Online gaming will be tied to brick-and-mortar casinos
As Pennsylvania state senators introduced a fifth online gaming bill, momentum for iGaming legalization in the state continues to build.
The new bill, SB 900, would create internet gaming permits for current casinos that offer table games and slots. Permit fees would be $10 million, with a renewal fee of $1 million every five years. Game servers would be required to be located an maintained “only within the physical location of a permittee’s facility.”
Platform and software providers would be required to purchase a separate license from the board.
The bill would require in-person registration at a brick-and-mortar casino before players could access the gaming sites. Exceptions to this rule would be granted for people living 20 miles or more from a casino.
The bill, sponsored by Senator Kim Ward and co-sponsored by
Three other senators also would give the Pennsylvania Gaming Control Board authorization to issue temporary regulations for iGaming, to accelerate the launch.
One important difference from other iGaming bills currently before the legislature is the tax rate—internet gaming revenue would be taxed at 54 percent under the new Senate measure, just one point below the state’s high slot tax.
The national Poker Players Alliance advocacy group applauded the introduction of the Senate measure, while expressing reservations about some of its provisions.
“Today the Pennsylvania Senate took an important step toward bringing the great game of poker into the 21st century and ensuring residents are protected by the most sophisticated online consumer technologies,” said John Pappas, executive director of the PPA. “As the internet increasingly becomes an integral part of all of our daily lives, Pennsylvania lawmakers are clearly recognizing that more and more Pennsylvanians want the option to enjoy the game of poker online.
“We do, however, have serious concerns with a provision that requires ‘in person’ registration at a land-based casino in order to play online. This completely undermines the value of the online market to attract new customers that may not visit a brick-and-mortar casino. There should absolutely be ways for a person visiting a casino to sign up for an online account, but cutting off safe and proven online registrations would be a major barrier to entry for adult players and ultimately damaging to the new industry.”
Meanwhile, last week, the state House Gaming Oversight Committee continued public hearings on iGaming in a session at the Capitol during which officials of Caesars Interactive Entertainment gave lawmakers a demonstration of how internet gaming would work, and how built-in protections will keep underage and compulsive gamblers off the proposed sites, all of which would be operated by current brick-and-mortar casino licensees.
Michael Ceccarelli, senior vice president and chief information officer for Caesars Interactive, showed a real-time interactive map that can display the locations of everyone logged on to play the operator’s games using cellular and Wi-Fi triangulation technology—which has been effective in the operator’s online operations in New Jersey, Nevada and Delaware in blocking players outside the legal area from signing on.
Caesars Interactive official Michael Cohen told the board that its current legal internet casinos in New Jersey and elsewhere have already proven that iGaming does not take revenue from brick-and-mortar casinos. “Actually, it’s the opposite effect,” he said. “We’ve seen that more players are coming to the brick-and-mortar casinos because they’ve been playing online.”
Cohen added that online gaming creates new casino players, attracting a younger demographic than live gaming. Sixty percent of online players, he said, are between the ages of 21 and 39.
Rep. John Payne, chairman of the Gaming Oversight Committee, is sponsor of the iGaming bill that is seen by many as the model for how the final legislation should look. Payne’s bill, HB 649, would provide for both poker and casino games online, where two other House bills would provide only poker. License fees would be $5 million, with significant vendors paying a $1 million fee.
Payne’s bill would tax online gaming revenues at 14 percent. At last week’s hearing, Caesars’ Cohen said a tax such as that in the new Senate bill would be unworkable. “If the tax rate is the same as the slot machines in the brick-and-mortar casinos… no one will participate,” Cohen told the board. “It’s a license to lose money.”
Neither Payne’s bill nor the new Senate measure contains so-called “bad-actor” language that would prohibit participation by iGaming operators who maintained U.S.-facing online casinos after passage of the 2006 Unlawful Internet Gaming Enforcement Act. Such language in other proposed state laws would prohibit participation by Amaya Gaming’s PokerStars, the world’s largest online casino operator.
Payne, who has been an enthusiastic supporter of iGaming legalization, said after the Caesars demonstration that he is convinced the protections in place will prevent underage and problem gamblers from accessing the new sites.
“We keep the children off of internet gaming,” Payne said. “We keep the compulsive gamer off. We know where the revenues are going. We will audit it. We know what the payout is and, most importantly, we’ll get some tax revenue from online gaming.”
A legislative study last year estimated that iGaming would generate $184 million in revenue the first year, and around $307 million annually once the sites are all established.
