After a much hyped spending bill was passed through the Pennsylvania General Assembly – one that included regulations for online gaming and poker as a part of the budget – the bill has yet to be signed by Governor Tom Wolf. Why is that? It comes down to the crux of what holds up many things in government – money and politics.
Since June 30, when the General Assembly passed a $31 billion budget for the Keystone State, that bill has languished on the desk of Wolf and has yet to be enacted. That is because the bill, which put through spending plans for every facet of the state’s operations, for some reason didn’t pass the actual way that the state would derive the funds to pay for the budget. In essence, Pennsylvania legislators said “we have passed a budget, but our checking account is empty so we can’t pay for it.”
The problem is a significant one. If there isn’t any methodology for the state to pay its bills by Monday, Wolf will be forced to veto the budget that was passed last month lest it become law without his signature. According to reports, the members of the House and Senate didn’t meet on Thursday or Friday and, although there could be weekend sessions held, nothing is scheduled at this time.
Online gaming and poker isn’t the only thing that is being held up, either. Other methods of increasing revenues included in the budget discussions are higher taxes on cigarettes and tobacco products in general, increasing bank taxes and extending the state’s 6% sales tax to cover digital downloads such as e-books, digital music and video games. For those in the gaming world, however, it is the online gaming and poker part of the discussions that are important.
The online gaming and poker regulations in the proposed budget would make Pennsylvania the fourth state to enact such legislation. Under the plan, the state’s 12 casinos would have the option of participating in the Pennsylvania online gaming industry (full casino gaming, not just online poker). Each casino would have to pony up an $8 million licensing fee and any software provider or other gaming operations could also take part, provided they also pay the $8 million up front.
Once the system is up and running, the state would take in 14% of the revenues from any online gaming operations inside the state. The municipalities where the online operations are licensed would also earn 2% of the revenues. Players would have to be physically located in the state of Pennsylvania, provide accurate taxation information (SSN, address, etc.) and they would have to be 21 years old or older to take part in the games.
The level of success of Pennsylvania and online gaming is the huge question in this mix. With its 12.8 million citizens, Pennsylvania would be the largest state yet to enact online gaming regulations. With this said, it is only about 3 million residents larger than New Jersey, where online gaming and poker has drawn in $358 million in total revenues and $53 million in tax revenues since it was launched in November 2013, far short of the $260 million in TAX REVENUES that New Jersey Governor Chris Christie said would be drawn in during the first full year (Christie also estimated online gaming revenue over $1 billion in its first year, which many said was completely unrealistic and were proven true). It is possible that Pennsylvania would face a similar situation as that in New Jersey…a good gaming market but not the windfall that they are expecting.
The answer to that would be some sort of compact with another gaming state, with New Jersey being the most logical option. A combination of Pennsylvania and New Jersey for online gaming and poker would not only be a boon to those states, it would more than likely force New York into action in passing online gaming and poker legislation, most likely during the 2017 legislative session.
But these speculations are all moot unless Pennsylvania moves forward. With the budget impasse dragging onward, it doesn’t seem that either Governor Wolf nor the Pennsylvania General Assembly are in much of a hurry to pass the online gaming and poker legislation. It is also possible that the negotiations on the budget could remove any of the revenue enhancements prior to being signed by Wolf, including that online gaming segment. And if you’re wondering how long the Pennsylvania politicians can “hold their breath,” so to speak – the 2015 budget for the state wasn’t passed until April of 2016.
