Ever since the U.S. Supreme Court removed the federal ban on sports betting by invalidating the Professional and Amateur Sports Protection Act (PASPA) in May, several states around the U.S. have been scrambling to have sports-betting programs in place by the start of the NFL football season on September 8. New Jersey’s casinos already have sports books up and running, and Mississippi is not far behind.
Pennsylvania, not so much.
Even though a few of Pennsylvania’s 12 operating casinos have expressed interest in launching sports betting—Sands Bethlehem and Valley Forge Casino are the latest—two months after sports-betting licenses became available, not a single casino has ponied up the $10 million fee to become a licensed sports-betting operator.
The reason, it is widely believed, is not only that fee—several times what any other state is charging—but the whopping 36 percent tax on sports-betting revenue created by last year’s gaming expansion law. That tax has been widely criticized as unworkable for legal sports books that carry an average profit margin under 5 percent.
The lawmakers who created that tax still maintain that in the end, casinos will be unable to resist the prospect of operating sports books, and will pay up. State Rep. Robert Matzie said as much last week in an interview with the New Castle News.
So far, there are no indications Matzie’s prediction will come true. In an interview last week with the web news source SportsHandle.com, Doug Harbach, director of communications for the Pennsylvania Gaming Control Board, reported that the board has not yet received a single sports-betting license application.
The Pennsylvania taxes and fees have been assailed by both casino licensees and sports betting vendors. “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 capita,” wrote Penn National Gaming in a June public comment on the sports-betting law. “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.”
Dan Shapiro, vice president of business development of William Hill US—already operating sports books in New Jersey—made a similar comment to Sportshandle.com last week. “With a 36 percent tax and a $10 million license fee, there are other states that are more interesting to us,” he said. :”It’s just not something we’re looking at seriously right now.”
