It’s becoming more and more apparent that Pennsylvania is all-but destined to earn the title of, ‘Fourth US state to legalize internet gambling‘. It seems to be more of a waiting game than a question at this point, with anticipation building as the State Legislature prepares to reconvene in September, tasked with filling a lingering gap in the PA Budget.
Most of the state’s 12 casinos are happy with the projected move, not just because they are eager to jump into internet gambling – following in the footsteps of Nevada and their close neighbors, Delaware and New Jersey – but because it will help to offset another proposal that came out of left field and passed into law faster than you can say, “Blackjack!”
PA casinos were prepared for the gaming reform measure that would allow them to install satellite-operated slot machines at the Keystone State’s 6 international airports and throng of off-track betting facilities, but they were utterly shocked by a last-second tax hike on table games revenue.
16% Table Games Tax to Raise $17M/yr
Just before the summer break, legislators pounded out a revenue package meant to cover the $31.6 billion budget passed in late June. Among other things, Pennsylvania chose to increase casinos’ tax on table games from 14% to 16%; a calculated decision that they estimate will generate an additional $17 million in annual funds.
Needless to say, none of the state’s licensed casino operators were too pleased with the decision, especially since they never saw it coming.
“We spent a lot of time fighting some of the other stuff,” Mark Juliano, CEO of Sands Bethlehem told The Morning Call. “This one sort of came out of nowhere. We’re not happy about it,” he continued. “But it doesn’t stop us in our tracks. [Pennsylvania] is already the highest tax environment for casinos, but we’ll deal with it.”
Juliano was right on that last point. PA charges a staggering 54% tax on all slot machine revenue; the highest in the nation. But not all of the state’s casinos see the table games tax hike as a pure negative; but rather an exchange of mutual benefits.
“Certainly with any tax increase there is a balance between good effective government and a business’ ability to provide a quality product and stimulate the economy through job creation. If the balance tips too far, it is not good for anyone,” said Bobby Soper, President of Mohegan Tribal Gaming Authority.
“We clearly are watching the other issues very closely and believe that online and [daily fantasy sports] are part of a comprehensive product offering,” said Soper.
And therein lies the equilibrium; the pivotal balance that will be sustained with the passage of the airport/off-track slots expansion and internet gambling bill.
Why So Certain iGaming Will Pass?
There are no guarantees in life – anyone old enough to gamble has surely learned that hard-knocks lesson by now. Then again, any seasoned gambler also knows to play the odds, and the odds are clearly in favor of legalized internet gambling in Pennsylvania.
While legislators came up with numerous ways to supplement the more than $1 billion budget shortfall, including tax hikes on cigarettes and table games, they didn’t fill the gap entirely. That’s where the heightened probability of internet gambling comes into play.
Most casinos are demanding the omnibus bill be passed as a trade-off for the tax hike. Lawmakers seem to be viewing it as a must-pass urgency bill. And there’s no denying that the $50+ million it will immediately generate in licensing fees – plus an estimated $100+ million per year once up and running – will have a crucial impact on the budget’s revenue package.