Two Pennsylvania Casinos Pay $10m Sports Betting Fee

The Supreme Court decision to end the federal ban on sports betting has led many states to go ahead with legalization in their own jurisdiction. Pennsylvania has already have passed its sports betting bill and two casinos appear to be in a race to be the first to open a sportsbook in the state.

Pennsylvania gambling history

Pennsylvania has been one of the gambling heartlands in the US. Significant legislative changes have been made to the gambling laws in recent times to reflect this.

The state legalized some types of online gambling in October 2017. It then went ahead and passed a sports betting bill following the Supreme Court decision to end the federal ban in May 2018. It was the fourth state after Delaware, New Jersey and West Virginia to pass a bill following the end of the federal ban.

Pennsylvania has long focused a lot of energy on its casino sector, which ranks second only to Nevada in the country in terms of annual revenues. Therefore, it came as no surprise to anyone that it was quick to hop on the sports betting train.

It also hase one of the most successful state lotteries in the country, which has been in operation since 1971. In the intervening years, more than $28bn (£21bn) has been raised for social programs that aid older residents in Pennsylvania.

Despite its pro-gambling stance, it has been a bumpy journey so far with its sports betting efforts.

A rocky road

The main issue that has rumbled on since online gambling was legalized in the state has to do with the launch of an iLottery program for the state lottery. This allows residents to buy lottery tickets online, as well as partake in instant play games that are very similar to online slot games.

This led to the 13 casinos in the state banding together to protest and call for the suspension of this platform. The state declined and the group proceeded to file a lawsuit. They allege that the iLottery instant win games are extremely similar to casino slot offerings.

As per the 2017 online gambling law, the lottery in the state is not permitted to offer these types of games to their players.

Steep sports betting license fee

Criticism has also been focused on the state gaming commission for the hefty license fee for those looking to offer sportsbooks.

Each license comes at a cost of $10m (£7.5m) and would allow the licensee to offer online sports betting, slots games, table games and poker.

It takes 90 days for an application to be approved by the board. If a casino gets the go-ahead, it must pay the fee within the first 60 days of approval. Hefty taxes have been waged on these online offerings, but it doesn’t appear to be too much of a disincentive to the applicants so far. For example, online slots revenues will be taxed at a significant rate of 54%.

Out of the 13 casinos in the state, 11 have applied for an online gambling license, but only two have applied for sports betting licenses. Most of them are looking for otherwise fully encompassing licenses. The state authorities have decided to open the remaining three licenses to operators that are out of state.

The casinos that look like they will be first to open up their sports betting offerings are the Parx Casino, which is located on the outskirts of Philadelphia, and the Hollywood Casino, which is located in Harrisburg.

It is expected that both will get the nod of approval during the public meetings that are held by the board in October. This will give them the green light to open their first sportsbooks straight away.

These applicants will give a presentation during these public meetings, and it’s expected they will reveal their precise timeline of when their sportsbooks will be opened. The new licenses will cover all forms of sports betting, both online and offline.

There is some concern about the hefty tax rates being implemented on sports betting. Pennsylvania has introduced a 36% tax on sports betting gross profits, compared with 6.5% in Nevada, 9.25% in New Jersey and 10% in West Virginia. Some claim that this will be the highest sports betting tax rate anywhere in the world.

It is expected that others will follow suit, especially those near the Ohio border, such as those two casinos located in Pittsburgh and the casino found in Erie.