Some Pennsylvania lawmakers have been trying to legalize online poker and casino games since 2013. Rep. Tina Davis was the first to suggest that online gaming should go from being an offshore black market to one that is taxed and regulated in Pennsylvania.
The bill introduced by Rep. Davis in 2013 would have permitted any game that is legal in Pennsylvania casinos. That includes poker, slots, video poker, blackjack, craps, roulette and a variety of proprietary table games. The 2013 attempt failed and a similar bill returned in 2014 and suffered the same fate.
Rep. Davis was not the only state lawmaker looking to pass online gambling legislation in 2014. Rep. John Payne introduced a similar bill that year. Rep. Davis, Rep. Payne and Rep. Nick Miccarelli filed bills in 2015 to legalize online poker and casino games. The main difference between the bills is the tax rate. Rep, Payne’s is considered the favorite to pass as he is the chairman of the Pennsylvania House Committee of Gaming Oversight.
Pennsylvania likely to become next U.S. online gaming market
Pennsylvania is the favorite to become the next state to legalize and regulate online gaming. The 2016 fiscal year is projected to have a $2.3 billion deficit. Online gaming could help fill some of the holes in the state budget. Rep. Payne’s HB 649 has a 14% tax rate. There is also a $5 million licensing fee for casinos and $1 million fee for vendors that provide the software. Between initial licensing fees and taxes on the projected $120 million per year Pennsylvania online gaming could generate, the state could create $40-$50 million in taxes in the first year.
Pennsylvania second largest gaming market
Pennsylvania is the second largest gaming market in the United States. Casinos generated $3.1 billion in revenue in 2014. That is about half of what Nevada casinos earn. Pennsylvania earns more tax revenue from casinos than any other state. This is due to the 55% tax rate on slots and video poker. Table games and poker have a 16% tax rate.
Lawmakers are in need of an alternative to raising taxes to generate revenue for the state. Online poker and casino games are one way to do that. Lawmakers on the fence may consider that the state already generates about $1.4 billion per year from the gaming industry.
There is one major opponent to online gaming in Pennsylvania. Las Vegas Sands operates a casino in Bethlehem, PA. Sheldon Adelson, the company’s founder and CEO, vowed to spend “whatever it takes” to stop online gambling. The lobbying effort to stop it is already underway in Pennsylvania. Attack ads air on local television proclaiming the evils of online gaming through the lobbying group known as Coalition to Stop Internet Gambling (CSIG). This group is bankrolled by Sheldon Adelson.
CSIG is also lobbying on the federal level. Adelson is behind a bill known as Restore the Wire Act (RAWA). This bill hopes to roll back online gaming that is already legal in Delaware, Nevada and New Jersey, as well as prevent further expansion. RAWA would also make it illegal to sell lottery tickets over the Internet.