At its meeting on October 3, the Pennsylvania Gaming Control Board is expected to approve sports betting licenses for Penn National Gaming’s Hollywood Casino in Harrisburg and Greenwood Racing in Bensalem, which previously submitted license applications. Harrah’s Philadelphia is planning to submit an application at the meeting. All three must pay the state’s $10 million license fee within 60 days of application. The state’s 10 other licensed gaming operators have not yet applied for sports gambling licenses.
Besides the fee, under the state’s sports betting law, operators also must pay a 36 percent tax on gross winnings. Specifically, 34 percent of sports wagering revenue will go to the state’s general fund, and 2 percent will be used “exclusively for grants for projects in the public interest in the Commonwealth,” according to the legislation.
In comparison, New Jersey taxes sports betting revenue at 8.5 percent, West Virginia at 10 percent and Nevada at 6.75 percent. Nevada gaming attorney Kate Lowenhar-Fisher said a high tax rate like Pennsylvania’s could help illegal bookies thrive. “Some of the bills that states have considered or even passed have been really a boon to the illegal bookmakers, because the economics are ridiculous. It makes it impossible for a legal or regulated bookmaker to make any money,” she said. Sports betting only offers slim profit margins for casinos, so “if you levy a bunch of taxes and fees, you’re going to kill it,” Lowenhar-Fisher said.
Last fall, Pennsylvania passed sports betting as part of a huge legislative package including mini-casinos with up to 750 slot machines and 30 table games each; Penn National Gaming, which owns and operates Hollywood Casino near Harrisburg, will develop mini-casinos in York and Lancaster counties. The expanded gambling measure also included online gambling, daily fantasy sports and slot machines at truck stops and airport gaming lounges.
Meanwhile, a coalition of Pennsylvania casinos recently filed suit in Commonwealth Court seeking an injunction to stop the Pennsylvania Lottery from providing illegal, simulated casino-style online games. In May, the Pennsylvania Department of Revenue, which oversees the lottery system, launched iLottery, offering casino-like games online and on mobile devices. The lottery’s website offers a “demo” that anyone—including children—can play, as long as they indicate they’re age 18 or older. Casino operators point out they must follow strict regulations that players are at least age 21, or face thousands of dollars in fines.
Casino operators also note although state law makes it illegal for the lottery to offer and use casino-style games, it launched online games that imitate slot machines, with the same titles and/or themes as slot machines on casino floors.
Pennsylvania casinos are required by law to provide space for lottery ticket vending machines. The casinos have made more than $5 billion in property investments, created more than 18,000 jobs and spent $230 million annually for goods and services from local businesses. In 2016-17, casinos contributed $2.3 billion in slots tax revenue plus $132 million to host communities to use for local projects.
