Pennsylvania Senate Passes Online Gambling Bill

Pennsylvania Senate Online Casino Bill

The bill would allow online casinos, poker sites, daily fantasy sports, and online lotto sales.

Responding to the Pennsylvania House of Representative’s budget bill last week, the Pennsylvania Senate passed its own budget proposals on Wednesday night, including a comprehensive gambling bill.

The Senate passed its measure by a 31-19 margin.

Pennsylvania has a $2.2 billion budget shortfall at the moment, stemming from $700 million in unpaid debts in 2016 and an additional $1.5 billion in debts in 2017. For the past several months, the House and Senate have sought a compromise.

Wednesday night’s Senate bill is the latest move in the legislative chess game. House Speaker Mike Turzai (R) passed H 265 last week, a measure which did not raise taxes. Senate Majority Leader Jake Corman (R) passed a spending bill this week, which relies heavily on expanded gambling to pay down the debt.

Here is a quick rundown of the various forms of gambling in the new Senate bill.

Online Casinos and Poker Sites

Online gambling would be legalized. Existing licensed commercial casinos — both inside Pennsylvania and across the United States — could apply for an online and mobile gambling license with the Pennsylvania Gaming Control Board. License holders would pay a $10 million licensing fee. It is not know yet if that is a one-time fee, though previous iterations of the bill required companies to renew their license every 7 years, but at a reduced fee.

Online and mobile slots revenue would be taxed at a 52% rate. Online table games revenue would be taxed at 14%. Presumably, online poker would be taxed at a 14% rate, as well.

Online Lottery Sales

The Pennsylvania State Lottery would be allowed to operate online, like the lotteries in Georgia, Kentucky, Michigan, and Illinois do. The Pennsylvania Lotto could sell online scratchcards, keno tickets, and instant lotto tickets.

The lotto site could not engage in traditional casino games like slots, video poker, table games, or poker. Raffle games would be allowed, though the bill lacks detail on how online raffles would work. Proceeds would go into the State Lottery Fund.

Daily Fantasy Sports

Daily fantasy sports played online at sites like DraftKings and FanDuel would become legal and regulated. License fees would be miniscule compared to online casino licenses, though the revenue generated also is minor in comparison — perhaps $5 million a year.

Land-Based Casinos – Local Share

The “local share” of land-based casino revenues would be reinstated. The issue of whether casino operators in the state should pay $10 million annually to local communities went before the Pennsylvania Supreme Court and is still unresolved. As a final decision awaits, casinos either continue their payments voluntarily or pay in to an escrow account.

Philadelphia, along with 11 scattered counties around the state, are affected by local share. Bethlehem Sands Resort and Casino currently refuses to pay Bethlehem and the surrounding county their local share, causing considerable distress to the nearby communities. The Senate bill would reinstitute the local share law and preclude more decisions from the state supreme court.

Airport Gambling with Tablet Computers

International airport terminals (plus Arnold Palmer Regional Airport) would be allowed to offer tablet computer gambling to customers. The tablet games would be similar to video slots, but might eventually include electronic roulette or electronic blackjack. Only visitors with airline tickets would be allowed to play.

The list of airports includes Philadelphia, Pittsburgh, Erie; Lehigh Valley, Harrisburg, Wilkes-Barre/Scranton, University Park Airport in State College, and the aforementioned Arnold Palmer Regional Airport. Licensing applicants would be charged multi-million dollar fees.

Truck Stop Gambling Machines

Truck stops would receive the right to house up to 5 video gambling terminals (VGTs). This is similar to the VGT legislation in Illinois and Indiana at present. Revenues from the VGTs would go to the state, the license holder, VGT owners (who lease the machines to license holders), and host counties and cities. The revenue sharing is similar to the West Virginia slot machine venues.

Sports Betting Licenses

If sports betting were to become legal at the federal level of government — if PASPA was struck down by the US Supreme Court — then it would be legal for existing land-based casinos to operate sportsbooks and offer sports betting. To operate a sportsbook, a casino would need to pay a $10 million licensing fee.


Resort Casino Restrictions Lifted

Resort casinos like Lady Luck Casino Nemacolin (in southwestern Pennsylvania) and Valley Forge Casino (in suburban Philadelphia) were deemed “resort casinos” in a 2004 casino law. To take part in gambling, visitors to the Lady Luck or Valley Forge must take part in other amenities. Players would need to be hotel patrons or pay for spa services, and other such amenities.

The Senate Bill allows those two casinos to waive those restrictions by paying a $1 million yearly fee. In essence, the doors of the two resort casinos would be opened to the general public.

Casino Ownership Restrictions Ended

The 2004 law also restricted majority owners of Pennsylvania casinos from owning a majority share in more than one casino. The Senate proposes to lift those restrictions. The bill would affect the Stadium Casino project in Philadelphia.

The Stadium Casino is a joint venture of the Cordish Companies out of Baltimore and Greenwood Gaming & Entertainment. Greenwood is owned by Watche “Bob” Manoukian, who also owns Parx Casino. Due to imaginative shareholding by Bov Manoukian’s children, SugarHouse Casino took the parties to court, claiming Manoukian owns more than 33% of the Stadium Casino LLC.

While the bill would resolve the Stadium Casino issue, it would open the door to Las Vegas casino operators to own multiple casino operations in the state.

Satellite Casinos

As a sop to the existing casinos and racinos in Pennsylvania, up to 10 satellite casinos would be licensed by the Pennsylvania Gaming Commission. Only current license holders could own these smaller casinos, which would be opened in small or more remote communities beyond a 25-mile radius of existing operations.

The licensing fee for slots-style gaming would be $7.5 million, with an extra $2.5 million for a table games license. Local public schools and civic development projects would receive some of the revenues, while the state government would receive the lion’s share of the tax revenues. Most casino operators would be able to own less expensive “slots boxes” to boost their revenues. Penn National Gaming complained this law is unfair, because many of their racino’s customers come from beyond the 25-mile radius.

Pennsylvania Online Gambling Law?

Now that the state senate has passed the bill, the Pennsylvania House would need to approve the bill. If that happened, then Gov. Tom Wolf would need to sign the bill. It is by no means certain that the House would approve such a measure, though Gov. Wolf signaled he was ready to sign a budget bill with key financing from gambling.

Given the large number of gambling options, it is possible the Pennsyvlania Senate loaded the bill with revenue sources, in order to negotiate with the House. The House might refuse to support a couple of the measures, at which point the Senate would drop those gambling types in order to secure agreement. If recent experience is any indication, Pennsylvania’s lawmakers still have a lot of haggling to do before online gambling is legalized.