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Pa Online Gambling Moves Forward

Pa Online Gambling Moves Forward

By on Jun 28, 2016

Pa Online Gambling Moves Forward on House Vote

Pa online gambling HB 2150, sponsored by Representative George Dunbar (R-56), moves forward after the Pennsylvania House of Representatives votes 115-80 in favor of the online gambling bill. The bill, if it becomes final, will allow online gambling activities such as slot machines, but was modified to exclude permitting video gaming terminals, VGTs, at bars, taverns and social clubs. The amendment also contained language that would permit daily fantasy sports under certain conditions and would make changes to current operating arrangements with existing casinos.

The bill, if passes a final vote, will make Pennsylvania online gambling the fourth state in the country to legalize the online activities. The bill originally permitted online gambling and the addition of VGTs in airports and at bars. Casino operators strongly opposed the addition of VGTs at bars at it would essentially create an additional 12 virtual casinos. Eleven out of twelve operators have expressed concern that it would be a slap in the face if legislators permitted the increased competition with bars and social clubs.

The casinos have made significant investments in Pennsylvania thereby creating jobs and providing much needed revenues to the State and towns. Online expansion may lead to erosion of revenue streams for the fixed casino sites if VGTs are permitted. With that, casino operators would have a more difficult time earning a return on the investments made in Pennsylvania. Consequently, operators see it as fair to restrict Pa online gambling to casino operators and not bars and taverns.

Large Revenue Streams Expected

Currently Nevada, New Jersey and Delaware permit online gambling for patrons over 21 years of age. The expected revenues stream from the expansion of Pa online gambling would be over $263 million per year. This is lower than original projections of $280 million as a consequence of not permitting VGTs in bars and taverns. Delaware’s online gambling program has yet to really get off the starting blocks. With just over $1.6 million recorded in all of last year, it pales in comparison to that of New Jersey.

Following last year’s budget debacle, Pa legislators have been looking for ways to plug some of the holes in the budget. With Gov. Wolfe’s hardliner stance last year coupled with facing rising personal income tax rates, expanding the state’s sales tax program and or cutting programs, the Commonwealth’s legislators can’t afford another repeat of last year.

Schools, social service organizations and capital projects suffered as the budget debacle of 2015 went unresolved. Most organizations can’t afford another year of uncertainty and no funding. Schools considered closing classrooms in May until after the budget is approved and state subsidies flowed to the schools. Others have taken the costly, unbudgeted expense of securing bridge financing to meet expenses during the budget crisis. Consequently, Pa online gambling revenues became a necessary tool for lawmakers.

New Jersey as an Example

Other states have added online gambling without issue. Pennsylvania’s neighbor to the east, New Jersey, has enjoyed millions in additional gambling revenue for years. In May of 2016, New Jersey’s online gambling statistics showed a 32% increase over April of the current year and increased 30% year over year. Year to year growth for the bricks and mortar facilities was at 1.6% year to date as of May. Online gaming industry insiders expect this trend to continue to grow into the future. Legislators hope that Pa online gambling revenues see the same level of support.

The Bill will now be voted upon by the Appropriations Committee and then back to the full House floor for consideration. If it passes through these steps, it will go to the Senate for consideration. Barring any unforeseen changes, the bill should end up in Governor Wolfe’s hands for consideration soon.

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