Out Of State Betting May Be More Than A Temporary Solution For Philly Sports Fans

Martin Derbyshire July 21, 2018
Sewn Philadelphia Eagles logo

Philadelphia’s major sports franchises are enjoying an unprecedented era of success. However, in Pennsylvania, you still can’t bet on the National League East-leading Phillies to win the World Series. Nor can you wager on the 52-win 76ers to make the NBA Playoffs next season. Plus, you can forget about betting the Eagles to repeat as Super Bowl champs.

You can take a drive and place the bet at sportsbooks in neighboring states like Delaware and New Jersey. But unfortunately, legal and regulated sports betting has yet to get off the ground in PA. Philadelphia sports fans are on the outside looking in.

The Pennsylvania legislature actually legalized sports betting, pending a change in federal law, as a part of a comprehensive gambling expansion law approved in October 2017. That change in federal law came when the Supreme Court of the United States declared the Professional and Amateur Sports Protection Act of 1992 (PASPA) unconstitutional in May. It lifted what was a federal ban on sports betting pretty much everywhere outside of Nevada, and opened the door to legal sports betting across the US.

Delaware almost immediately got on board, launching sports betting operations run by the Delaware Lottery at its three casino and racetrack properties on June 5. That trio consists of Delaware Park, Dover Downs Hotel & Casino, and Harrington Raceway & Casino.

Delaware Park is close

Delaware Park is just a 45-minute drive from Philadelphia. Additionally, Dover Downs and Harrington are both less than a two-hour drive away.

It’s worth noting that Delaware Gov. John Carney admits to being a life-long Philadelphia sports fan. In fact, when the sportsbook inside Dover Downs Hotel & Casino opened Jun 5, and Gov. Carney made the first legal sports bet in the state, he bet $10 on the Philadelphia Phillies to beat the Chicago Cubs. The Phillies beat the Cubs 6-1, and a Philadelphia sports fan’s first bet in Delaware paid off.

When a Philadelphia sports fan’s first bet in PA will pay off remains to be seen. The application process for licenses recently opened, but there is a long road to go before taking bets. Philly sports nuts have likely already won, and lost, several bets in New Jersey as well.

As the state that took on PASPA at the Supreme Court, New Jersey wanted to be the first state outside of Nevada to take a legal sports bet. However, it wasn’t able to get the legal framework in place to launch sports betting at Atlantic City casinos and local racetracks until June 14.

Atlantic City isn’t too far away

Monmouth Park Racetrack’s William Hill-branded sportsbook in Oceanport, NJ. took the first bets in the state. Borgata Hotel Casino & Spa in Atlantic City was next. A sportsbook has since opened at the new Ocean Resort Casino on the Atlantic City Boardwalk. Plus, FanDuel Sportsbook launched at Meadowlands Racetrack in East Rutherford, NJ., about a half hour from Midtown Manhattan, on July 14.

More of Atlantic City’s now nine casinos and New Jersey’s third racetrack, Freehold Raceway, are also expected to launch sports betting before long too.

It’s a good thing Atlantic City is only an hour or so away from Philadelphia. Plus, all three NJ racetracks are within about an hour an a half’s drive. Because for now, the sportsbooks there join Delaware Park as the best options for Philadelphians that want to make a sports wager.

Pennsylvania’s 13 casino license holders have had the right to apply for a license to operate a sportsbook on the property and online since the end of May, only none have as of publication.

Oppressive tax rates and lofty licensing fees

Apparently, sports betting operators are concerned about the $10 million license fee and 36-percent tax Pennsylvania wants to charge.

In an article published in The Philadelphia Inquirer July 16, 2018, New Jersey and Nevada sportsbook operator William Hill USA VP Dan Shapiro said the oppressive tax rate and lofty licensing fee are exactly why it has steered clear of partnering with a PA casino to launch a sportsbook so far:

“With a 36 percent tax and a $10 million license fee, there are other states that are more interesting to us. It’s just not something we’re looking at seriously right now.”

Pennsylvania lawmakers figure when one casino jumps aboard, others will soon follow. Still, as of yet, none have.

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Philadelphia favorites

Rush Street Gaming, owner and operator of SugarHouse Casino in Fishtown, said it had an interest in sports betting. Yet a peep has not been heard from SugarHouse on sports betting since then.

Nor has any move been made by Philadelphia-area casinos like the top-grossing Parx Casino and Racing in Bensalem, Harrah’s Philadelphia Casino & Racetrack in Chester, or Valley Forge Casino Resort in King of Prussia. There’s been nothing but a deafening silence from all three. This despite the fact these properties are likely to benefit most from the huge sports betting market Philadelphia represents.

Behind the scenes, the casinos have been lobbying state lawmakers to reconsider the high taxes and licensing fees.

Sportsbooks want to make a profit

Daniel Ihm, VP and GM at Hollywood Casino at Penn National Race Course in Grantville, said they make it hard to make a profit:

“The taxes and fees are) the highest in the world and may make it impossible for a casino operator to make any return on its investment of capital.”

Nevada’s sports-betting tax is just 6.5 percent. New Jersey charges casinos and racetracks 8.5 percent and plans to charge online sportsbooks 13 percent when they launch. A federal excise tax of another five percent is also due no matter what state a sportsbook operates from.

New Jersey also has no licensing fee.

PA casinos may eventually budge, apply for the license under the current tax scheme, and open up sportsbooks. However. they still won’t be the best place for Philadelphia sports fans to make bets.

The increased cost of the high tax rate is bound to be passed on to consumers. Therefore, PA sportsbooks will be offering less attractive odds than those in neighboring states.

Getting used to the drive

Philadelphia gamblers forced to make the drive to Atlantic City or Delaware Park right now better get used to it. At this rate, the casinos will not be able to make it worth their while to stay close to home.

Illegal bookies will even be able to offer local gamblers a better deal. As a result, they’re likely to hold on to their piece of the sports betting business, legal or not.

When Pennsylvania lawmakers first considered sports betting legislation, they set the tax rate at 18 percent. Somehow, they doubled that in an effort to get it passed alongside other gambling expansion initiatives.

Now, if PA’s casino industry holds firm, they may be forced to roll it back to the original rate. Or else, continue to leave Philadelphia sports fans who want to make wagers on the outside looking in.

Photo by charnsitr / Shutterstock.com