For Once, Pennsylvania Almost Gets It Right With Regards To Online Gambling…Almost

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The road toward legal online gambling in Pennsylvania has been a frustrating affair.

Instead of looking to nearby New Jersey as a prime example of how to do iGaming right, lawmakers and regulators have decided that it would be best to stifle the industry at every possible juncture.

First there was the onerous tax rate on slots, a nearly unsustainable 54%. In tandem was the absurd licensing fees of $4 million per vertical, or a “discounted” $10 million should bidders apply for a collective slots, table games, and poker license.

More recently, regulators decided it would be wise to forbid gamblers from firing up their favorite iGaming site at any of the state’s 12 land-based casinos, not only rendering live/online play impossible, but potentially causing a whole slew of headaches for geolocation companies.

Last week the Pennsylvania Gaming Control Board ruled on skins, and for once, the outcome was favorable. Operators will be able to have unlimited skins, which seems to be even more generous than New Jersey’s hard cap of five platform providers per online gambling license.

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Yet, Pennsylvania being Pennsylvania, there are several confounding caveats built into the regulations. A couple of these should just prove minor annoyances, but at least one could have a damaging impact on the industry.

First, some good news

Leniency regarding skins has proven a boon for New Jersey.

  • Skins allowed smaller Atlantic City brands like Resorts and Golden Nugget to host some of the most recognizable names in online gaming (PokerStars, Betfair), inspiring a sense of competition that would be virtually absent otherwise.
  • NJ operators no longer have to live and die based on the performance of a single site. This has tempted them to take more risks, leading to more creative marketing initiatives and new formats such as Live Dealer and Virtual Sports.
  • Having numerous brands under one license also enables better information sharing among brands, and therefore better operations.
  • Skins are not just good for operators. Players benefit from a greater assortment of no-deposit bonuses, welcome bonuses, and recurring promotions. The state benefits from increased tax revenue and job creation.

An argument can be made that having too many sites would result in competition so fierce, that operators would have to vastly increase their marketing spend. That would be true if there wasn’t an appetite for more online casino sites, but recent revenue trends and the performance of industry newcomers reveal that it is not the case.

In a word, skins are good, and Pennsylvania will reap untold benefits from allowing them in spades.

Three problems that are varying levels of problematic

Of course Pennsylvania regulators couldn’t just leave well enough alone, instead instituting three caveats in its temporary regulations that seem designed to appease Parx Casino and Penn National, who came out against unlimited skins.

None of these caveats are catastrophic, but they’re hardly doing anyone any favors either.

Caveat #1: Identify your boss

The most innocuous caveat is one pertaining to branding. As per the temporary regulations, all skins must visually identify the associated license holder on their websites. So if Betfair is partnered with Parx, and there’s a Betfair online casino in Pennsylvania, the site would presumably have to stick a Parx icon prominently on its homepage.

This condition is both reasonable and easy to implement, so we don’t really see it as restrictive.

Caveat #2: Park your domain

Caveat #2 is open to a bit of interpretation. The language reads:

“Interactive gaming certificate holders and interactive gaming operator licensees acting on behalf of an interactive gaming certificate holder may only offer interactive gaming in this Commonwealth through the interactive gaming certificate holder’s webpage or the webpage of an entity within the interactive gaming certificate holder’s organizational structure.”

Presumably this means that skins will have to exist as subdomains of the land-based casino’s primary online casino site, ala BetfairCasino.Parx.com or equivalent. While this makes for some cumbersome URLs and possibly some redirects, it’s again not particularly damaging to the industry.

It does feel unnecessary though.

Caveat #3: One account to rule them all

The final caveat could have have distinctively negative repercussions. It reads:

“A player shall have only one interactive gaming account for each interactive gaming certificate holder or interactive gaming operator licensee. Each interactive gaming account shall be non-transferable; unique to the player who establishes the account; and distinct from any other account number that the player may have established with the interactive gaming certificate holder or interactive gaming operator licensee for non-interactive gaming activity.”

What we believe this somewhat cryptic passage to mean is that for each operator, players can only have one account per software provider. For instance, if 888 Casino uses its platform to power three sites for Mount Airy Casino, then players will use the same login for all three, and presumably will only have to register once.

Sounds convenient, right? Certainly, but it’s also potentially damaging to players, and thereby operators.

Consider that one of the primary vehicles sites use to attract new players is a combination no-deposit, first-time deposit bonus. Assuming our interpretation is correct, once players sign up for one site they’ll be automatically registered for any lookalike operating under the same license holder. This could mean that they’ll be ineligible for any welcome packages on those other sites.

We already see an example of this in New Jersey, where Pala Poker players who were already registered with Pala Casino couldn’t capitalize on the site’s welcome offer.

Perhaps PA operators will invoke a workaround, where first-deposits are matched regardless if an account was created on another skin. If not, players could be disincentivized to spread their play around during the critical launch period.

In New Jersey, multiple sites operating under the same license share software, including:

  • Tropicana/Virgin
  • Resorts/Mohegan Sun
  • WSOP/888
  • Harrah’s/888
  • Borgata/Party/playMGM

Right there, that’s six welcome packages players could miss out on.

Far more good than bad

The bottom line is that despite the aforementioned restrictions, the recently released regulations regarding skins should be viewed as a win. Yes, subdomains, explicit branding, and account restrictions are a drag, but without these measures it’s plausible that anti-skins lobbyists wouldn’t have backed off.

At least now we can continue to trudge down the long and winding road toward getting the first online gambling sites in Pennsylvania up and running.

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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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