[toc]It is no exaggeration to say this week in Pennsylvania casino news was a landmark one. Online gaming regulation is closer than ever before after a gambling expansion bill cleared the Senate. The bill is now on its way to the House, but do not get too excited just yet.
This is certainly great progress, but the current bill is far from ideal. The hope is the House will find a way to meet in the middle on some core issues, but that is easier said than done.
Meanwhile, business decisions in the state’s casino market could result in a shift in industry support for the bill.
There are lot of moving parts, so here is a recap of a busy week of news to help you understand how much progress online gambling is making, as well as as how far it still needs to go:
Busy week in Harrisburg for online gambling
There is clearly one story which dominated the headlines in Pennyslvania, and deservedly so. The state Senate returned from recess and wasted little time taking action on gambling expansion legislation.
Those within the industry expected progress this week. After all, the state was days away from the court-imposed deadline to resolve its casino host fee problem.
Progress indeed. Here is a rundown of the week of legislation, as well as what to expect after Memorial Day.
Bill clears appropriations committee with obscene tax rates
The gambling expansion bill HB 271 passed through committee with a resounding 24-2 vote. It also underwent a host of changes.
Most notably, the tax rates for online casinos came in. Many worried the tax rates would parallel brick and mortar standards, with 16 percent on poker and table games and 54 percent on slots. Those rates would make it difficult for online casinos to succeed.
Turns out the rates were even worse than expected. Instead of a 16 percent tax on table games, they were also slated at 54 percent. To some, the taxes, combined with hefty fees on multiple licenses, made it effectively impossible to run a profitable online gambling site.
Senate sends HB 271 on to the House
Later in the week, the bill cleared another committee vote, then passed on the Senate floor by a vote of 38-12. The bill’s separate license fees of $5 million each for peer-to-peer and casino games remained, as did the tax rates.
Other tricky elements to consider about the bill are video gaming terminals (VGTs) and the aforementioned casino host fee. As we observed earlier in the week, so long as the host fee and online gambling are coupled in the same bill, iGaming proponents stand a better chance at getting the bill passed into law.
What to expect from the House
The bill now moves on to the House, a group that has generally been much more supportive of online gambling than the Senate. Rep. George Dunbar, a strong proponent of the issue, spoke to Online Poker Report about what to expect.
While the current state of the bill seems dire, Dunbar assures plenty of changes are in store. We can also expect a battle on the VGT front.
“We’re a step further than we’ve ever been,” Dunbar said. “It’s not a great step, but it’s a step.”
MGM/Sands sale fail throws a wrench in online gambling progress
While lawmakers deliberated out in the open, another major deal for Pennsylvania casinos quietly died. Neither MGM Resorts nor Sands Corporation ever confirmed the $1.3 billion sale of Sands Bethlehem Casino, but multiple sources within the state confirmed it was happening.
Not anymore though.
This week, the sale allegedly fell through. There is no definitive reason why MGM is backing off the sale, but there is plenty of speculation. It seemed sensible Sands, an anti-online gambling company, would want out of Pennsylvania. It made even more sense MGM Resorts, who is establishing even more of an online casino presence, wanted in.
Local media speculates something in HB 271 gave MGM cold feet though. It could be something to do with host fee negotiations, but the idea MGM does not want online gambling in the state does not make much sense.
Either way, it certainly sounds like the seemingly done deal is no more.
This is an interesting development for the legislation. With Sands remaining in the state, will it become a vocal opponent against the measure like Parx Casino? If so, the top two casinos in the state would oppose the crux of the bill, making the road to regulation that much bumpier.