Even with less-than-impressive results in states where it is legal, iGaming is an issue that keeps coming up in several states. Last week, Pennsylvania and New York got more serious about considering this form of gaming.
Experts on online gaming briefed the Pennsylvania House Democratic Policy Committee last week.
Kevin O’Toole, executive director of the Pennsylvania Gaming Control Board, told the lawmakers that his agency has studied online gaming and concluded that it can be regulated and controlled and that the existing technology can accurately locate players to prevent out-of-state players from participating. The technology can also prevent minors from playing. There are also provisions for preventing money laundering.
He recommended limiting the games to existing brick and mortar casino operators in the state. The director said he favors “bad actor” clauses to prevent those who have fallen afoul of federal laws governing online gaming from participating.
Caesars Entertainment Senior Vice President David Satz told legislators that no evidence exists that online gaming cannibalizes existing casinos. It does, however, encourage people who don’t normally visit casinos to play. In New Jersey the number of customers increased by 11 percent when Caesars introduced online gaming.
On the other side were lobbyists representing Las Vegas Sands and its anti-online gaming chairman, Sheldon Adelson, who spoke to Bloomberg TV last week about online gaming.
“I want to make money from those who can afford it. But I can’t tell over the internet who is underage,” he said. “I can’t tell who’s got financial difficulties. I can’t tell who is not gaming responsibly. I can’t tell if money is being laundered. I can in the casino.”
One of Adelson’s arguments—that iGaming cannibalizes bricks-and-mortar casinos—was discounted by the study’s author.
“The net effect of iGaming would be to complement, not cannibalize, land-based gaming,” Stephen P. Mullin, president of Econsult, told the committee.
Pennsylvania’s casino industry is beginning to stagnate in the face of more competition and the state is not likely to see increased tax revenue from the industry. However, legalizing online gambling in the state could create a significant boost in tax revenue.
That’s one of the conclusions from a report commissioned by a state legislative research agency. The report was conducted by Philadelphia consulting firm Econsult Solutions, which was paid $153,000 to conduct the study
The study estimates that legalizing online gambling could bring as much as $113 million to the state in new tax revenue per year.
Republican Senate Majority Leader Dominic Pileggi said after a briefing session on the report that lawmakers could expand gambling in Pennsylvania this year in the face of falling revenues.
“Fundamentally there’s a policy decision. How much gambling do we want to make available to the citizens of Pennsylvania?” Pileggi told Philly.com. “Do we want to legalize every form of gambling that every casino operator has ever thought of and make those forms of gambling available to Pennsylvanians?”
The report was asked for by Senate officials to study how to offset falling casino tax revenue.
The report also says relaxing some casino regulations could also increase revenue such as restrictions on credit/cash advances and third-party check cashing.”
The report also highlighted two types of online gambling for the state to explore, namely fantasy sports and prediction markets—such as betting on the outcome of an election.
A full Senate hearing on the report is expected to be scheduled for June.
Among the report’s findings:
• Tax revenue from casinos statewide grew from 2006 to 2012 before dropping by 4 percent in 2013.
• Casinos generate about $81 million a year in non-gaming tax revenues.
• Pennsylvania’s effective gaming tax rate of 44.5 percent is competitive for the Mid-Atlantic region.
In New York, Assemblyman J. Gary Pretlow, chairman of the Committee on Racing and Wagering, introduced a companion piece to a bill in the state Senate to legalize online poker in New York State.
The Senate bill was introduced by state Senator John J. Bonacic in March.
Both bills restrict only gambling to the poker games Texas Hold ‘em and Omaha poker.
The bill would allow for 10 online licenses awarded by the state Gaming Commission. The 10-year licenses would have a one-time application fee of $10 million.
The bills also bar operators that continued to take bets in the U.S., after 2006, when federal law blocked online gambling in the U.S.
Online gambling revenue would be taxed at 15 percent. The bills would also allow New York to enter into agreements with other states to share player pools.
