Since online gambling was legalized in Pennsylvania under gaming legislation passed in 2017, those based in the state can use their electronic devices to participate.
This has opened the path for the 13 existing casinos to snap up new licenses. By the deadline early this week, nine had submitted applications for the hefty $10m (£7.67m) license fee, which doesn’t include the state tax.
The licenses allow the casinos to offer online gaming in three categories: peer-to-peer interactive games such as poker; non-peer-to-peer interactive table games; and interactive games that simulate slot machines.
The gaming board has 90 days to approve the licenses. Fees are due within 60 days of approval.
Mixed messages in Pennsylvania
The interest from the casinos is, however, muddying the waters slightly with the currently protesting gambling industry.
Back in May, the Pennsylvania Lottery launched iLottery, but operators raised their concerns, believing that the online elements mimic slot machines. Pennsylvania Revenue Secretary C. Daniel Hassell acknowledged last month that online lottery games were inappropriately marketed as “slot-style” or “casino-style.”
He told the casinos’ attorney, Mark Stewart, that an affiliate of the iLottery was responsible for the advertising and that the practice had stopped. With no confirmation, though, it could be an issue that ends up in court.
Previously, the casinos had said the iLottery has the “same interactive appearance, feel, and play experience that a player would expect from land-based and online slot machines.”
The casino operators said the lottery also uses two essential casino tools to retain customers: free play and a patron-loyalty program. The iLottery offers prizes up to $250,000, and play prices start from just one cent, similar to slot machines.
The casinos also complained that the lottery is aimed at players 18 or older, while the casinos would be sanctioned if they allowed anyone younger than 21 to bet.
With this complication hanging over the deadline for the Pennsylvania interactive gaming licenses, which are offered under the state’s 2018 expanded gaming law, it was thought that operators would mostly avoid the full license option and instead go for one-off investments.
Tax, tax, and more tax
Pennsylvania was taking a significant gamble on these licenses and the accompanying tax rates, 16% of the casino’s win for internet poker games and online table games, and 54% for online slots, which is an astonishing four times higher than New Jersey and the most expensive in the nation.
The state’s 13 casino license holders had until Monday to apply for the licenses for all three categories of internet games.
What casinos have applied?
- Parx in Bensalem
- Mount Airy in the Poconos
- The yet-to-be-built Stadium Casino in South Philadelphia
- Sands Casino Resort Bethlehem
- Hollywood Casino at Penn National Race Course
- Valley Forge Casino Resort
- Harrah’s Philadelphia Casino & Racetrack
- Rivers Casino in Pittsburgh
- SugarHouse Casino in Fishtown
If all nine petitions are approved, it will generate a whopping $90m (£69 m) for Pennsylvania’s treasury via license fees alone. That’s almost double the Independent Fiscal Office’s estimate that issuing iGaming certificates would generate $54m (£42 m) this year.
What about those that haven’t?
The four casinos that did not apply have the option to apply for individual licenses that cover interactive gaming categories at the cost of $4m (£3.1) per license.
The four are:
- Lady Luck Casino Nemacolin
- Meadows Racetrack and Casino in Washington
- Mohegan Sun Pocono
- Presque Isle Downs & Casino in Erie.
If any of the licenses are unsold after Aug. 14, the Gaming Control Board could offer them to qualified operators that do not have casino licenses.
Currently, there are no applications for sports betting licenses, thought to be linked to the impossibly high 36% tax rate and the ongoing delays.