

After all — if all the licenses sold out, that would create more than a quarter of a million dollars. So far, we know of no licenses that have been issued for the pricetag for either iGaming or sports betting.

Does the revenue estimate in the budget mean we can expect that the licenses won’t sell out, or go as much as half unclaimed? We’ll find out in the coming months if they do or not.