Pennsylvania House Pushes NJ Model; Senate Backs Land-Based Casinos

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Following the Pennsylvania House’s passing of H271 about a week ago, it has become clear that the debate has become a vehicle for back-and-forth between two groups, one represented by each house of the General Assembly. The House-backed bill follows closely in line with the proven successful model for legal online gambling implemented in New Jersey, while the version passed by the Senate strays heavily from the NJ model and may in fact be backed by at least some anti-iGaming groups.

Indeed, New Jersey’s lessons have been learned by both sides of this perpetual war for gambling revenues, and the conclusions have been drawn. H271 has become a tool in this war, delivering tax rate focused artillery salvos back and forth. Fortunately, it also serves as a communication-channel between the two sides, and as such, it may yet morph into the “step towards legal online gambling in Pennsylvania” for which many are hoping. For the time being, though, it would clearly be overly optimistic to view it legal online gaming in Pennsylvania as a done deal.

Quick Recap: The Contents of the Bills

The technical differences between the two bills have already been covered numerous times, so there’s not much sense in wading into their details again. In a nutshell: the Senate bill proposes a 54% tax rate on table games and online slots, in line with the rates currently paid by the brick and mortar operators of the state. For online poker, that rate would be 16%. The licensing fees for online casino and online poker activities have been set to $5 million each for a total of $10 million.

In contrast, the House version stipulates a flat 16% tax rate for the online casino and poker verticals, and brings licensing costs under a single, $8 million roof.

What it all Means

The Senate version of H271 is a piece of legislation aimed at the aggressive defense of the interests of incumbent B&M casinos. In fact, the debate so far would suggest that the legislation really protects the interests of a small handful of existing land-based sites.

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These interest groups aren’t keen on ushering in a playing field, where small operators could take them on from equal footing. The advantages they enjoy courtesy of their larger casino floors and more generous amenities would go straight out the window in the virtual gaming market.

The Senate bill appears to intentionally create a situation where online gambling will be viewed by potential operators as an unprofitable enterprise.

The House bill, on the other hand, adopts a constructive approach, looking to strike a sort of compromise which may still make the 12 currently discussed PA online gaming licenses attractive to would-be operators.

Where VGT’s Fit In

The issue of VGT’s (Video Game Terminals) is another clear indiiscation that the above-delivered theory isn’t far-fetched at all. While the House is looking to allow VGT’s in establishments with liquor licenses, the Senate version wouldn’t touch VGT’s, which are generally opposed by existing casinos, with a ten-foot pole.

Given how this single point of contention may indeed end up sinking the entire bill, one can certainly hazard a guess at this point as to how the Senate will relate to it. When all is said and done, advocates for legal online gambling in Pennsylvania may yet again have to settle for seeing the can get kicked down the road.

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