With no action taken on igaming by the July deadline for balancing the budget, no action is now expected until the autumn. Mark Balestra of Segev LLP looks at where legislators left off and reviews the points to be addressed once they revisit the issue.
Igaming in Pennsylvania is on hold for the moment. Supporters of HB 271 hung their hopes for the summer on the legalisation of Internet gambling under a broad plan to overcome the state’s fiscal woes.
HB 271 would establish a framework for regulating Internet-based casino games, lottery games, poker and daily fantasy sports, and is viewed by many as a badly needed source of state revenue. But with the July deadline for balancing the budget in Pennsylvania coming and going with no action taken, the igaming industry is left waiting on the sidelines for new traction.
The House and Senate have taken turns passing vastly different versions of HB 271, with the latest version passing in the House in June. The matter lay in the hands of the Senate as the budget deadly passed, and Sen. Jay Costa tweeted on 1 August that he doesn’t expect further action on igaming until the fall.
In the meantime, here is a brief review of the important points to be addressed once the legislature revisits the issue:
- VGTs – supporters in the House have insisted on the inclusion of a provision to legalise video gaming terminals (VGTs). This would be heavily opposed by the state’s casino industry, and igaming supporters in the Senate have accordingly refused to approve any such provision.
- Casino tax rates – the House wants a 16% tax on all regulated igaming, while Senators have advocated for a 16% tax on poker and 54% on slots and casino games.
- DFS tax rates – the most recent House bill calls for a 19% tax on daily fantasy sports, compared to 12% in the Senate.
- Fees – the most recent House bill prescribes an $8m upfront licensing fee, compared to a $5m fee agreed upon in the Senate.
- Common ground – the most recent proposal in each chamber includes a fix for the state’s local share tax issue; the regulation of daily fantasy sports; the authorisation of only lottery sales; the authorisation of tablet gaming at certain Pennsylvania airports; and the removal of the Category 3 amenity requirement for a one-time fee.
Among discrepancies between the two chambers’ proposals, taxation and VGTs present the biggest challenges. A successful igaming measure could hinge on whether House supporters can be convinced to drop the inclusion of VGTs. Otherwise, pressure applied by the casino industry could paralyse the effort.
Likewise, whether Senate supporters are willing to come down on the tax rate remains to be seen.
The 54% casino tax is comparable to land-based rates but is around triple the standard for online casinos. The House could conceivably capitulate on tax rate, but a high rate could doom the industry in Pennsylvania.