PA has adopted a protectionist philosophy for online casino

Lessons For New PA Online Casinos, Part 5: Foster Competition

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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 the final installment of the series, Online Poker Report will lay out the case for an open, competitive market.

Competition is good

When New Jersey legalized online gambling way back in 2013 it had two main goals in mind:

  • Maximize revenue from the new vertical.
  • Bolster the Atlantic City casino industry.

The former was accomplished by industry-friendly licensing fees and tax rates; the latter by limiting online gambling licenses to land-based Atlantic City casinos.

But that didn’t mean New Jersey was closing the door on outside operators or eliminating competition.

Yes, only an Atlantic City casino could be the main license holder, but outside entities are capable of forming partnerships with Atlantic City casinos, through which they can launch branded online casinos and poker rooms (known as skins) in the state of New Jersey.

The number of partnerships an online gambling license holder could enter into isn’t unlimited. Per the Division of Gaming Enforcement regulations, each online gambling license holder can offer up to five distinct online gambling brands.

That had several interesting effects.

  • The land-based casinos would get a cut of the revenue from each of their sub-brands.
  • As a first-mover state, the presence of additional, competing brands helped blanket the market with online gaming advertising and raise consumer awareness about the new legal market.
  • More brands meant more competition, which meant more marketing and product innovation.

The end result is a thriving (and still growing) market, with New Jersey’s land-based casinos at the top, and numerous sub-brands supplementing that revenue.

There are presently 19 unique brands operating under the across seven land-based casinos’ licenses:

So far, Pennsylvania has done the opposite

Pennsylvania has taken a different, more protectionist tack.

Pennsylvania will allow skins, but unlike New Jersey, there will be a number of restrictions that make Pennsylvania less attractive to outside operators than New Jersey.

Skins are second-class citizens

First, skins must visibly identify the land-based casino they are affiliated with on their website and in marketing. In practice that means instead of PokerStars PA the site would be identify as PokerStars PA Valley Forge, or some other amalgamation.

Second, skins will also have to use a sub-domain from the main license holder. Precisely how that will be implemented is still a little unclear, but the best guess is something along the lines of

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Uncertainty about master accounts

There is some confusion on how account creation will be handled. Regulations mention a single master account that would be used for all skins operating on the same platform. Again, how that will be implemented is unclear.

In its explanatory package, the PGCB said:

“In other words, a player in this Commonwealth may establish ONE non-transferrable interactive gaming account with an interactive gaming certificate holder, or in the case where an interactive gaming certificate holder employs multiple interactive gaming licensed operators, the player may establish no more than ONE interactive gaming account with EACH operator.

The player may establish the account with either the interactive gaming certificate holder or interactive gaming operator so long as the account information is ultimately visible and centralized with the interactive gaming certificate holder.”

Coupled with the high tax rate and licensing costs, the restrictions and uncertainty are going to tamp down interest in the market. That means fewer skins and less competition and innovation.

Photo by Lorie Shaull used under

- 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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