Online gaming sites would take months to set up
Even though a bill to allow online casino gaming in Pennsylvania is suddenly moving forward, players are months away from placing Internet bets legally.
The Gaming Oversight Committee of the state House voted 18-8 on Nov. 18 to approve a bill allowing all forms of casino gambling online, including slots, blackjack and poker. The proposal had been in the background as state leaders wrangle over a budget, which by law was due July 1. The online gaming bill is emerging as part of a package to raise money for the state.
The proposal still faces votes by the House and Senate; if both pass it, Gov. Tom Wolf would have to sign it into law. Then, licensing and game testing could take six months or more.
New Jersey started accepting online gaming license applications in June 2013, and Atlantic City's first Internet casino launched the following November, notes Marie Jiacopello Jones, partner at Fox Rothschild LLP and special gaming counsel for Amaya Inc., the world's largest publicly traded online-gaming company and operator of the PokerStars and Full Tilt brands.
“Six months would be great” for Pennsylvania to have games up and running, Jones tells Player's Advantage.
Gaming Control Board spokesman Doug Harbach says the agency estimates it would need nine months from passage of the law.The bill sponsored by state Rep. John Payne, R-Dauphin County, would allow each of the state's casinos to offer Internet gaming, with the option of using contractors such as Amaya to provide the platform. A casino would have to pay a $5 million licensing fee; a contractor would have to pay an additional $1 million fee.
The Gaming Control Board, which tests all slots used in Pennsylvania and sets the rules for table games offered at land-based casinos, would be in charge of regulating online games.
The bill sets a tax rate of 14 percent on Internet gambling revenue. That's comparable to the current rate on table-game revenue at the state's land-based casinos. Pennsylvania's 55 percent tax rate on slot machine revenue is among the highest in the country; earlier proposals for a similar rate on Internet gaming were criticized as unworkable.
Jones, who was instrumental in getting Amaya licensed to operate in New Jersey, says the tax rate there is 8 percent, the same as for land-based operations.
She says the Pennsylvania proposal would allow Amaya to operate in the Keystone State, as well.
John Pappas, executive director of the Poker Players Alliance, which bills itself as the voice of poker players across the country, says that's a popular aspect of the bill. Federal investigators shut down American operations of Full Tilt and PokerStars in 2011 amid allegations of banking violations. Amaya bought the companies in 2014, and none of the previous leadership remains.
“A lot of players who used to play online back in the heyday would like to see a company like PokerStars back in the marketplace,” Pappas says. “Someone once told me (that banning the current companies) would be like offering coffee for first time in the state but not allowing Starbucks to sell.”
Pappas says state regulation would ensure that operators have been thoroughly vetted and have software and equipment to guard against fraud and collusion. Regulation also would give players confidence that they will be able to withdraw their money easily, he says.
Pennsylvania could play a key role in the expansion of online gambling in the United States. Only Nevada, New Jersey and Delaware currently allow online gaming, and Nevada allows only poker. Passage of the Pennsylvania bill would double the number of people eligible to gamble online.
Under federal law, gamblers must physically be in the state to gamble online.
The Pennsylvania bill would allow the state to form compacts so gamblers here could play with those in other states that allow online gaming. In February, Delaware and Nevada leaders signed the first online gambling compact.
Jones says poker seems to be the most popular online offering in New Jersey, but other games gain fans as people become familiar with them.
Increasing the pool of players, or “liquidity,” is essential for online poker. That's one reason Pennsylvania and its 12.8 million residents are important to the online gambling campaign. A proposal in California, population 38.8 million, also is attracting attention.
Payne, who is chairman of the Gaming Oversight Committee, says many Pennsylvanians already gamble online at unregulated sites. He also argues that online gambling should be regulated and taxed before the state imposes any broad-based tax increases.
Mark Gruetze is the gambling columnist for Trib Total Media. Reach him at firstname.lastname@example.org.