Pennsylvania Budget Impasse Doesn’t Bode Well for Online Gambling Expansion

August 3, 2015
Pennsylvania Budget Impasse Doesn’t Bode Well for Online Gambling Expansion

Having blown past their soft deadline of July 1, Pennsylvania’s Republican-controlled state legislature is still trying to iron out a budget agreement with newly-elected Democratic Governor Tom Wolf. And so far, that has not included talk of online gambling expansion.

What’s the problem in PA?

Wolf is intent on raising revenue by overhauling the state’s income tax code and creating new taxes on, among other things, natural gas production.

On the other hand, the legislature would like to raise the necessary revenue without raising taxes. Republicans are of the opinion this can be accomplished by reforming existing revenue channels. One of the proposals put forth by the legislature was comprehensive gaming reforms, including the legalization and regulation of online gaming in the Keystone State.

According to the latest reports on the budget talks, all of the gaming reforms with the exception of online gambling expansion have been scrapped. But it’s starting to look like internet gambling expansion is destined for the scrap heap as well.

Online gambling isn’t dead in Pennsylvania by any stretch of the imagination, but the chances Pennsylvania will pass an iGaming bill in 2015 seem far more tenuous than it has in months.

iGaming expansion goes from bullish to bearish

When the budget talks began in earnest in June, analysts and iGaming advocates were extremely bullish about online gambling expansion. And well they should have been, as a cursory Google search shows dozens upon dozens of articles written from June 1-July 1 linking online gambling to the state budget.

Hope started to subside in early July.

From July 1-14 the articles speculating on online gambling’s inclusion in the Pennsylvania budget continued to roll in, but instead of dozens, Google News finds only six columns on the topic during that timeframe.

The second half of July saw the number of news reports for “Pennsylvania-Budget-Online-Gambling” fall to just three.

Furthermore, of the nine July articles linking the PA budget and online gambling, nearly all of them were pessimistic in tone.

Penn National appears to be throwing in the towel

Penn National is one of the state’s 12 casino operators, and along with Caesars, Penn is one of the biggest supporters of iGaming expansion in the state.

Penn has introduced its own analysis of the potential iGaming market to the legislature, and went so far as to hire industry veteran Chris Sheffield to head its iGaming division.

Despite its desire to see the legislature pass an online gambling bill, Penn National brass didn’t sound very optimistic about iGaming passing in 2015 during a July 23 earnings call,

Eric Schippers, Penn National’s Senior Vice President of Public Affairs & Government Relations, was the first to address iGaming on the call, saying,  “… we’re hoping … maybe at some point, we’re hanging around the hoop for the opportunity that maybe real-money internet gaming or another gaming opportunity might come out of the ongoing budget impasse there.”

Penn National CEO Tim Wilmott was more blunt, saying expansion was unlikely in 2015: “We don’t expect anything happening in ’15, but we’ve been encouraged by the hearings that we’ve participated in, in and around the state of Pennsylvania, that there’s more of an appetite to consider these options than there ever has been.”

There’s always next year

This is a familiar, albeit halfhearted, rallying cry for iGaming supporters in California (who have been stymied in their attempts to pass an online poker bill for seven consecutive years), but “there’s always next year” rings true in Pennsylvania.

Expansion in 2015 would have been a huge victory for iGaming advocates, as adding Pennsylvania would double the number of U.S. residents capable of playing online poker at a legal, regulated site.

It would also be a major blow to the anti-online gambling movement.

Pennsylvania is one of two states where Sheldon Adelson’s Las Vegas Sands owns and operates a casino. Had the legislature managed to pass an online gambling bill, it may have been the tipping point that effectively ended Sheldon Adelson’s efforts to ban online gambling at the federal level — right in his own backyard.

That being said, we shouldn’t look at 2015 as a failure in Pennsylvania. The state came a long way (a lot further than many expected when 2015 began). and Pennsylvania now appears poised to pass an online gambling bill in the very near future.

As Penn National’s CEO said, “there’s more of an appetite to consider these options than there ever has been.”

Photo by Tadson Bussey used under license CC BY-ND 2.0.

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