Pennsylvania Poised To Legalize Online Gambling And Daily Fantasy Sports

[toc]The watch is officially on for Pennsylvania to join New Jersey with legal online poker and gambling.

What’s going on in PA for online gambling

The Pennsylvania House of Representatives recently voted to amend a bill that legalized daily fantasy sports to include other gaming reforms — including the legalization of online gambling. One that happened, all eyes were on the House Appropriations Committee.

Because of the newly added amendments, the bill was sent back to Appropriations for the committee’s approval. Day after day, the committee failed to vote on HB 2150, despite it being listed on its daily agenda.

On Tuesday morning’s agenda, the bill was nowhere to be found, and for good reason. The Appropriations Committee had passed the bill late Monday night, sending it back to the House floor for consideration. And without any fanfare, the House passed the bill 114-85 on Tuesday afternoon.

The bill’s next stop will be the Pennsylvania Senate.

How it will be received in the Senate is unclear, but one legislative source told OPR their understanding is that HB 2150 is an important part of the state budget.

Many of the same operators in the NJ online gambling market — like Caesars and Harrah’s — are expected to operate in PA, if it is legalized.

What’s in the PA gambling bill

HB 2150 is much more than a bill legalizing online gambling and daily fantasy sports. HB 2150 is a comprehensive gaming reform bill that is expected to generate more than $200 million in revenue in revenue next year (mainly through one-time licensing fees and payments), and even more down the road.

HB 2150 achieves the following:

  • The legalization of online gambling.
  • The legalization of daily fantasy sports.
  • Allows Category 1 racinos to add slot machines at up to four select off-track betting parlors for a one-time fee.
  • Addition of slot machines (through a partner land-based casino) behind secured areas of international airports.
  • Allows Category 3 resort casinos to increase the maximum number of slot machines and table games on premises for a one-time fee.
  • Allows Category 3 resort casinos to eliminate the need for membership fees for a one-time fee.

What’s not in the bill

What HB 2150 doesn’t contain is as important as what it does.

The omnibus amendment added to the bill wasn’t the only gaming reform package the House considered. The House had several heated debates centered around a single issue: the possible legalization of video gaming terminals at the state’s bars, clubs and truck stops.

When the dust settled (it took four separate votes on two different days), it was the gambling reform package without VGTs, the version the Senate has voiced little opposition to, that passed.

This was a critical development, as VGTs were seen as the proverbial poison pill in the Senate.

Senate concerns linger

VGTs may have been the No. 1 issue that would have stalled online gambling, but multiple sources indicate that some members of the Pennsylvania Senate still have revenue and consumer protection concerns. And as is always the case, there will be lawmakers who harbor anti-gambling sentiments.

Last year the Senate considered online gambling legalization, but the discussion was derailed when some lawmakers pushed for an untenable tax rate of 54 percent. This flawed tax rate wasn’t being pushed to raise additional revenue, but more as a misguided attempt to protect the state’s land-based casinos.

The House gambling bill the Senate will be considering calls for a tax rate of 14 percent, with an additional 2 percent going to local coffers.

This tax rate disparity has been less of an issue in 2016, but this debate was never seen to a conclusion last year. It could make a return appearance if and when HB 2150 is brought up in the Senate.

If the bill is amended in the Senate, it would be sent back to the House, and the process would repeat itself until the two chambers pass the same version of the bill. This could become problematic, as the Pennsylvania House of Representatives is scheduled to adjourn on June 30.

Will the governor sign it?

Governor Tom Wolf has said he is amenable to online gambling and the other reforms contained in HB 2150, but he qualified his support by saying it has to be part of a larger revenue package.

The bottom line is this: HB 2150 is an integral part of the proposed budget. The revenue these gaming reforms will generate cannot be tossed aside and replaced.

If the gaming reforms aren’t part of the budget, Pennsylvania will likely be staring down a budget impasse that will last several months.

Last year’s budget (due on June 30, 2015) wasn’t passed until the spring of 2016, causing a lot of finger pointing in the direction of Harrisburg by Pennsylvanians. It’s unlikely the state’s elected officials want to repeat last year’s historic budget stalemate in an election year.

About the Author

Steve Ruddock

Steve is a seasoned veteran of the online gambling industry, having written about it from every possible angle in his many years as a freelance gaming writer. Based in Massachusetts, Steve especially focuses on regulatory and legislative news coverage pertaining to the U.S. market.