Meeting follows report estimating 0 million from iGaming
The Pennsylvania General Assembly will officially begin to address gaming expansion efforts this week in a joint hearing of the gaming oversight committees of the state House and Senate.
The hearing, scheduled for 2 p.m. Tuesday, is the first step in the effort to draft an omnibus gaming bill expected to include the legalization and regulation of online gaming and daily fantasy sports, as well as expansion measures such as tablet gaming at the state’s airports and possibly video lottery terminals at licensed liquor establishments.
Also at the top of the agenda is a replacement for the casino local host fee that was declared unconstitutional in September by the Pennsylvania Supreme Court.
The hearing will be conducted by members of the Senate Community, Economic and Recreational Development Committee and the House Gaming Oversight Committee. Any bill involving gaming must clear these committees first.
The Senate committee issued a notice that the hearing’s purpose is to “gather information regarding any House/Senate suggested Title 4 changes, and gaming expansion options from the previous and current sessions.” The notice also said the hearing will include testimony from “stakeholders in the gaming industry.”
The scheduled hearing comes on the heels of a white paper issued last week by onlinepokerreport.com analyst Robert DellaFave that projected legalized online gambling would generate more than $400 million in revenue within five years. The report projects that the state would collect $126 million in up-front licensing fees from casinos operating the online gambling sites, and $46 million a year in taxes beginning after the first year, with projected revenues of $230 million in the first year, growing to $364 million by year 2022. A tax rate of 20 percent would bring the state $426 million for the first five years.
“Of any state that has already legalized some form of online gambling or is actively exploring the idea, Pennsylvania represents the biggest economic upside,” DellaFave wrote. “Other contenders, namely New York and California, may own a larger population, but are only considering online poker legislation. Massachusetts, Michigan and New Jersey either offer, or plan to offer, both online poker and casino games, but their populations are a tier lower than Pennsylvania’s.”
The report uses New Jersey as an example in its revenue projections.
“Much of our optimism stems from the strong performance of the New Jersey online gambling market,” DellaFave said. “Although New Jersey initially underperformed its exaggerated expectations, the market has grown at a torrid pace, with revenue climbing from $122.9 million in 2014 to $196.7 million in 2016: a growth margin of 60.1%.
“Extraordinarily high tax rates or license fees could change the narrative significantly, especially for prospective online poker operators, who may find the cost prohibitive and choose to opt out of Pennsylvania.
“Online casino operators too would be forced to tighten their belts, resulting in poorer promotions, tighter games, and (perhaps) fewer operators.”
