Controversial legislation that would allow online gambling in Pennsylvania was left out of an 11th-hour bill to fund the 2016-17 state budget and will not be enacted before the fall at the earliest.
The $31 billion budget was signed by Governor Tom Wolf last week, 10 days into the new fiscal year, but without a final agreement among lawmakers on how to pay for a $1 billion shortfall. Many items were suggested to close that gap, including $100 million in revenue from licensing fees for iGaming in the state.
The House of Representatives passed an internet gambling legalization measure as a means to raise $100 million for the treasury in the market’s first year by way of one-time licensing fees and a 16 percent tax on revenue, but the bill lacked sufficient support in the Senate, which didn’t even vote on it.
Republican Rep. George Dunbar, the bill’s primary sponsor, said regulation of internet gaming and daily fantasy sports are a “no-brainer,” but he acknowledged that other provisions of the bill, such as one calling for slots at non-casino locations like bars and restaurants, were contentious. As originally proposed, the bill would allow racetrack casinos to install up to 250 slots at as many as four outside locations and would allow existing casinos to install slots in major airports.
Dunbar said that if OTB slots are allowed, the state could get an additional $200 million a year in tax revenue. In fiscal 2015-16, which ended June 30, the state received $1.28 billion from slot machines, up by 2.3 percent from last year, though short of the peak of $1.35 billion collected in 2011-12.
Other hurdles remain as well, one of the most significant being the categorical opposition of Las Vegas Sands, the owner of Sands Bethlehem, the state’s second-most profitable casino, to any form of online gambling.
Sands Bethlehem President and CEO Mark Juliano confirmed that to GGB News last week.
“We will continue to oppose online gaming because we don’t feel that’s the direction that the gaming industry in Pennsylvania should be taking,” he said.
Despite this opposition, Rep. John Payne, the sponsor of the iGaming bill, believes there it’s a smoother path for iGaming than any other gaming expansion.
“At last count eight of the 12 casinos would sign up for iGaming on Day One,” Payne told OnlinePokerReort.com. Payne said it was likely 10 would be on board if iGaming becomes law.
As it stands, gaming still plays an integral part in spending plan in the form of a new 2 percent tax on casino table game revenue, which is expected to generate $17 million, and $75 million in expected license fees from a planned second Philadelphia casino. The plan also extends a 3.07 percent state income tax to Pennsylvania Lottery winnings to generate $16 million. The 2 percent increase on the table-game tax brings it to 16 percent, but is supposed to only last for three years. But then again, the table game tax rate was expected to drop to 12 percent after five years of operation, which is now unlikely to ever happen.
Other key funding sources include an increase of $1 to $2.60 on the per-pack excise tax on cigarettes, which is expected to generate $430 million. A 40 percent tax will be imposed on the wholesale price of electronic cigarettes, including vapor-producing devices and liquid cartridges, to generate $13 million. Roll-your-own tobacco and smokeless tobacco will be hit with a tax of 55 cents per ounce to raise $50 million.
An exemption from the state’s 6 percent sales tax on the download of digital videos, books, games, music and applications will be rescinded, raising $47 million.
Liberalizing the sale of wine and liquor is written in for another $149 million.
