During a recent House budget hearing, Pennsylvania Gaming Control Board Executive Director Kevin O’Toole offered up a general timeline for the implementation of online poker in Pennsylvania.
O’Toole told lawmakers that the Board is in the process of not only crafting temporary regulations for online gambling, but expects to begin the licensing process for operators in mid-April. On Wednesday, O’Toole’s timeline was confirmed; the Pennsylvania Gaming Control Board (PGCB) will open the application process beginning April 16.
What happens next?
Thanks to provisions in the law, the mid-April date provides us with a good jumping off point for when Pennsylvania online poker might launch.
Once the licensing process commences, there is a 120-day window for Pennsylvania’s land-based casinos to apply for the available operator licenses. If any licenses remain after that initial 120-day period, those licenses would be made available to qualified out of state casinos and online gaming companies.
Within that 120-day period is an initial 90-day period when the state’s Category 1, Category 2, and Category 3 casinos can only apply for a full online gaming license. The cost of that license is $10 million and authorizes the licensee to offer online slots, online table games, and online poker.
Beginning on day 91, the $10 million, all-inclusive license splits into three categories – slots, table games, and poker. Each of those licenses costs $4 million and the state’s land-based casinos can apply for an individual slot, table game, or poker license, or mix and match.
After 120 days has elapsed the same bifurcated licenses are available to the previously mentioned “qualified” outside entities, at the same cost – $4 million per license.
Additionally, a second clock begins once the PGCB begins accepting license applications, as by law, the PGCB is given 90 days to approve a received application.
The current lack of even temporary regulations, coupled with the above licensing timeline suggests that online gaming might not launch until at least Q4 of 2018.
What we might learn during the licensing process
The number of applications received in the first 90 days will act as an important bellwether for Pennsylvania online poker and will provide watchers with a clearer picture of how the future market will shake out.
Meaning, will the state’s land-based casinos:
- Gobble up all of the licenses, and be the sole providers of online gaming.
- Control the majority of the available online gaming licenses.
- Have to compete with out-of-state interests in what would be a very open environment.
The lack of clarity on this front stems from a known provision in the gaming reform act, and a yet to be determined decision on skins.
Not only has the state handicapped online gaming operators with an onerous 54 percent tax rate on online slots (the known), but there is now talk of limiting the number of branded websites (skins) an operator can possess to as few as one.
Either one of those things is enough to drag the market down, the combined burden might be enough to keep some of the state’s land-based operators out of the market entirely.
That said, the smart money is still on the state’s casinos grabbing most of, if not all of the available licenses.
Online gaming isn’t the only thing on Pennsylvania’s gaming menu in 2018, and during his remarks O’Toole provided updates on three other gaming related topics.
According to O’Toole:
- Video gaming terminals (VGTs) could roll out at truck stops by the end of the year.
- The PGCB recently made daily fantasy sports licenses available.
- Construction on the proposed Philadelphia Live! Casino will begin following demolition of the current site in June.