The Pennsylvania Gaming Control Board began accepting license applications on July 11 for operators, manufacturers and suppliers relative to sports wagering. The applications are available on the PGCB’s web site, gamingcontrolboard.pa.gov, under its licensure section.
A “Sports Wagering Operator” is licensed by the board to operate sports wagering, a mobile sports wagering system or an interactive sports wagering system, through the provision of an interactive gaming or sports wagering platform, on behalf of one sports wagering certificate holder.
A “Sports Wagering Manufacturer” builds, rebuilds, fabricates, assembles, produces, programs, designs, sells, leases, offers or otherwise makes modifications to any authorized sports wagering device or associated equipment for use or operation in Pennsylvania for sports wagering purposes.
A “Sports Wagering Supplier” provides, distributes or services any authorized sports wagering device or associated equipment for use or operation in Pennsylvania for sports wagering purposes that is not otherwise required to be licensed as a sports wagering manufacturer, or, provides risk management services or integrity services to a sports wagering certificate holder or sports wagering operator.
The Pennsylvania Gaming Control Board (PGCB) rolled out temporary regulations earlier this summer, but not a single operator has applied for a sports betting license. Potential gaming operators have not been shy about telling the state that it has made the prospect of doing business there all but impossible.
Of course, it remains to be seen how many operators, or suppliers, for that matter, apply to operate sports betting in Pennsylvania, where the state law and regulations covering sports betting have been assailed as unworkable. In addition to a $10 million application fee, the law provides for a whopping 36 percent combined tax on sports betting operations. By comparison, legal sports books in Nevada pay a 6.75 revenue tax to the state, and still operate with a profit margin that hovers around 4 percent or 5 percent.
The 36 percent sports book revenue tax (34 percent to the state plus 2 percent local) also compares poorly to other newly legal jurisdictions. Wes Virginia requires a license application fee of only $100,000 with a 10 percent revenue tax. In New Jersey, operators pay the same application fee—on 10th that of Pennsylvania—with a revenue tax of 8.5 percent.
“PNG first notes that the $10 million license fee and 36 percent tax rate established in the gaming expansion legislation are the highest in the world and may make it impossible for a casino operator to make any return on its investment capital,” Penn National Gaming Vice President and general manager Daniel Ihm wrote in his company’s response to the state’s temporary regulations. “Based on the tax rate and the fact that, on average, 95 percent of sports wagers are returned to winning bettors, PNG estimates it could lose approximately 40 cents on every $100 wagered on sporting events.”
The fees and taxes also have been assailed by other operators, and even by the National Football League, with the NFL has taken the stance that the cost of doing business in Pennsylvania would not permit operators to compete effectively with illegal bookmakers.
In an interview with Sportshandle.com, Pennsylvania Gaming Control Board spokesman Doug Harbach downplayed the fact that Pennsylvania’s sports-betting market seems stalled due to the costs.
“When I ask internally with the people who handle in our licensing area, there doesn’t seem to be a lot of concern; it’s just a matter of timing,” said Harbach. “We haven’t approved all of the regulations yet, so I think there is some holdup on that. My understanding is that there are still some casinos that are putting together partnerships before they petition us.”
Unlike the online gaming provision of the new law, there is no provision for offering untaken sports betting licenses to anyone outside of the 13 brick-and-mortar casino licensees.
