Host-community tax issue complicates effort
With only six full legislative sessions left before the U.S. election and just one after that before the Pennsylvania General Assembly adjourns for the year, proponents of bills to legalize online gaming and daily fantasy sports revisited both issues last week, beginning with hearings before the House Gaming Oversight Committee.
Among those testifying was John Pappas, the executive director of the Poker Players Alliance, who made the case for the case for legalization and regulation of online poker by highlighting the failed online poker sites Lock Poker and Full Flush Poker, both of which closed, taking player balances with them. “This is bigger than just another $100 million for Pennsylvania,” he said, noting that legalization will provide consumer protection.
“There is no policy or political justification for delaying regulation of internet gaming in Pennsylvania,” Pappas testified. “Each and every day that the commonwealth goes without regulation is another day that consumers are left unprotected and revenue is left on the table. Doing nothing is simply not an option; Pennsylvania consumers and taxpayers have waited long enough.”
Steve Brubaker, executive director of the Small Business Fantasy Sports Trade Association, testified on behalf of small businesses in the fantasy sports industry, noting that most of the bills that have passed in 2016 don’t create a good environment for smaller companies.
Rep. John Payne, chairman of the gaming committee, agreed with Pappas that legalization of iGaming and regulation of DFS is more about protecting bettors than anything. “This isn’t about the Democrats versus the Republicans,” he said. “This is about protecting consumers. It’s been a great team effort.”
However, the real action for either form of gaming to become legal before next spring—when a newly elected legislature could choose to restart the process from square one—would need to come from the state Senate. The House already passed H 2150, sponsored by Rep. John Payne, who currently chairs the gaming committee (he will retire at the end of the session), which would authorize online gaming and provide for DFS regulation. A separate bill to authorize fantasy sports regulation only is out of committee and on the Senate floor.
The Senate could either act on the House-passed iGaming bill—likely with amendments to remove provisions like adding slot machines to airports and off-track betting parlors—or vote on the separate DFS measure. Both chambers of the Assembly passed a state budget that figures iGaming revenues.
Meanwhile, the efforts to pass iGaming and DFS bills was overshadowed by the crunch to replace the host-community share of slot revenues in Pennsylvania’s gaming law, which was struck down as unconstitutional two weeks ago by the Pennsylvania Supreme Court. The court, which held the 2 percent-or-$10 million minimum fee to be paid local host communities from slot revenues violates the state constitution because it imposes different burdens on different licensees. The legislature was given 120 days to replace it before all host payments cease.
Lawmakers are still grappling on how to devise a system that distributes the local-host burden fairly among all casino licensees. Payne has called on the state Senate to add a host-community payment fix as an amendment to the House-passed iGaming bill, which would both meet the court-imposed deadline and settle the iGaming and DFS issues before the current session ends.
