It seems that Pennsylvania could be the next state to legalize and regulate online casinos in the state, which would be a great way for them to help with the deficit. They could be very close to having an iGaming industry within their borders. Discussions for the online gaming expansions started in 2013, as Representative Tina Davis introduced the bill. It has been delayed due to the state verifying that having this kind of market would be good for its residents.
Current Conditions and Taxes
The Governor of Pennsylvania, Tom Wolf, has proposed a plan to increase taxes on several different things, including cigarettes, personal income, and on casinos. Wolf is planning on obtaining another $51 million in taxes each year from gambling operations, but in a big surprise, the tax would target the Sands Casino in Bethlehem more specifically than others. The main reason why the Sands would take a bigger hit, roughly paying $12 million in taxes, almost double what other casinos would pay, is thanks to their marketing in promotional play.
The tax is set at 8%, taxing free-play slots credits, which is used to bring in customers and has been proven to be quite lucrative for the casino so far. The other casinos in the state use the same method, but the Sands uses it more efficiently. As Richard McGarvey, spokesman for the Pennsylvania Gaming Control Board stated,
“No one else is even close. Sands’ use of promotional play as a marketing tool has led all casinos since they opened in 2009.”
He isn’t wrong, Sands uses $150 million in free promotional credits to draw people in, and the next closest is the Parx Casino in Bensalem, which uses $84.9 million.
Online Casinos Could Offer Further Relief
As John Payne, current Chairman of the Gaming Oversight Committee, and Co-chairman Nick Kotick, presented HB 649 last year, which details the expansion into online gaming. Payne predicts that the bill will be approved in July of this year. His reasoning is sound,
“Look, we need revenue. They’re not going to find votes for (higher) taxes in an election year. So I would think gaming will be a component.”
Based on Payne’s research, it is believed that more than $120 million could be earned by the state within the first year that the online casinos are operating. The HB 649 bill would give the state authority to license casino operators, who could branch out into poker, and other casino games. It would also allow racetrack operators to add slot machines to their venues.
This would certainly help with the state’s budget deficit and would be able to be more lenient on the brick-and-mortar operators, as well as help keep overall taxes lower in other areas as well. The 12 casinos in the state brought in $3.17 billion in revenue in 2015, and it can be said that it is thanks to their marketing that enabled that. By eliminating the need to tax their promotional play, it would help increase total revenue and taxes. The online gambling and casino bill is a great idea, and it looks like Pennsylvania will pass it.