This is a difficult question to answer at this stage.
There are still a lot of I’s to dot and T’s to cross, from licensing applications and approvals to submitting regulations. Pennsylvania Gaming Control Board hasn’t set a firm timeline, but the PGCB has put forth a few ballpark estimates on when online gambling might be up and running.
What the PGCB has said and intimated
According to Harbach, putting a firm timetable on launches is impossible at this time, but he did seem to indicate that a year was the upper end for all of the reforms.
“… suffice it to say, it’s going to take months, and, in some cases, closer to a year on some of them to try and get everything out,” Harbach told Meyer.
In reporting by CapitolWire (subscription), Harbach said online gambling would be easier to implement:
The board is on more familiar ground when it comes to implementing internet gambling and fantasy sports betting. Board officials have testified at numerous legislative hearings on internet gambling and have New Jersey’s experience to draw on. The board has published a report on fantasy sports betting.
“We’ve done a lot of things to get ready for this,” said Harbach.
Not only is the PGCB familiar with online gambling, but the state needs online launched sooner rather than later.
In fact, there is an ideal launch date for the state: on or before July 1, 2018.
The Pennsylvania fiscal year
Pennsylvania’s online gaming law is designed to fill the state’s coffers and plug budget holes in two ways:
- A one-time lump payment from licensing fees ($100-$150 million) for the current fiscal year, FY 2017/2018.
- Recurring revenue of $65 million for FY 2018/2019 and increasing to over $100 million by Year 5.
As long as the checks are cut by June 30, 2018, the licensing fee money will be applied where it’s supposed to be: FY 2017/2018.
When it comes to the recurring revenue it’s a bit trickier.
The faster the state rolls out online gaming the faster it starts collecting tax revenue. And for Pennsylvania, the best possible start date is no later than July 1, 2018.
Reason being: Pennsylvania’s fiscal year begins on July 1 and runs through June 30 of the following year. Every day online gaming remains sidelined past July 1, 2018 the state will lose precious tax revenue already earmarked to help fund Pennsylvania’s FY 2018/2019 budget.
If Pennsylvania’s online gaming industry launches in October instead of July, the state will miss out on three months of online gaming revenue. It will also push back market maturity.
Any delay after July 1, 2018, will result in less revenue for FY 2018/2019.
How much money could the state lose?
Even with a slow start, Pennsylvania online gaming operators should bring in at least $30 million over the first three months. That works out to $11-15 million in online gaming tax revenue, depending on how the revenue is split between poker, table games, and slots.
In order to maximize recurring tax revenue for FY 2018/2019, the state will need to have online gaming up and running by July.
And it appears the state is very cognizant of this.
As Chris Grove noted in a recent Pennsylvania online gaming white paper:
“Much of Pennsylvania’s bill suggests an approach built to facilitate a rapid path to market. While regulators will have a substantial amount of work prior to launch, the legislation provides them with tools – including conditional approvals and waivers based on approvals in other U.S. jurisdictions – that will help move the process along.”
New Jersey did a lot of the heavy lifting
As Grove notes, Pennsylvania’s ability to draw on the experiences of New Jersey and other online gaming states will be a big asset.
When New Jersey launched online gaming in November of 2013 a number of the systems were wholly untested.
Operators and regulators were essentially learning on the job.
With multiple operators likely to be active in both states, the learning curve is nowhere near as steep as it was back in 2013. And from the regulators’ standpoint, Pennsylvania will be able to follow the trail New Jersey blazed.
As Grove noted:
“Pennsylvania’s neighbor New Jersey now has nearly four years of online gambling experience under its belt, as does Nevada, and both states are well-positioned to supply Pennsylvania with much of the template and expertise necessary to craft effective regulations. That advantage, combined with the fact that Pennsylvania regulators have been preparing for online gambling for several years, augurs well for a quick pace to a live market.”
Can Pennsylvania get online gaming up and running by July?
It’s feasible, but there are plenty of factors that could slow the process down.
Not least of which is how the PGCB prioritizes the numerous gaming reforms it has on its plate.
Pennsylvania didn’t just legalize online gambling, the gaming reform package is far-ranging.
- Legalizes online poker and online casino games
- Legalizes regulates of daily fantasy sports contests
- Authorizes of the sale of online lottery products
- Authorizes up to five video gaming terminals at qualified truck stops
- Creates up to ten “satellite” casinos in designated areas
- Authorizes tablet gambling in secure locations at qualified airports
- Authorizes skill-based and hybrid games
- Eliminates the amenity fee requirement at Category 3 casinos for a one-time fee of $1 million
- Allows Category 3 casinos to increase the maximum number of slot machines by 250 for a one-time fee of $2.5 million, and/or increase maximum by 15 tables for a one-time fee of $1 million
- Reinstates the local share tax the PA Supreme Court ruled unconstitutional last year
- Authorizes the Pennsylvania Lottery to offer Keno
- Eliminates a third Category 3 license the state hadn’t awarded
- Eliminates ban on casino operators owning more than one casino in the state
- Authorizes Category 2, 3 and 4 casinos to contract with racinos to simulcast horse racing
- Allows ADW (Advanced Deposit Wagering)
Not only is the PGCB familiar with online gambling, it’s also one of the biggest revenue pieces of the bill, so it should be at or near the top of the hierarchy.
Of course, there are also unforeseen issues that could arise. Anything from software testing to the licensing approval process could cause a delay.