Only one state appears to have a reasonable chance of passing an online gambling bill in 2016: Pennsylvania.
While it’s far from a done deal, if online gambling does mange to make it across the finish line this year, here’s what I expect to happen in Pennsylvania, and what impact it might have on online gambling in the United States.
Regulations, licensing, testing and launch
Following the passage of the bill, the Pennsylvania Gaming Control Board (PGCB) will immediately get to work on crafting regulations and setting up the licensing process for operators and vendors.
After that, regulators will switch their focus to testing and prepping for launch. Even on an accelerated timeline, this process will take a minimum of several months, and likely take closer to a year to complete.
Pennsylvania will likely adopt many, if not all, of New Jersey’s regulations wholesale. New Jersey has proven itself a regulatory success, and by adopting New Jersey’s regulations, Pennsylvania regulators save themselves a whole lot of time and energy. Instead of creating what would be a near identical regulatory framework, they could simply rely on New Jersey’s two-plus years of experience.
I also suspect the licensing process will look a lot like New Jersey, with one notable exception. It’s highly likely that to mitigate the cost to potential operators and vendors, companies licensed by the New Jersey Division of Gaming Enforcement, or in Nevada or Delaware, would be fast-tracked for licensure.
For example, 888, bwin.party, NYX, as well as vendor companies like CAMS or GeoComply, would be able to receive a license in Pennsylvania without going through the costly vetting process — with the PGCB taking a cursory look.
Who’s in and who’s out
I’d be very surprised if every Pennsylvania casino doesn’t jump on the online gambling bandwagon in some way, shape or form, save one: Sands Bethlehem.
We know several casinos are already gearing up for online gambling:
- Parx Casino has already announced a partnership with GameAccount Network.
- Mount Airy Casino has formally announced its partnered with 888.
- Valley Forge has purportedly partnered with bwin.party.
- Penn National hired industry veteran Chris Sheffield to head up their online gaming division.
- SugarHouse and Rivers Casino are both owned by Rush Street Gaming which applied for and received a transactional waiver in New Jersey.
- Considering their relationship with 888 in New Jersey and Nevada, Harrah’s is also likely to partner with 888.
- Mohegan Sun runs the Resorts Casino in New Jersey, which partnered with NYX, and has already launched a Mohegan Sun branded online casino in the Garden State.
That leaves just three others — Lady Luck Casino, Meadows Racetrack and Presque Isle Downs — as the only casinos in the state whose online gaming plans are unclear.
There are also plenty of online gaming partners still out there too. PokerStars, Churchill Downs and Gamesys are all potential iGaming partnership candidates that currently have no known ties to Pennsylvania.
Pennsylvania, with its population base of 12 million, would be the first state with legalized online gambling that might be enticing enough to New Jersey for the state to consider an interstate agreement. If Pennsylvania and New Jersey link up, the potential for Nevada and Delaware to join them increases as well.
My hunch is Pennsylvania will launch without interstate agreements in place — to work out their own kinks. However, I fully except them to be exploring interstate possibilities from the outset, and to jump at the chance to partner with New Jersey if that opportunity presents itself.
The domino effect
Legal online gaming in the U.S. has debunked the claims that it would cannibalize land-based casinos, but this comes with a caveat, as New Jersey’s online gaming industry has seemingly cannibalized eastern Pennsylvania’s poker rooms. The likely reason for this cannibalization is the addition of online poker in New Jersey has kept enough New Jersey poker players from traveling across the border to play at casinos like Parx, which claims they’ve experienced a 20% decline in New Jersey traffic.
The obvious solution is to also offer online poker and online gambling, and keep your border populations from heading to the other state’s poker rooms and casinos.
This is a potentially big issue in Pennsylvania, as every border state has a land-based casino industry. With Pennsylvania sharing a border with New York, Ohio, Maryland, and West Virginia, I expect these states will ramp up their own online gaming talks if the Keystone State passes an online gambling bill, in an effort to prevent the same thing from occurring. Pennsylvania also shares a border with New Jersey and Delaware, both of which have legal online gambling.
In fact, New York and West Virginia are currently both potential candidates for online gambling expansion, and it wouldn’t take much to move Maryland and Ohio into that category, if they view Pennsylvania’s expansion into online gambling as a threat to their casino industry.