The Pennsylvania Senate received its first official online gambling bill this week as State Senator Kim Ward (R-District 39) introduced SB 900, a piece of legislation that seeks to amend the current Race Horse Development and Gaming Act.
Co-sponsored by State Senators Robert Tomlinson (R-District 6), Elder Vogel (R-District 47), Joseph Scarnati III (R-District 25), Camera Bartolotta (R-District 46), and Patrick Stefano (R-District 32), the proposition sets forth existing land-based gaming entities in good standing to be eligible to venture into online gambling upon payment of a $10 million permit fee to the Commonwealth.
“Since the development of the Internet, millions of people have chosen to gamble online through illegal off-shore operators without regulatory oversight or consumer protections,” the bill reads. “An effective State Internet gaming statute would provide public trust in Internet gaming, ensure that Internet games are fair and safe, and strictly regulate the conduct of gaming in this Commonwealth.”
But There’s a Catch
Internet gambling expansion in America’s sixth most-populated state should be a welcomed progression amongst those in the casino and horse racing industries.
The bill also omits any “bad actor” language, a provision that would ban iPoker networks that continued to operate following the passage of the Unlawful Internet Gambling Enforcement Act in 2006, primarily that of PokerStars, the world’s largest online card room.
But not all is sunshine and roses, as SB 900 also mandates a 54 percent gross Internet revenue tax, a rate so astronomical market experts warn it might scare off networks. “Taxing this industry at rates unfamiliar to the leading online gaming operators will likely lead to fewer, if any, willing participants,” Jeff Ifrah, an attorney whose practice focuses on iGaming told Gaming Intelligence.
Your Taxes So Fat…
Pennsylvania need not look far to realize the $10 million initial permit fee, $1 million annual fee, and 54 percent gross tax rate is excessively high.
In its neighboring state of New Jersey, Internet gaming permits cost $400,000 at issuance, and then $250,000 per annual renewal.
A $250,000 annual Responsible Internet Gaming Fee is also charged to operators, meaning the first-year total comes to $650,000 and then $500,000 for each subsequent year.
Luckily for those in Pennsylvania who want to see online gambling legalized, there are plenty of other bills in the State House that seek to do just that. Though there are three current pieces of legislation presented, it is State Rep. John Payne’s (R-District 106) House Bill 649 that is the leading contender for passage.
Payne, who also chairs the House Gaming Oversight Committee, places a $5 million initial licensing fee, or half of the senate’s premise.
The taxation rate is also drastically lower at just 14 percent on gross revenues, a whopping 40 percent reduction.
With a total of four online gambling bills on the table in Harrisburg, lawmakers might consider collaborating to create the best bill for the state, residents, and gaming operators.
Should they come together and compromise, the legislation could help Governor Tom Wolf and the state as a whole begin to fix its $2 billion structural deficit.