Decisions about PA online casinos and poker have not been made rationally

Lessons For New PA Online Casinos, Part 2: Separate Fact From Fiction

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Pennsylvania is gearing up to become the second major state with legalized online casino gaming. With a launch potentially months away, Online Poker Report has identified five lessons the Keystone State can take from the Garden State’s experience.

In this installment of the series, we’ll look at the public and behind the scenes lobbying that has derailed and degraded online gambling legislation.

When it comes to advice, trust but verify

After debating online gambling for several years, Pennsylvania has received plenty of “advice,” both solicited and unsolicited. In addition to the ‘here’s why online gambling is bad’ crowd, Pennsylvania lawmakers and regulators have also been receiving input from the state’s multiple, diverse stakeholders.

Most of the policy advice from these groups is self-serving policy ideas disguised as best practices. Unfortunately, Pennsylvania has been buying it hook, line and sinker.

Pennsylvania should have followed New Jersey’s lead

Pennsylvania may have passed an online gambling law, but it’s a far cry from progressivism seen in New Jersey.

At the behest of a couple land-based casino interests, Pennsylvania has saddled its online industry with:

  • Exorbitant tax rates and licensing fees.
  • Random restrictions, such as an on-property online gambling prohibition.
  • Unnecessary and burdensome restrictions on skins that will depress competition and innovation.

Fortunately, other “advice” like requiring in-person registration wasn’t adopted.

The above policies were sold to the legislature and regulators as a defense against online cannibalizing land-based revenue. What they really are is a defense against smaller casinos.

All these policies do is prevent Pennsylvania from maximizing online casino revenue.

Instead of creating a robust, thriving industry where all 12 casinos have the same reach, online gambling has been kneecapped. It’s a form of self-sabotage designed to maintain the current casino hierarchy in the state, and the state’s major casino operators have played the game masterfully.

PA should have copied the NJ model

As one of the first online gambling states, New Jersey really only dealt with the should we or shouldn’t we groups. There were really only two sides, and you were either for it or against it. No one was for it under specific conditions.

The how was largely left up to lawmakers and regulators — with some input — and not the state’s casino interests.

And because all of New Jersey’s casinos are in the same city, there weren’t dozens of lawmakers all going to bat for the casino located in or near their district.

That doesn’t mean New Jersey lawmakers didn’t have to listen to and debate things like cannibalization, tax and licensing rates, and the casino in every pocket crowd. But at the end of the day, New Jersey was able to separate the signal from the noise and pass a pretty progressive online gambling law.

New Jersey online gambling has been thriving thanks to its:

  • Semi-open market that fosters competition and innovation while propping up Atlantic City’s land-based casinos.
  • Sensible tax rate and licensing fees.
  • Its de facto position of letting its capable regulators do their job and approve new games and operators.

Final thoughts

Up to this point, Pennsylvania has decided to ignore the clearly marked path New Jersey blazed. Instead, it’s been listening to the devil on its other shoulder when it comes to policy and the result has been a parade of poor decisions, leaving the state in strange, uncharted territory.

Pennsylvania has effectively put restrictor plates on its online casino industry.

That’s great news for the state’s thriving casinos, but it’s not so good for smaller casinos, Pennsylvania residents or the state’s coffers.

- 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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