By Limiting Skins To Just One Per Casino, Pennsylvania Regulators Further Choke The Sports Betting Industry

0

The Pennsylvania Gaming Control Board (PGCB) approved a second set of temporary sports betting regulations on Wednesday, taking another small step towards green-lighting the vertical inside the state.

While the majority of the 59-page document lays out the technical requirements for becoming licensed to provide industry-related services, it did contain one surprise, a block on third-party operator skins.

Skins are out the game

The issue of skins is referenced directly in the intro of the document, which includes the following text:

“Provisions limiting sports wagering certificate holders’ ability to employ the services of more than one sports wagering operator licensee or more than one sports wagering website or mobile application.”

The situation is clarified further in the following section, which begins by stating that PA casinos (“sports wagering certificate holders”) may partner with outside software providers (“sports wagering operators”) to operate both physical and virtual sports books.

Those partners may then offer sports betting under the casino’s brand in the following ways:

Play PA Online Lottery Now!

$5 Free

  • Play Online From Home
  • Exciting Instant Win Games
  • 1X Wager Requirement
  • More Games Coming Soon
  • At a certificate holder’s casino property
  • At a temporary facility physically connected to the property, for a period not exceeding 18 months
  • At a “non-primary” racino location

However, what these outside providers can’t do is have their own branded site, with a provision stating that wagering will only be allowed “through a single interactive website or mobile application that clearly and prominently displays the name of the sports wagering certificate holder.”

So, for example, if sports software provider William Hill were to power the sports book at Sands Bethlehem, the Sands brand name would be the one prominently shown on the property’s website or app.

Neighboring New Jersey also places restrictions on sports betting skins, but they’re less obstructive, with three individually branded websites permitted per license holder.

Different rules for online casinos

The PGCB’s decision to block sports betting skins is curious, not least because it had no problem authorizing unlimited skins for state online gambling licensees. Well, sort of.

Back in April, the agency made the announcement that land-based casinos could effectively serve as an umbrella for third-party software providers looking to open their own branded online casinos.

New Jersey, one of the three other states to have legalized some form of online gaming, has a similar system. Atlantic City’s Golden Nugget, for instance, has struck partnerships with several other gambling brands, including UK gaming behemoth Betfair and PA-based SugarHouse. All three offer their own branded online casinos under the Golden Nugget license.

By allowing unlimited virtual casino skins, PA goes even further than New Jersey, which limits partners to five brands per certificate holder.

That being said, the way iGaming skins will be handled in the Commonwealth is a bit quirky, and might turn off interested providers. In PA, players will only be allowed to have one account per certificate holder, and each skin must display the certificate holder’s casino logo alongside its own. The skin must also exist (presumably) as a subdomain on the main casino’s website.

Penn National gets its way

Perhaps the decision to block sports skins was made to appease some of the state’s casinos who initially protested that allowing online gaming skins would dilute their brands and make the overall environment too competitive.

Earlier this month, several PA casino parent companies sent letters to the PGCB requesting that third-party operators be restricted from offering their own sports betting sites.

Greenwood Gaming implored the board to “establish a limitation on the number of sports wagering interactive websites a sports wagering certificate holder may operate.”

Penn National, parent company of Hollywood Casino, warned that “the failure to prohibit skins with respect to online/mobile sports wagering would present significant new competition… and result in overall saturation of the marketplace, as is occurring… in New Jersey.” Both companies have apparently gotten their wish this time around.

What else is in the regulations?

This round of regulations was meant to build on the initial framework presented by the PGCB in late May, and largely lays out the process by which casinos, software providers, hardware manufacturers and other peripheral companies will be vetted and approved.

The text also touches on the importance of security and game integrity. All operators will be required to employ the services of third-party risk management companies to assist in identifying potentially illegal sports wagering activity.

The use of the word “integrity” in the document should not be confused with the integrity fees for which several major sports leagues have been lobbying.

While the text contains no mention of any such fees, casinos interested in sports betting will already have to contend with an eye-watering $10 million licensing fee and 41% effective tax rate. If those levels aren’t reduced, casinos may not foresee a path to profitability in the vertical and avoid it altogether.

In fact, the worst case scenario may already by unfolding. The first set of temporary regulations were approved on May 30, and the state began accepting sports wagering licensing applications the next day. As far as we know, however, not one casino has yet applied.

We’ll get a better idea of what PA’s sports betting industry will look like at the next PGCB meeting, slated for July 18 at 10 a.m., and find out if there are any other surprises in store.

Find Out When PA Online Gambling Goes Live!

Subscribe to our list and we’ll alert you when internet gambling goes live in PA.

Thank you for subscribing.

Something went wrong.

Bill Grinstead

Bill has over a decade of experience working in diverse aspects of the online gambling space. He is currently focused on legal, US online gaming, which he has reported on since the industry first became regulated in the country.

Comments are closed.