The last legislative session saw the state of Pennsylvania making another effort to make online gambling legal. However, despite all the steps made towards iGaming and online poker legalization, the state saw another year of great expectations and hard work gone without any practical results yet.
Pennsylvania lawmakers once again failed to make a compromise and find the right balance between tax rates and online gambling licensing fees, which ended up with the matters of online gambling legalization being shelved for another year, but hope still remains.
The new session of local lawmakers is to soon become after the summer break, but the discussions related to the state’s gambling legislation in terms of online poker and casino games expansion is to be closely monitored. Online gambling is considered as an industry with a great potential for future growth that can bring hundreds of thousands of dollars to the state of Pennsylvania.
Online Gaming Legalization Effort
Over the last few years, the state of Pennsylvania has made a series of unfortunate attempts to make online gambling legal. The state lawmakers’ last legislative session was close to success, but eventually, the desired online gambling expansion was not achieved.
So, what are the reasons why the state of Pennsylvania has been pushing for online poker and casino expansion? Currently, the state has been celebrating a flourishing land-based casino industry. However, the increasing competition from its neighbouring states has been putting the local gambling industry’s margins in danger, so Pennsylvania just has to do its best in order to stay competitive enough and face the rivalry of other states.
Unfortunately, as reported by Casino Guardian at the beginning of August, Pennsylvania has officially shelved its online gaming and poker expansion for another year, as local lawmakers were not able to make compromise on certain matters.
Earlier in 2017, both the House and the Senate passed versions of a gambling expansion bill that would make online casino and poker operations legal across the state. Apart from making Pennsylvania more competitive to its neighbouring states’ markets, the long-awaited gambling expansion could help the state fill in a massive deficit in the local budget. The budget hole is estimated to $2 billion.
Until August 2017, the forms of gambling that have been discussed as part of Pennsylvania’s possible gambling expansion include not only online gambling and poker, but also online lotteries and Daily Fantasy Sports (DFS). For the time being, it has been left on hold, in spite of the fact that it seemed like a logical step for the state to finally give the green light to the long-expected expansion.
At one point of the local lawmakers’ discussions, the online gambling and poker expansion seemed to be close enough to finally happening. Unfortunately, in the mid-July, the gambling expansion package reached an impasse, despite that the state’s Governor Tom Wolf has been preparing to officially give his approval to the all-inclusive gambling package. No such thing happened eventually, as prolonged budget talks put an end to the online gambling legalization efforts.
According to analysts, the addition of online gambling and poker to the gambling landscape of Pennsylvania could unlock the full gambling industry potential of the state. Now, with it being postponed for another year, it is hard to say what the consequences for the local gambling market would be.
Pennsylvania Gambling Industry’s Potential
According to analysts, casino venues located in the state of Pennsylvania can actually draw benefit from legal online gambling operations. Experts say that the revenue that could be generated over the first year after online gambling legalization could amount to $230 million, with the industry having the potential of seeing that revenue rise to over $360 million on an annual basis.
For a few years now, Pennsylvania has been described as the golden goose on US online gambling, as the state actually represents the largest economic upside that could see millions of dollars in revenue thanks to online gabling and poker legalization. As mentioned above, giving the green light to the expansion would make Pennsylvania more competitive to states featuring larger population such as California and New York, as well as to states which currently offer or plan to offer both online poker and casino gaming options.
In addition, analysts also predict that the above-mentioned revenue would be mostly generated from new customers, rather than simply a reshuffling of the casino revenue that is currently generated.
Main Sources of Online Gambling Revenue
According to some analysts, making online gambling legal in 2017 would have resulted in overall tax revenue of more than $420 million brought to the state through 2022, with three major sources of revenue being recognized.
First, it is the upfront licensee fees that are being pointed as one of the primary revenue sources for the state of Pennsylvania. These fees are considered able to instantly bring $100 million dollars to the state’s budget without new taxes being imposed.
Then, there are revenue taxes that could generate literally tens of millions of dollars every year, which basically means that they would provide the state with a steady income of reliable revenue.
Last, but not least, the license renewal fees are considered the third type of primary source of revenue that will be created as soon as online gambling is made legal across the state. License renewal fees is to provide enough funding to Pennsylvania in order to make sure the state has enough money to cover the online casino and poker market regulation costs.
Online casino Casino Revenue
Over the past few years, the state of Pennsylvania has made an attempt to legalize and regulate both online casino and online poker games. According to analysts’ projections, it is exactly the online casino industry that would be recognized as the main driver of the gambling revenue increase in the state.
Online casinos are projected to generate approximately 90% of the overall iGaming revenue of Pennsylvania by 2022, with the expected online casino revenue totalling $329 million over 2022.
Online Poker Revenue
Of course, online poker is considered as another important part of online gambling revenue. Despite online poker being considered as a major contributor to online gambling revenue in case that iGaming is made legal on the territory of the state, certain questions have already occurred.
Pennsylvania may be a large state, but it would be new to the online poker arena as soon as iGaming operations are made legal there. Once iGaming and online poker are legalized across the state, the local market would be still be relatively small and would not be able to support a large number of unique poker websites. This inevitably puts the question what happens in case that too many online poker websites become available for a limited number of players across the state.
Other important issue is related to taxes. For the time being online poker providers could be more easily hurt by higher tax rates in comparison to other gambling options available across the state. In addition, higher tax rates could result in creating an environment that could stop local customers to participate in online poker activities, which on the other hand, would make the market weaker by harming online poker revenue potential.
Despite making a number of attempts to legalize online poker so far, it is not yet clear whether the state of Pennsylvania would join the rest of the states in the country that have already made online poker legal.
The Future of Pennsylvania Online Gambling Expansion
So, what are the chances for the long-desired online casino and poker expansion in the state over the upcoming legislative session? Analysts say they are pretty good, actually.
As a matter of fact, according to experts, almost any online poker bill that reaches the state’s Governor will probably include not only online poker, but also online casino games and other forms of online gambling. On the other hand, online casino games are considered as an integral part of the state’s possible iGaming expansion, especially considering the fact that they have been proved as a massive revenue generator.
Now, it remains to be seen what will local lawmakers actually do over their upcoming legislative session and will they manage to finally put an end to the online gambling expansion struggle of the state.
- Author
Daniel Williams
