The Pennsylvania legislature will hold a joint hearing next week on gambling. The Senate Community, Economic & Recreational Development Committee and the House Gaming Oversight Committee will get the ball rolling on discussions of a comprehensive gaming reform package.
Online gambling, from a revenue perspective
The centerpiece of the package is the legalization of online gambling. Ahead of the hearing, new analysis on the size of a potential Pennsylvania online gambling market is being circulated.
If the state legalizes online gambling, it stands to gain approximately $426 million in new direct revenue during the next five years. That’s according to a new white paper compiled by industry analyst Robert DellaFave.
The paper — “Regulated Online Gambling: A Billion-Dollar Opportunity For Pennsylvania” — lays out how the Pennsylvania online gambling industry will generate well over $1 billion in revenue during its first five years. It also demonstrates how the state stands to benefit during that same time period.
Key takeaways from the white paper
DellaFave reached the following conclusions based on his analysis:
- The Year 1 performance of Pennsylvania’s online gambling market will be slightly improved from New Jersey saw. That’s because of improved payment processing and a stronger mobile rollout.
- Pennsylvania will receive $126 million from the one-time licensing fees in 2017. DellaFave’s analysis is based on 11 operator licenses (all of Pennsylvania’s casinos with the exception of Sands Bethlehem) along with 20 sub-licenses for significant vendors, e.g. online gambling companies partnered with land-based casinos.
- In Year 1, online gambling in Pennsylvania will generate roughly $230 million in total revenue. That breaks up as $189 million in online casino revenue and $41 million in online poker revenue. From that, $46 million will go to the state in the form of tax revenue (assuming a 20-percent tax rate).
- By Year 5, online gambling revenue will increase to $364 million. The breakdown is $329 million in online casino revenue and $35 million in online poker revenue. From that, $72.8 million will go to the state in the form of tax revenue.
Per DellaFave’s analysis, here is a look at the estimated revenue generated for the state year-by-year:[i15-table tableid=20717][i15-table tableid=20704]
Hearing scheduled for March 7
First reported by Online Poker Report, the joint hearing should be the 2017 jumping-off point for online gambling and the gambling expansion package.
In addition to online gambling, the state is considering the following gaming provisions:
- Legalize and regulate daily fantasy sports.
- Fix the local share tax for host and surrounding communities by imposing a yearly slot license fee on Category 1 and 2 casinos that amounts to a $10 million annual payment by each affected casino.
- Authorize multi-state progressive slot machines.
- Allow for skill-based and hybrid slot machines.
- Authorize tablet gaming at certain airports.
- Loosen restrictions on Category 3 casinos by removing the casino amenity requirement in exchange for a one-time fee.
A more controversial issue could find its way into the mix: the authorization of video gaming terminals at certain private establishments throughout the state.