Pennsylvania Is The Key To Unlocking Online Gambling In The US

August 25, 2016
Pennsylvania Is The Key To Unlocking Online Gambling In The US

This year was shaping up to be the year that more states legalized online gambling. No less than four states seriously explored the issue this year, giving the online gambling community some hope that at least one of these states would join the ranks of Nevada, Delaware, and New Jersey to legalize and regulate online gambling. NJ online casinos continue to lead the way in regulated iGaming in the US.

Thus far, 2016 appears to be following in the footsteps of 2014 and 2015. But there’s still time, and at least one good candidate remaining in the form of Pennsylvania.

Here’s what’s unfolded so far, and why Pennsylvania could hold the key to future online gaming legalization.

Bill falls short in New York

After passing the New York Senate by a 53-5 margin at the tail-end of the legislative session, the assembly decided to not even hold a vote on online poker. However, it did manage to get a daily fantasy sports bill across the finish line — much to the chagrin on online poker supporters.

Since online poker’s failure to pass, Assemblymember Gary Pretlow (the author of the assembly’s online poker bill and the man who is believed to have blocked a vote) has offered no less than three reasons why online poker didn’t get considered:

  1. Poker isn’t a game of skill.
  2. There were concerns about the potential for cheating.
  3. The votes simply weren’t there.

Unresolved problems continue to haunt in California

Online poker in California remains the proverbial riddle, wrapped in a mystery, inside an enigma.

The state has advanced its most complete online poker bill all the way to the assembly floor, but with time running out on this year’s legislative session, and one major, and multiple smaller problems still yet to be resolved, it looks like the Golden State will get to reargue online poker, bad actors, racetracks, and tax rates in 2017, and most likely beyond.

Michigan remains an unknown quantity

On the online gambling front, Michigan is still in play, but the state’s chances of passing an online gambling bill this year is anyone’s guess.

The state is unlikely to even consider online gaming until after the November elections, leaving online gambling advocates to play the waiting game.

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Pennsylvania provides the best chance

And then there is Pennsylvania, the state that supporters of legalizing online gaming were most optimistic about, and are now pinning their 2016 hopes on.

If the Keystone State can pass its pending legislation, it would become the first state to legalize and regulate online gambling since New Jersey Governor Chris Christie enacted a law in 2013.

The reason hopes are high in Pennsylvania is because the legislature has already passed a budget that includes a yet-to-be-passed gambling expansion bill in its revenue projections.

The keystone (revenue-wise) of the bill is the legalization and regulation of online gambling, and as the bill’s author, Rep. John Payne has noted on several occasions, there simply isn’t another way to raise the estimated $100 million in revenue without raising taxes. That’s something politicians are generally loathe to do, even moreso in a presidential election year.

If Pennsylvania legalizes and regulates online gambling, it would be a very big deal, and not just because it would end three years of legislative inaction. Here’s why Pennsylvania matters.

Perception of gaming states

Nevada and New Jersey are thought of as “gaming” states. Delaware, the third state with legal online gambling, is simply too small to really register with most people.

Lawmakers and residents in both states are used to gambling and have a better understanding of, and less of a distaste for, the industry, having seen its positive and negative consequences firsthand. Additionally, the population writ large considers Nevada (Las Vegas)  and New Jersey (Atlantic City) to be gaming states.

Essentially, when people hear that Nevada or New Jersey legalized online gambling the response is likely to be along the lines of, “Well, that’s not much of a surprise.” On the other hand, if Pennsylvania legalizes online gambling, the response would be more along the lines of, “That’s interesting.”

Pennsylvania, despite its thriving casino industry, isn’t thought of as a “gaming” state, which is why I’m of the opinion it will be a bigger deal when Pennsylvania legalizes online poker, and will help normalize online gambling.

Critical mass

If Pennsylvania passes a bill legalizing online gambling, the state’s population of 12 million would double the number of Americans with access to legal online gambling.

A fourth state (along with the four states that offer online lottery — Michigan, Illinois, Georgia and Kentucky) could be the tipping point that puts an end to the calls for a federal online gambling ban.

Here’s why.

If Sheldon Adelson’s proposed federal online gambling ban were to become a reality, it would almost certainly require carveouts that would grandfather in states that have already passed online gambling expansion bills.

Considering the perception of Nevada and New Jersey as gaming states, exemptions for these states would likely raise very few eyebrows. (Also of note, Delaware is one of four states with a PASPA exemption.) But a carveout for Pennsylvania might make other states like New York, Ohio, Maryland, Connecticut, and Massachusetts cry foul, as Pennsylvania casinos would be seen as having a competitive advantage.

Legal online gambling in Pennsylvania may not slam the door shut on the anti-online gambling movement, but it comes pretty close to doing so.

The domino effect

Finally, a Pennsylvania with legal online gambling should provide the impetus that gives a state like New York the final push across the finish line. It could also accelerate online gambling talks in other states in the region, from Massachusetts to Maryland, and even westward to Ohio and Indiana.

And since it’s not an election year, if other states are trying to catch up to Pennsylvania, 2017 could be a banner year for online gambling legalization.

If Pennsylvania gets it done this year, it should spur on several online gaming efforts in 2017.

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