[toc]On Monday Pennsylvania state Sen. Jay Costa announced plans to introduce legislation overhauling casinos and gambling in the state.
The proposed legislation would include a new revenue taxation plan, the introduction of computerized gambling in the state’s major airports, the regulation of daily fantasy sports (DFS) and the introduction of online poker and casino games.
The legislation has not been formally introduced. In his memo, Costa said he was seeking co-sponsors.
New PA gambling bill to address budget shortfall
The new legislation intends to address the budget shortfall following a 2016 court decision ruling the laws for taxing casinos in the state unconstitutional because the rates were not consistent across all 12 of the state’s casinos.
In the wake of the changes, the state and many municipal governments reported anticipated budget shortages caused by the loss of expected gaming revenue.
State lawmakers tried to come up with a temporary taxation solution to get the state through the fiscal year. One bill which included measures for DFS and online gambling made it through the House, but could not make it through the Senate before the legislative term ended.
Costa’s proposed legislation has several revenue-generating measures:
- An annual slot machine license renewal fee equal to 20% of the cost of the $50 million original slot machine license
- A casino taxation plan matching the one proposed in last year’s HB 1887
- Online gaming licenses for an initial fee of $10 million
- Online gaming vendor licenses for an initial fee of $5 million
- A $2.5 million licensing fee for airport game providers
- A $2.5 million licensing fee for DFS providers
- 25 percent taxation on internet gambling revenue, DFS revenue and airport gaming revenue
How do these rates compare to other states?
Part of the reason Pennsylvania has more gambling tax revenue than any other state in the country is because the state taxes at much higher rates.
A recent report by the Las Vegas Review-Journal states Pennsylvania earned over $1.3 billion in gaming tax revenue in 2015 compared to $889 million in Nevada. The casinos in Pennsylvania took in just $3.17 billion revenue compared to the $11.11 billion of Nevada casinos.
The online gaming license fees are massive in comparison to Nevada as well. In the Silver State, brick and mortar properties can obtain an online license for an initial fee of $500,000 and a $250,000 annual renewal cost.
In New Jersey, licenses are even cheaper. There is a $200,000 initial fee and an annual renewal cost of $100,000.
The DFS license is also a record high number. There are fewer states with licensed DFS operators than casinos.
As means of comparison, New York taxes DFS operators at a rate of 15 percent for up to $50,000 annually. This is one-fifth of the initial licensing fee and nowhere close to the unrestricted 25 percent take on revenues proposed by Costa.
The near future for PA casinos and the proposal
High taxation rates are nothing new for Pennsylvania. With a current budget shortfall of $600 million that could reach into the billions in the next seven years, local lawmakers are investigating every possible opportunity to increase tax revenue and avoid cutting programs at the state and local levels.
Lawmakers met behind closed doors with casino operators on Tuesday to discuss the near future of gambling in the state. The two groups have until the end of the month to reach some sort of compromise on the tax front before the current solution expires.
Image credit: EQRoy / Shutterstock.com