Pennsylvania takes crucial step towards online gambling regulation

A bill to legalise online gambling in Pennsylvania passed two Senate committees on Tuesday evening and is expected to be passed by the full Senate on Wednesday.

Bill H 271 would legalize and regulate online casino, poker, lottery and DFS, albeit with heavy taxes.

Operators would be required to pay an upfront licensing fee of $5m for a casino licence and $5m for a poker licence, or $10m for both, with online casino then taxed at 54% of revenues, poker taxed at 16%, and DFS at 12%.

The 54% rate mirrors the tax for land-based properties in the state, and has been lobbied for by some existing casinos as a way to minimize new entrants to the market.

The bill was passed Tuesday by the Senate Community, Economic & Recreational Development Committee with an 11-3 vote, then the Senate Appropriations Committee by 24-2.

The full Senate is expected to vote on the bill Wednesday and the fact that 24 of 50 senators have already passed the bill in the Appropriations Committee suggests passage should be straightforward.

If so, the bill will return to the House, which has previously passed two similar online gaming bills.

There would be 12 licenses for both poker and casino available.

Pennsylvania casino Penn National has previously warned that “no-one will sign up” if tax rates are too high, but Dermot Smurfit, CEO of US-facing provider GAN, said he expected a “surprisingly high” number of the licenses to be bought, in part because operators will be forced to wait another two years to apply if they sit out the initial award.

Smurfit said casino operators could still feasibly turn a profit in the market by eliminating bonusing for players and turning to cut-price content suppliers.

He added it was unlikely that all 12 poker licenses would be taken given that the nearby New Jersey market currently only supports three operators. The two markets would likely share liquidity should Pennsylvania come online.