Online Poker Momentum In The United States Could Come To A Crashing Halt, Thanks To Pennsylvania

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There’s little denying that Pennsylvania is a poker state. From its ten live poker rooms, to the hordes of prominent players with roots in the state, to its top-shelf tournament extravaganzas like the Parx Big Stax, Pennsylvania embraces its poker brethren like nearly no other.

It’s also the state that could put a wedge in any momentum legal online poker has gained in the United States. That may at first sound like a puzzling statement, as isn’t Pennsylvania just one of four states to legalize online poker within its boundaries?

Yes, but just because the invite has been sent, that doesn’t mean anyone will RSVP. And that’s looking like at least a plausible scenario in the Keystone State.

A hostile climate

Pennsylvania lawmakers placed would-be online poker operators in a precarious spot when they passed the omnibus gambling expansion bill, HB 271, last October.

The licensing fee for a collective license, spanning slots, table games, and poker, was set at $10 million, with an onerous 54% tax rate on slots, and 16% paid to the state for table games and poker. Operators are also given the less than desirable option of acquiring a single license for an inflated (and staggering) price of $4 million.

Admittedly, the 16% tax rate on online poker is reasonable, but is there really any reason to believe operators will fork over $4 million for a license when there is limited financial upside?

In neighboring New Jersey, online poker has proven to be little more than a negligible source of income for iGaming operators. So far in 2018, NJ online poker has generated just $9.4 million in revenue, compared to $116.9 million for online casino. Online poker revenue has been on a continual downslide since the industry first went live in November 2013, only temporarily lifted by the entry of PokerStars NJ in March 2016. Online casino sites have been on the opposite trajectory, with revenue exhibiting impressive gains each and every year.

Even a shared liquidity pact, merging New Jersey and Nevada poker players, has yet to move the needle, only redirecting revenue away from sites under the Borgata and Resorts license and toward WSOP.com, which operates under Caesars AC.

Given this, it’s difficult to see Pennsylvania operators going gung-ho on online poker alone, as not only would they receive a “discount” on an all-encompassing license, but they’re far more incentivized to market their online casino brands.

Problem is, the current law creates an inhospitable and possibly unsustainable environment for online casino license holders.

No reported submissions

The Pennsylvania Gaming Control Board began accepting applications for Interactive Gaming Certificates on April 16, with a 90-day window for applicants to petition the Board. That window expires on July 15, and to date, there is no on-record report of a casino filing an application.

It may just be that prospective license holders are taking their time with the paperwork, but there exists the very real possibilities that eligible parties are either holding out because they want to purchase individual slot and table licenses, which they cannot do until July 16, or are deciding to forgo the industry altogether.

Both scenarios bode poorly for the proliferation of online poker in Pennsylvania. And even if operators pick up an online poker license, restrictions recently set forth by the Board on “skins” all but guarantee that the industry won’t reach its full potential.

The legal US online poker industry needs Pennsylvania

There are numerous reasons to believe that without Pennsylvania, any momentum legal online poker proponents have gained of late will be for nothing.

The fact is Pennsylvania isn’t just any old state. It’s a distinctly poker state with a resident population approaching 13 million. Its entrance as a major player in the US market, sharing liquidity with the existing NJ/NV/DE network, would signify a tipping point for the industry, where the market would finally be big enough to dissuade players from grinding on black-market sites.

With Pennsylvania, summer would be high-time for east and west coast players alike, as WSOP.com would be able to vastly increase the already lofty guarantees of both its flagship Online Championships series and its Online Bracelet events.

Going further, with Pennsylvania as part of the mix, players would have options. Right now, grinders are all but forced into favoring 888-branded sites, as they’re the only ones with a presence in all three states with an active online poker rollout. But in Pennsylvania, 888, PokerStars, GVC, and perhaps Rush Street Interactive all stand to be players, promoting a healthy competitive environment and providing players with greater diversity.

Without Pennsylvania, smaller states — ones that would be dependent on shared liquidity with a large network for survival — lose incentive to pass online poker legislation. We won’t see the likes of Maine, Rhode Island, and West Virginia toss their hats in if Pennsylvania is a state without sites. Larger states like New York would also have less reason to join the party, as it wouldn’t have to worry about competition from its neighbor to the south.

In short, Pennsylvania needs online poker to thrive in order for the industry to grow, and right now, it’s questionable whether or not that’s going to happen.

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Robert is a veteran writer and analyst for the gambling industry, with a particular focus on the emergent US online gambling market. An avid poker and gambling enthusiast, Robert offers unique perspectives from both the vantage point of the player and industry professional, and is fit to cover a broad spectrum of topics.

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