Pennsylvanians are a Gov. Tom Wolf signature away from being able to play online poker, after the state legislature passed a comprehensive gaming bill on Thursday.
Here’s what you need to know.
What’s in the bill?
Outside of a state authorizing casinos, H 271 represents the biggest expansion of gaming in US history.
The big ticket items are:
- Legalization of online poker and online casino games
- Legalization and regulation of daily fantasy sports contests
- Authorization of the sale of online lottery products
- Authorization of up to five video gaming terminals at qualified truck stops
- Creation of up to ten “satellite” casinos in designated areas
H 271 also:
- Authorizes tablet gambling in secure locations at qualified airports
- Authorizes skill-based and hybrid games
- Eliminates the amenity requirement (membership fee) at Category 3 casinos for a one-time fee of $1 million
- Allows Category 3 casinos to increase the maximum number of slot machines 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
Online gambling licensing and tax rates
H 271 breaks online gambling into three categories, each requiring a separate license:
- Slot machines
- House-banked table games
- Poker/peer-to-peer games
Pennsylvania casinos will have first crack at the 12 licenses in each category. Within the first 90 days they can apply for all three licenses at a cost of $10 million. After 90 days the cost is $4 million per license.
After 120 days “qualified entities” that are licensed in other jurisdictions outside of Pennsylvania can apply for and receive an interactive license at a cost of $4 million per license, assuming any are still available.
Online table games and poker will be taxed at a rate of 14 percent, plus an additional two percent local tax. Online slots will be taxed at an unprecedented 52 percent rate, with the same two percent local tax.
What will online gambling look like in PA?
Pennsylvania’s online gambling industry will look a lot like that of its eastern neighbor, New Jersey.
The licensing categories, and barrier presented by the high slot tax rate, might keep some operators on the sideline. But the recent interstate agreement entered into by New Jersey, Nevada and Delaware will likely bolster the number of online poker operators.
It’s likely all but a couple of the gaming licenses will be claimed, and perhaps all of them once they’re opened up to out-of-state interests.
How long will it take to launch?
New Jersey’s online casinos were up and running just nine months after its bill became law.
With a clear model to follow, and operators with experience in the US market, there’s no reason Pennsylvania can’t match or beat that timeline.
Will PA join the compact for online poker player pool sharing?
As mentioned above, New Jersey and Nevada-Delaware will start pooling online poker players.
Pennsylvania and New Jersey regulators have already had preliminary talks about joining forces. It would be in every state’s interest to have Pennsylvania sharing poker liquidity sooner rather than later.
The state will probably want to get its online poker sites up and running before joining. But expect the Keystone State to join the compact not long after launch.
What does this mean for online gaming in the US writ large?
Pennsylvania is a huge get for online gambling. Here’s why:
- Pennsylvania is the first to take a comprehensive approach to online gambling, legalizing poker, casino, lottery and DFS in one fell swoop. Traditional gaming states New Jersey and Nevada are supposed to legalize gambling. A state like Pennsylvania doing it makes other states take notice.
- The addition of Pennsylvania doubles the number of US residents with access to online gambling. If as expected Pennsylvania joins forces with New Jersey, Nevada and Delaware to pool online poker players, it will boost efforts to legalize online poker in other states like New York.
- Four states now offer legal online poker and/or casino games to some 25 million US citizens. With six states offering online lottery to over 50 million US citizens, the idea of a federal online gambling ban — and rolling back online gaming laws in these states — is almost certainly out the window.