Pennsylvania Inches Closer To Final Budget: Fate Of Online Gaming Still Up In The Air

July 3, 2017
Pennsylvania Inches Closer To Final Budget: Fate Of Online Gaming Still Up In The Air

The budget impasse in Pennsylvania appears to be over, and that’s good (but not great) news for supporters of legal online gambling in Pennsylvania.

After weeks of backroom talks, an agreement was reached Thursday between the House and Senate on the framework for a $32 billion budget.

In an 11th-hour vote Friday, the spending bill (that bit is important) breezed through the Senate by a vote of 43 – 7. A few hours later the House of Representatives passed the bill by a vote of 173 – 27.

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It’s a spending bill not a budget

It’s important to note that the bill passed by the Pennsylvania legislature passed can only loosely be described as a budget.

What the Pennsylvania legislature did by passing HB 218 on Friday was to explain how much money they intended to spend on the 2017 – 2018 budget. What it didn’t do is explain where that money is going to come from. That part is important since by law Pennsylvania must pass a balanced budget.

How the bill will be funded is being worked out, and likely won’t be revealed until after July 4. But there are some backroom rumblings that should excite online gambling supporters.

Will online gambling be part of the budget?

Over the past several weeks the Pennsylvania House and Senate have been battling over a gaming reform package. Both sides are banking on the bill to help balance that $32 billion budget.

The two bills were largely the same.

Both bills sought to:

  • Fix the local share tax issue;
  • Legalize and regulate online gambling in Pennsylvania;
  • Legalize and regulate daily fantasy sports;
  • Authorize the Pennsylvania lottery to sell products online;
  • Authorize tablet gaming at certain Pennsylvania airports; and
  • Remove the Category 3 amenity requirement for a one-time fee.

Aside from some quibbles over the tax rate placed on online gambling in Pennsylvania, the only major point of disagreement was video gaming terminals or VGTs for short.

The House proposal included the authorization of VGTs at most Pennsylvania businesses that possess a liquor license. That would lead to an estimated 40,000 new slot machines in bars, taverns, truck stops, and off-track-betting parlors.

Authorization of VGTs would be a massive expansion of gambling in the state that goes too far for the Senate. For a few weeks, it looked like the VGT issue might derail the entire gaming reform package, as the House didn’t want to give in to the Senate, or in a cruel twist of fate, displace online gambling in the gaming reform package.

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VGTs out and online gambling in?

We won’t know until a bill is passed, but multiple sources tell US Poker that the compromise precipitating Friday’s vote is good for online gambling in Pennsylvania. In a nutshell: VGTs are out and online gambling will be in the final bill.

The end result isn’t overly surprising.

The governor is against VGTs:

“I want real revenue, and I want net revenue. I don’t want anything that we do in gaming or gambling to interfere with the revenues that are already in place. If it just cannibalizes and takes from one bucket called gambling to another, the Commonwealth isn’t doing anything more than it has in the past.”

Pennsylvania’s casino operators are almost unanimously against VGTs:

“This proposal would destroy the brick-and-mortar casino industry and risk the nearly $1.4 billion in tax revenues that these establishments generate annually,” Michael Bailey, a spokesperson for Pennsylvanians for Responsible Government, told the Allentown Morning Call. “Worse yet, because VGTs are designed to operate without employees, the 18,000 people casinos collectively employ in Pennsylvania will be put in serious jeopardy.”

And VGTs are seen as a non-starter in the Senate, as Rep. Mark Mustio told Fox 43:

“VGT-based gaming expansion could net $300 million in new, non-taxed revenue. However, the majority of Senators aren’t keen on the idea of relying on so-called “sin taxes” to balance a budget. Many are, however, in favor of a limited gaming expansion, including internet-based casino games and online lottery games.”

What happens next?

At the moment, Pennsylvania is a favorite to be the fourth state to legalize online gambling. And as we’ve seen, Pennsylvania is not above earmarking online gambling revenue for the budget without passing a bill.

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