Pennsylvania State Senator to Introduce Online Gambling Bill Soon

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Pennsylvania State Senator Jay Costa (D – District 43) issued a “Senate Co-Sponsorship Memorandum” on Monday, announcing his intention to introduce legislation that will legalize and regulate online gambling in the Commonwealth.

It seemed that the Pennsylvania legislature would get online gambling, including poker, legalized in 2016 and, in fact, the House of Representatives did, but the Senate never followed suit. The state has become one of the largest gambling centers in the United States and there is a lot of support for online gaming amongst lawmakers, but there were enough disagreements on some issues that the ball was never carried over the goal line.

The legislature’s attempts to cobble together a balanced budget last year were a mess and online gambling was promised as a solution to fill a $100 million gap.

In the Memorandum, Senator Costa summarizes what his bill would entail. All casino games would be permitted on the internet, with the dozen Pennsylvania casinos being eligible to apply for internet gaming licenses. Licensing fees would amount to $10 million for the casinos and $5 million for vendors who partner with a casino to provide the gaming platform (for example, PokerStars or 888). Those fees would go into the state’s General Fund.

Internet gambling operators would be taxed at 25 percent of gaming revenue; 15 percent going to the Property Tax Relief Fund and 10 percent deposited into an account with the Commonwealth Financing Authority, to go to towards economic development projects in the Commonwealth. Half of the funds in said account will be for projects in a casino’s surrounding counties.

No internet gambling will be allowed on casino property (to prevent tax avoidance by the casinos), but players may sign up for accounts online or at a casino.

One of the aspects of internet gaming that was debated was the expansion into Pennsylvania airports. Senator Costa’s bill would authorize tablet gaming at the Philadelphia and Pittsburgh airports on a five-year trial basis. There would be a $2.5 million licensing fee and this revenue would also be taxed at 25 percent.

Daily fantasy sports and internet lottery sales would also be legalized.

One of the most pressing gambling legislative challenges that cropped up in the final quarter of the year was how to handle casino “host fees.” The dozen casinos in the Commonwealth are all required to pay out a portion of their revenues to their local municipalities and counties; the nine casinos outside of Philadelphia must pay $10 million per year or two percent of slot machine “gross terminal revenue,” whichever is greater. In 2016, the owner of the Mount Airy casino sued the state, saying that this was an unconstitutional tax, as every non-Philly casino ended up paying the $10 million and therefore each was essentially paying a different tax rate. The state Supreme Court agreed in late September and gave the legislature 120 days to come up with a solution.

Senator Costa’s solution is to basically take away the “either/or” option and just require the casinos to pay a $10 million annual host fee.

Senator Costa did not say when he will introduce the bill, just that it will be introduced in the “near future.”

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