Pennsylvania Set to Offer Online Licenses to Non-State Operators

Pennsylvania Casinos Calling for Shutdown of State iLottery

The US gambling market is only now starting to catch up with its counterparts in other parts of the world. Sports betting was finally legalized on a federal level in May 2018 and now many states are expanding the online offerings in their states. Pennsylvania is one of them, with two licenses now being available for operators outside of their state.

Pennsylvania’s gambling background

Pennsylvania has long been a popular destination for gambling. In October 2017 the state decided to legalize certain forms of online gambling.

A couple of months after the Supreme Court legalized sports betting in May 2018, Pennsylvania passed its own sports betting legalization bill. It was the fourth state to do so since the Supreme Court decision, following the likes of Delaware, New Jersey and West Virginia.

One of the main areas of focus has been Pennsylvania’s casino sector. Currently, it ranks only behind the state of Nevada in terms of its annual casino revenues. It was a natural step to push forward with the sports wagering bill.

The state lottery, which has run since 1971, is also extremely popular. To date, it has raised $28bn (£21.3bn) for social programs that help elderly residents in the state.

Lawsuit filed

There has been some controversy in Pennsylvania following the legalization of online gambling. The state lottery set up an iLottery platform and offered residents the option to purchase lottery tickets online, as well as partake in different types of instant games.

The 13 casinos in operation in the state outlined their dislike for this move, claiming that the creation of the iLottery platform was illegal, and called for a suspension of the platform.

According to the casinos, the lottery’s instant win games were almost identical to those instant win titles that the casinos had and that a law introduced in 2017 stated that the Pennsylvania lottery was not allowed to offer these casino-type games.

The group of casinos has subsequently filed a lawsuit.

Applying for licenses

Initially, the state had offered online licenses for a fee of $10m (£7.6m), a significant sum. Licensees would be allowed to offer the likes of poker, table games and interactive slot games.

There is a 90-day approval period, during which the board assesses an applicant and makes a subsequent decision. Following approval, the license fee needs to be paid within 60 days. There is a significant tax of 54% for online slots, but this hasn’t appeared to act as a disincentive for the parties involved.

To date, 11 of the 13 casinos in the state have applied for a license for online gambling. They all looked for the fully decked license, except for Presque Isle Downs which does not want to have an online poker offering. Currently, there is room for three more online poker licenses, two for slots and two for table games. It is unlikely to take too long for these licenses to be allocated.

As per the 2017 online gambling law, any of the licenses that have not yet been claimed can be offered to other types of qualified gaming entities.

These parties are not required to be of American origin, which means that out-of-state and overseas operators can now get involved. Petitions are being sought for these remaining licenses between October 15 and October 31.

After this allotted period expires, the Pennsylvania Gaming Control Board will look at the applicants, ensure that they meet all the requirements and will then conduct a random, blind draw. Those who are successful in the draw will then have 45 days to send in their online application.

There has been no indication yet when the online gambling scene will be officially launched, with most parties believing that it will be sometime in 2019.

The state of New Jersey decided to wait until all the licensed parties were ready before launching, so as no particular party could receive a first mover advantage.

Currently, no online sports betting will be allowed, despite petitions being filed with the Gaming Control Board by the likes of Penn National Gaming and the Greenwood Gaming and Entertainment company.

The board said that the time is not yet ripe for online sports betting, but did not rule out it going ahead in the future.  It is likely the board will want the new sports books to have a bedding-in period in order to assess what effect the introduction of sports betting will have before committing to an online offering.