Pennsylvania Democrats See Potential in State Regulated Online Gambling

Posted on May 3rd, 2014 by Robert DellaFave

Pennsylvania Democrats See Potential in State Regulated Online GamblingOn Thursday, the Pennsylvania House Democratic Policy Committee sponsored a hearing to discuss the possibility of bringing Internet gambling to the Keystone State.

Even before yesterday’s online gambling hearing, Pennsylvania was widely considered to be the state most likely to ink an iGaming bill into law, behind California. That belief was reinforced when Pennsylvania Gaming Board executive director Kevin O’Toole took the stage and announced that Internet gambling can be effectively regulated.

The hearing, which took place over an approximately three-hour span, featured a variety of influential state legislators and gambling proponents including James Kilsby from Gambling Compliance, Parx Casino Chairman Bob Green and PPA executive director John Pappas. It was divided into four panels, each one focused on a different set of issues pertaining to regulated gambling.

Highlights of the hearing

As the hearing’s first speaker, O’Toole set the tone by stating that Internet gambling licenses should be offered to PA’s brick and mortar casinos, much like they are in New Jersey. He also emphasized the importance of strong regulatory controls, such as responsible gambling checks.

In regards to minors gambling online, O’Toole indicated that Internet gambling does pose a unique concern, specifying that once an account is created by a person of legal age, it can be quite easily accessed by minors. O’Toole exhibited faith in geolocation technology, although players in New Jersey and Nevada who have had trouble logging on to their respective state’s sites may not share his optimistic sentiments.

O’Toole touched upon bad actor clauses, and while he refrained from making any hard conclusions, his remarks point toward the inclusion of such a clause on any PA iGaming bill.

Perhaps one of the most rousing remarks of the morning was given by David Satz, Senior Vice President of Government Relations and Development for Caesars Interactive. Satz specified that in New Jersey, online gambling is attracting thousands of new gamblers, and that 91 percent of online gamblers had not previously showed up in the company’s systems. Going further, of the 9 or so percent that Caesars did know, we’ve actually seen increased play and increased visitation to our sites.

Land-based casino operators have previously voiced their concerns regarding the potentially negative impact a regulated gambling scene would have on their b&m revenues. Satz wasn’t the first casino rep to dispel the myth that iGaming has a cannibalization effect on physical casinos, but he did hammer the point home, effectively alleviating any lingering fears in the process.

Revenue expectations

According to a statement from Thrive Gaming, it expects Pennsylvania to reap approximately $200 mm – $250 mm during its first year in the iGaming market. At full maturity, this number is expected to rise to nearly half-a-billion.

Although Thrive’s data is based on statistics measuring PA’s online gambling activity pre-Black Friday, it still comes across as a tad optimistic. Consider that NJ, now in its sixth full month in the market has yet to crack the $12 mm per month barrier. Although, given PA’s larger population and healthy gambling community, $200 mm first-year revenue does not seem out of the equation.

What’s next for Pennsylvania?

Pennsylvania does not appear to be in the same position as California, where bad actor clause debates withstanding, iGaming legislation seems inevitable. To the contrary, PA legislators lack the education necessary to make informed decisions regarding tax laws, technology and other regulatory processes. However, this will likely change over the coming months.

Additionally, the results of a gambling study commissioned by state officials are scheduled to be released next week. The findings of the survey will go a long ways towards determining Pennsylvania’s future in the industry.

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