Breaking Down The Pennsylvania Online Casino Landscape

Martin Derbyshire July 29, 2018
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Online casino gaming is coming to Pennsylvania in a very big way with several of the Commonwealth’s casinos now poised to open up what amounts to one-stop online gambling shops.

Exactly what PA’s first online casino will look like is anybody’s guess, but there are indications they will include fairly comprehensive products.

The first indication of this came just before the July 16, 2018 deadline to apply for a $10 million license to operate online slots, online table games, and online poker.

The Pennsylvania Gaming Control Board (PGCB) began accepting applications for the licenses in April. However, none applied for almost 90 days. Then, at the 11th hour before the July 16 deadline to apply, nine casino license holders finally filed applications with the Board.

Of course, the licenses for all three types of online gambling are still available individually to PA casino license holders. Only now they come at a cost of $4 million each. Then, after another 30 days has passed, unclaimed licenses may be made available to anyone outside the PA casino industry interested in getting in.

That means the four existing PA casino license holders that have yet to apply may still have designs on getting in one or more aspects of the new online gambling market in the state. It also suggests the nine PA casino license holders that did apply are interested in putting together something that encompasses it all.

Nine online casino sites on the way

In fact, that means there could be as many as nine legal and regulated online casino sites, complete with online poker rooms, opening up in PA in the coming months.

The nine PA casino license holders that did apply for a license to operate online slots, online table games, and online poker include:

The PA online casinos run by this group could include slots, table games and online poker, all in one place. However, they may not be able to offer the complete casino gambling experience to customers. That’s because, these days, that experience includes sports betting as well.

PA casino license holders have had the right to apply for a license to operate sportsbooks online and inside the casino since the end of May 2018. However, in a scenario similar to the one that played prior to the $10 million online gambling license deadline, none have applied so far.

Sports betting taxes and fees

There’s a difference this time. however. The casinos can’t justify the $10 million licensing fee and 36 percent tax on sports betting revenue Pennsylvania plans to charge.

Yes, online casino operators are facing a rather burdensome 54 percent tax rate on online slot revenue. Plus, a more favorable 16 percent tax on both online table game and online poker revenue. However, the immense popularity and profitability of online slots apparently make this a little easier to stomach.

In contrast, casinos operators who previously expressed an interest in sports betting have been quiet or publicly critical of the state making it near impossible to make a return on a sports betting investment.

Pennsylvania lawmakers are hopeful that when one casino applies for a license, its competitors will follow. However, even sportsbook operators partnering with casinos and racetracks elsewhere are steering clear of PA for now. They say oppressive tax rates and lofty licensing fees are the reason why.

In the meantime, Nevada’s sports-betting tax sits at 6.5 percent. New Jersey charges its casinos and racetracks an 8.5 percent tax on sports betting revenue. The state also plans to charge online operations 13 percent.

There is also another five percent federal excise tax all sportsbook must pay.

As it stands, PA’s $10 million licensing fee and 36-percent tax rate will be the highest in the country. Plus, they are the only things standing in the way of PA casinos offering comprehensive online gambling to customers.