While online casino games and internet poker may not be in the cards for 2015 in Pennsylvania, they could be part of an even larger battleground that includes online lottery and daily fantasy sports. Committee hearings coming on new subjects After a flurry of bills were introduced earlier this year that included portions on online gambling and online poker, more iGaming fronts will be considered in Pennsylvania before the end of the year. First up is a hearing in front of the House Gaming Committee called Exploring the Potential of Online Lottery/Gaming in Pennsylvania. That hearing will take place on October 27. Then, on November 19, the same committee will tackle a variety of subjects, including daily fantasy sports. There are not yet bills that would accompany either hearing on these subjects. Online lottery in PA? Pennsylvania has not seriously considered an online lottery in the past. Back in 2012, Penn Live said the state would likely take a wait-and-see approach: Online lotteries arent terribly common yet in the United States, but there have been solid early growth and revenue numbers from the likes of Michigan and Illinois. It seems safe to say this hearing will be a predecessor to legislation, and Pennsylvania possibly dipping its toe into a possible online lottery. Daily fantasy sports in PA? The topic of daily fantasy sports (DFS) might be a little trickier. Currently, Pennsylvania is one of 45 states where most DFS operators accept players; the industry operates unregulated in jurisdictions throughout the U.S. There have already been some rumblings in PA centering around DFS. Penn National has said it has designs on getting into the market. In the spring, a bill that would allow brick-and-mortar casinos to offer DFS was introduced, although it made no progress. Again, the hearing appears to be informational/exploratory in nature. What form would a Pennsylvania DFS bill take? It seems unlikely a hearing would precede a bill that would simply legalize daily fantasy sports, in the vein of a bill that passed in Kansas and one that was recently introduced in Michigan. If thats the case, a bill that somehow seeks to regulate the DFS industry possibly in the form of issuing licenses and taxing operators seems more likely. Whats the endgame? Right now, online gambling isnt entirely off the table in the Pennsylvania during its current budget impasse. But no one is betting on iGaming happening this year, either. It seems far more likely that the legislature would package a suite of gambling measures together in an overarching bill, as it did on several occasions with online gambling and poker earlier this year. Depending on the outcomes of these hearings, we may see a push for online lottery and DFS measures in 2016.
Since opening its doors to the casino industry in 2004, Pennsylvania has enjoyed an influx of gaming revenue. But despite this widely praised venture, recent estimates suggest the state will face an imposing $1.2 billion budget deficit, or more, in the coming fiscal year. And now online gambling regulation is on the table as a way to cut into that deficit. Campaign promises haunting Wolf The deficit represents a quandary for Governor Tom Wolf (D), who campaigned on platforms of lowering taxes across the states middle class and prioritizing education spending. According to the Pennsylvania State Education Association, a labor union, Pennsylvania ranks 45th in support for public schools in the country. But prior to his election, Wolf was unaware a severe deficit loomed. In March, the governor responded to news of the deficit by proposing an array of tax hikes in the states 2015-16 budget, a plan criticized by Harrisburg Republicans as overbearing and unfeasible. Wolfs budget would have halved corporate tax rates while increasing personal income tax in the state from 3.07 to 3.7 percent, and increased education spending by over $400 million. But Republicans, in control of the state legislature, insisted they would not approve what Senate President Pro Tempore Joe Scarnati called the most massive tax rollout plan in recent history of the commonwealth. Forecast better than expected, but still turbulent That proposal, however, was tailored to bridge a budget shortage estimated in March at $2.3 billion. While it now appears the deficit will be $1.1 billion lower than previously thought, legislators are nonetheless scrambling for a workable solution to the still-sizable gap. Harrisburg lawmakers, tasked with building a cohesive budget by a June 30 deadline, have floated ideas including raising taxes on tobacco products and phone bills, and placing a severance tax on natural gas extraction. In proposing the severance tax, Wolf said the initiative would generate $1 billion for the state in its first year, revenue which the governor hoped to earmark for education. Possibly easing matters further is HB 466, a bill to privatize the states liquor operations, which supporters say will trim costs. The bill cleared the Pennsylvania House in February, and is currently before the Senate. A proposed overhaul of the states employee pension system has also gained traction, recently clearing the state senate and currently awaiting action in the House. The Harrisburg-based Patriot-News has spoken favorably of the bill, which it says will lead to savings for taxpayers. Last week, Scarnati said firm agreements on both pension reform and liquor privatization bills were imminent. But complicating matters is the states extended budgetary forecast. Early estimates predict a deficit of over $2 billion in 2016-2017. And while Wolf still hopes to increase education subsidies, it is unlikely schools will receive the $500 million increase first pitched by the governor. Gaming a key revenue factor Legalized online gaming, meanwhile, remains an alluring option for lawmakers seeking to triage the deficit without resorting to tax hikes. Five regulatory bills have already been proposed in 2015, and debates on the subject have intensified in recent months. This option is supported by a number of key Pennsylvania legislators, including Kim Ward, chair of the Senate Community, Economic & Recreational Development Committee. Ward is the prime sponsor of one such regulatory bill, SB 900. The bill is co-sponsored by several key committee members, including Senator Robert Tommy Tomlinson. Each of the states land-based casinos, with the exception of Sheldon Adelsons Sands Bethlehem, supports the venture. To operate within the state, online casinos would need to partner with brick-and-mortar operations. While critics say online gaming would lead to cannibalization in the marketplace, analysts have said the arrangement would be mutually beneficial. There are still hurdles to clear if the bill is to become law. Senators on the CERD still seemed to have serious questions about Wards bill, and seven casinos recently came out against SB900, which is a wide-ranging gaming bill that includes internet gambling. While online gaming regulation would certainly help the deficit problem of coming years, its not clear if that budget relief will come from iGaming in 2015. Photo by Jerchel used under license CC BY 2.0.
1 Online gambling in October?
2 Will the Senate actually do anything on gambling?
3 Hearing will also be held The chances of legal Pennsylvania online casinos coming as soon as early next year could hinge on six days in October. Online gambling in October? The state Senate has just six days left in 2016 to attempt to pass a gambling expansion package that the state government promised to pass this summer, as part of the plan to finance the current fiscal years budget. The $100 million earmarked for the budget would largely come from the legalization of online gambling in the state. The House already passed its version of a gambling bill, complete with regulation for iGaming and daily fantasy sports. The Senate met briefly in September but never tackled gambling at all. It returns from hiatus for planned sessions October 17-19 and 24-26. Those are the last days before the November elections that the Senate will meet, unless it decides to extend the brief session. Will the Senate actually do anything on gambling? At one point, it seemed like a foregone conclusion that the statehouse would act on gambling this year when it was included in the budget. Those beliefs were eventually replaced with cynicism, as it started to become clear the Senate did not agree on the moving parts in the larger gambling package. Disagreement appears to have little to do with the authorization of online gambling, however. One thing has changed recently, however. A state Supreme Court ruling drastically reduced the amount of money that the state is taking in via casino taxes, money that was earmarked for jurisdictions that host casinos. The legislature is likely going to act on that issue, and may consider the wider gambling expansion in tandem. Rep. John Payne, who has championed the online gambling effort, puts the odds of the Senate acting soon at about a coin flip. More from Online Poker Report: If nothing happens this month, any effort would have to wait until 2017. Payne told OPR that the groundwork that has been laid in the past two years should help online gamblings chances in the future. Hearing will also be held Paynes House Gaming Oversight Committee will hold a hearing next week that will examine the regulation of online gambling and DFS. That comes after a similar hearing planned for September was canceled. That hearing may be designed to just bring attention to the issue, and spur the Senate to act. Whether it will do so this month remains to be seen.
1 House to Senate: Its time
2 Bill is Paynes last shot before retirement
3 Expanded gambling will boost state budget The wait is over. More than two months after the Pennsylvania House passed a bill legalizing online gambling and daily fantasy sports, the House Gaming Oversight Committee is scheduled to meet on Tuesday for a public hearing reviewing states that have already legalized online gambling and DFS. That list includes New Jersey, Nevada and Delaware for online gambling. For DFS, those states are:
Missouri Common sense says the Senate should be holding a hearing on online gambling as well, but its lack of action has online gambling proponents and the House antsy over the bills future. The Senate has introduced a new DFS-only bill, but its chances to move independent of other gambling expansions is murky. House to Senate: Its time Tuesdays public hearing is, in one sense, might be just for show. The gaming committee and the House already approved the bill, so this isnt about convincing anyone in its own ranks. Experts are of the opinion that the meeting is about getting the Senate to pass a bill allowing PA online casinos and DFS. Heres the big picture:
The Senate has not yet voted on any bill containing online gambling or DFS
The Senates fall session is nine days long.
If the bill isnt passed during those nine days, its pushed back again; this time to 2017. Theres a sense that the committee is passively telling the Senate, It would be nice if you passed this bill since so many other states have already done it in the past three years. Bill is Paynes last shot before retirement Rep. John Payne, head of the Gaming Oversight Committee, has long been a vocal supporter of expanding the states gambling laws. However, Payne is retiring after the states November elections; a win like this before his final day in the House would be a sweet victory for the Dauphin County Republican. After the June vote, Payne released a statement lauding the Houses bipartisan vote in support of online gambling regulation: Right now, Pennsylvanians who are playing these games online are at risk for fraud and abuse, and its nearly impossible to prevent children from gambling online or to protect problem gamblers. This legislation is needed to safeguard our children, our problem gamblers and our gaming consumers. Without it, we are only allowing the wild west atmosphere that currently exists to continue. Expanded gambling will boost state budget While pro-gambling folks in Pennsylvania would love to see the state finally pass the bill, the states budget would be equally as happy; it includes $100 million in gambling revenue. That $100 million is possible revenue generated by online gambling in the state in year one, mostly from licensing fees. In 2015, Payne co-authored an opinion piece on PennLive.com, in which he estimated that online gambling revenues could top $300 million in a mature market. Casinos might want to see it, as well; August was one of the states first bad months, revenue-wise, in quite awhile.
1 A new gaming bill drops in the House
2 Whats in the online gambling portion of the bill?
3 What did Gov. Wolf say about gambling? The effort to legalize online gambling in Pennsylvania got a shot in the arm from two different sources this week: the legislature and the governor. A new gaming bill drops in the House The good news on Thursday came from the state House of Representatives. There, the first of several planned omnibus gaming bills appeared. As expected, the bill (HB 392) included language to legalize, regulate and generate revenue from iGaming. The bill contains much more than that, of course, including:
A remedy to the casino host tax that was struck down as unconstitutional by the state Supreme Court, with a yearly slot license fee on Category 1 and 2 casinos.
Authorization of multi-state progressive slot machines, as well as skill-based and hybrid slots.
Allowing tablet gaming at some airports. But one of the key points is online gambling. Whats in the online gambling portion of the bill? The bill that just surfaced is much like one that passed the House on two different occasions at least on the online gambling front:
Anyone wishing to operate PA online casinos or poker rooms would have to pay an $8 million licensing fee.
Anyone partnering with a licensee to offer online gaming would pay a $2 million fee.
Gaming revenue would be taxed at a rate of 14 percent, with an additional two percent going to casino host communities. What did Gov. Wolf say about gambling? There was also good news from Gov. Tom Wolf on the online gambling front, even though he didnt mention it by name. Wolf announced his plan for the budget for the rest of this fiscal year, as well as the next one. In his proposed budget, he earmarked $250 million from a gambling expansion that has not yet been passed. More from his budget plan: Despite Wolf being noncommittal on where the money will come from, the only way for that type of revenue to be realized would be to legalize online gambling.
1 The letter to the House on iGaming
2 Stakes are too high
3 Are Tomlinsons concerns valid?
4 Letter sets the stage for 2017 At least one Pennsylvania state senator is not excited by the Houses eagerness to move forward on a gaming expansion that includes legalization of PA online casinos. The letter to the House on iGaming Pennsylvania State Senator Robert Tomlinson (R-6th District) recently wrote a letter that urges caution and a measured approach to an omnibus gaming expansion passed on two different occasions by the House. Tomlinson said he would like the state to fix an unconstitutional casino tax on its own, before dealing with other gaming issues. To date, the Senate has not acted on anything other than that tax fix. One of those issues is online gambling (alongside daily fantasy sports). Stakes are too high Tomlinson devoted an entire section of his lengthy letter to online gambling, saying the stakes are too high to get it wrong and assumptions and projections offered to date are deeply flawed. His three main concerns are:
Cannibalization of revenue from PAs 12 existing casinos.
A lack of protection for underage users and problem gamblers.
Revenue projections for online gambling that do not mesh with reality. Of those, cannibalization appears to be Tomlinsons biggest concern. From the letter: Are Tomlinsons concerns valid? According to Online Poker Reports Steve Ruddock, most of his concerns have already been debunked. Thats particularly true of the cannibalization argument for iGaming: Online gambling is understood by much of the gaming industry to help activate relapsed casino patrons or attract users who werent visiting land-based casinos. Letter sets the stage for 2017 Pennsylvanias legislature will tackle gaming provisions including online gambling next year. Tomlinsons letter sets the stage for lawmakers and interests in the state that want to slow down on online gambling or do nothing at all. Meanwhile, proponents will continue to seek to pass language that would regulate online gambling and generate revenue for the state. At this point, its not clear which side will have the upper hand.
1 The latest on online gambling
2 Whats that mean for online gambling?
3 Next year for iGaming? The hopes of Pennsylvanias legislature passing online gambling regulation and a massive fix to a tax on casinos in the state appear to be on hold until next year. The latest on online gambling Last week, the PA House once again passed an omnibus gambling expansion bill, piggybacking on language it passed this summer. That included both a fix for the casino host tax that the state Supreme Court struck down which has an impact of greater than $100 million and online gambling legalization. That put the ball in the Senates court, which has been slow to act on any gaming issues in the current calendar year. The latest? The Morning Call reports that the Senate wont vote on a gambling bill this year, but that the upper body of the legislature is prepared to deal with the casino tax problem: The court ruling stops tax payments based on the unconstitutional law near the end of January. Whats that mean for online gambling? Dealing with the casino tax is something that has an almost 100 percent certainty of happening in the legislature before the January deadline. The state is not going to let casino jurisdictions take a massive hit to their budgets. The question then becomes: Will online gambling, or any other gaming provisions, be tied to the casino tax? The prospects for action on iGaming had seemed dim before the November elections anyway, with a chance that action could still happen this month. The Senate has appeared hell-bent on not doing what the House wants to do. The gambling expansion bill the House just passed was originally sent there by the Senate, just as a casino tax fix. It amounts to the equivalent of an unending ping-pong rally, with the House wanting to take of a number of gambling issues in fell swoop, and the Senate being unwilling to do the same. More from the MC: That is despite the fact that the legislature still needs to pass a gambling bill that accounts for $100 million promised to the state budget, totally separate from the casino tax issue. Next year for iGaming? Online gambling could be taken up again next year, certainly. But that effort will run into several problems:
Legislation will have to start over from scratch, with a new bill being introduced, making its way through committee hearings and ultimately votes in the two chambers. At least the House appears to be happy with the language it has developed on iGaming, and that is the starting point.
Rep. John Payne the champion of online gambling in the legislature is retiring. He wont be around to push online gambling regulation forward.
The added time could give lawmakers a chance to find other ways to raise the $100 million promised to the budget, even though that may not be easy, either. But passing any type of tax increase would be more palatable after the elections than it is right now. It all adds up to the fact that the waiting game for PA online casinos and poker continues.
1 What Wolf said about PA online gambling
2 Lobbyists are lobbying on online gambling
3 Meanwhile casinos, state both could use revenue Legalizing online gambling remains on the forefront of the minds of government officials in Pennsylvania. That includes Gov. Tom Wolf, who fielded a question about online poker and gambling during a recent interview. What Wolf said about PA online gambling Wolf, speaking during a Q&A on Facebook Live, took a question from the Poker Players Alliance about legislation dealing with iGaming. Wolf didnt have to field the question, at all, if he didnt want to. So the fact that he did is perhaps the most significant thing to note here. The comments came after Wolf included new revenue from gambling in his proposed budget, without saying online gambling would be a part of any package, directly. Heres what he said: I think there is real work being done in the General Assembly as to what enhanced gambling including online gambling, including possibly online poker would look like moving forward. The deal is that whatever we do on this enhanced gaming, it should not take business away from our casinos or the lottery. Otherwise why would we do it? Because were already getting revenues from that. It should be something that could be implemented cleanly, and the oversight we could do without being really that intrusive. There are a lot of details that have to go into this. I know other states have done online poker and have done it successfully. We need to keep learning from what we can from those states. Watch his comments here: Lobbyists are lobbying on online gambling A new report from GamblingCompliance (paywall) showed that online gambling is indeed a front burner item in the state. GCs report said that lobbyists representing Sands Bethlehem warned that federal law could be changed to make online gambling illegal under President Donald Trump. While thats at least possible, its perhaps not likely that there will be a change from the Trump administration regarding iGaming. Lobbyists for PA casinos that would like to see online gambling legalized pushed back against that angle. Regardless of what was said, the push and pull of lobbyists on both sides point to the fact that online gambling is very much a part of the debate regarding new revenue and gambling expansions in the state. Meanwhile casinos, state both could use revenue The backdrop of the discussions regarding PA online casinos is simple: Money. The state is trying to dig itself out of a budget mess, and it seems clear gambling will be a part of the equation. At the same time, the state is trying to stave off several months of dipping revenue from land-based casinos. Online casinos would clearly help the bottom line of nearly all operators in the state.
1 The latest on PA online gambling
2 The short timeframe for 2016
3 Still, online gambling appears to be a heavy favorite Pennsylvania is supposed to pass legislation that would formally legalize and regulate online gambling in the state this year. Unless it doesnt. The latest on PA online gambling Earlier in the summer, Pennsylvania passed a gambling expansion bill that included a number of measures; among them were provisions allowing online gambling and poker in the state. That was HB 2150. (That bill also contain language that would regulate daily fantasy sports.) The Senate did not take action on that bill, before it went on hiatus. However, the legislature did pass a budget package that counted on $100 million from gambling online gambling included. GamblingCompliance, however, reports that there is no guarantee the Senate will pass a gambling expansion until 2017 (paywall). From GC: The short timeframe for 2016 The Senate is scheduled to convene just nine times before the November elections September 26, 27, 28 and October 17, 18, 19, 24, 25, 26. That leaves precious little time to complete a gambling bill that has been contentious at times, even if the online gambling portion has not been particularly controversial. And if the Senate does pass a bill, the House would have to concur with that bill, if it is changed. It all adds up to the very real possibility that action must wait until early next year. Still, online gambling appears to be a heavy favorite Even if nothing happens this calendar year, theres not much reason to believe online gambling and poker arent in the cards. The problematic discussions around gambling have mostly centered around expansions of slot machines and video gaming terminals. And despite the protests of Sands Bethlehem, most of the casinos are on board with legalizing online gambling. And the fact remains the budget is counting on $100 million from gambling, and theres almost no way to arrive at that figure without online gambling revenue. So, whether its this year or next, online gambling proponents expect to see legalization of PA online casinos on the agenda.
Pennsylvania is inching closer to legalizing online poker and gambling this week, when a bill containing iGaming regulation passed the House of Representatives. It sets up a possible mad dash to the finish line for a massive gambling bill in the state that would also regulate daily fantasy sports and authorize the expansion of slot machines at new locations. If the bill is passed, it will add to the nation-leading amount of revenue the state generates from gambling. Setting the stage for PA online gambling and the budget Pennsylvanias legislature is set to adjourn on June 30, the same day that the budget for the upcoming fiscal year is due. There had been indications that progress on the gambling bill would be coming sometime this month, although its becoming a last-minute proposition. At least on the House side, the gambling expansion (HB 2150) and online gambling are being counted on to provide revenue for the state budget. Whether the Senate and Gov. Tom Wolf will agree to that sentiment is an open question. Last year, of course, a full budget wasnt passed until nine months after that deadline. With 2016 being an election year, the sense is that the legislature will try to get a budget done, and may extend adjournment until a deal is reached. Gambling, in or out of the budget? Wolf, speaking generally about the budget plan and not specifically about gambling, said the House budget isnt balanced: There has been little public opposition to the gambling bill from Wolf or the Senate, but things can change quickly in the middle of budget negotiations. However, the appetite for significantly raising taxes in an election year is likely approaching zero, and the gambling bill can provide $200 million or more in revenue very quickly. Online gambling would likely provide $100 million in licensing fees, alone. The actions of the Senate today and tomorrow could tell us if they are prepared to send the gambling package to Wolf. One casino, still against it The casino industry is generally behind the online gambling bill. But one casino not shockingly is still against it. That is the Sands Bethlehem, which is owned by long-time online gambling opponent Sheldon Adelson. The shocking part is that Sands might take part in Pennsylvania online gambling, given the chance. From the Morning Call: