Hallelujah, the day is finally here where PA online gambling is underway!

Sure, some forms of expansion were already underway. The online lottery, Keno, and daily fantasy sports are all regulated as well as up and running.

However, as of May 28, PA online sports betting is now officially up and running. SugarHouse Sportsbook began testing of its online betting app on Tuesday. Following three days of PA Gaming Control Board-supervised testing, it will be fully live for PA bettors to enjoy.

First PA online sportsbook goes live May 28

While the online casinos will all launch on the same day, Pennsylvania sports betting apps are launching on a rolling basis.

The initial hope was to launch online betting in early May. It appears the issue holding things up was neither the operators nor the regulators. Rather, it is an issue with getting the new sports betting apps approved and in the Apple App store.

Eventually, SugarHouse decided to go forward without an iOS betting app. Instead, the operator offers an Android app that can be downloaded directly from SugarHouse’s website.

With one app finally pulling the trigger, there will ideally be a steady stream of launches throughout the summer. With the slow sports season, it is tough to tell how quickly sportsbooks will move to go mobile. Given how profitable New Jersey online sports betting is, the lack of football probably isn’t slowing many casinos down. And now that one is up and running, the race is on to join in on the action.

PA online sportsbooks launch

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PA online casinos launching July 15

Per the PA Gaming Control Board (PGCB), Pennsylvania online casinos will all roll out on July 15. While casinos are welcome to launch after that date, expect all but a couple to ready to roll come summertime.

Two exceptions are Sands Bethlehem and the still-under-construction Stadium Casino project. One only recently transferred its gaming license to new owners, the Poarch Band of Creek Indians. The other is busy trying to build both a casino and a mini-casino. As such, expect online gambling from these properties later on down the line.

While you can expect online casinos in a massive rollout, you might not get too excited about online poker sites. Surely some, the big names like WSOP.com and PokerStars will be up and running around launch, others will probably take their time with the more low-margin product.

PA online casinos launch dates

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What did the PA gambling expansion bill legalize?

The PA Senate passed a bill to legalize online poker, online casino games, daily fantasy sports, and sports betting on Oct. 26, 2017. Gov. Tom Wolf signed it into law just three days later. The bill, H 271, enacts widespread gambling expansion that extends beyond just PA online casinos.

Here is a look at exactly what the bill authorizes and why changes may be on the horizon if the tax rates on some gambling expansion is not adjusted.

After months of back and forth on tax rates, license fees, VGTs, mini-casinos, and other details, the bill the Senate passed permits:

• Online poker
• Online casino games (table games and slots)
• Daily fantasy sports
• Tablet gaming in certain areas at authorized airports
• Video gambling terminals (VGTs) at qualified truck stops
• 10 mini casinos
• Alterations to Category 3 casinos (removes membership fee, permits more slots – requires one-time fee)
• Online lottery sales
• Sports betting now that PASPA was overturned

Additionally, the changes in the laws resulted in SugarHouse Casino dropping its lawsuit blocking the Stadium Casinos LLC group from building its planned casino in Philadelphia’s Stadium Park. With legal issues gone, the group quickly ponied up the money for a Category 2 license and are moving forward with construction.

Tax rates and licensing fees

Tax rates and license fees for online gambling have been major bones of contention for months.

After a 54 percent tax rate on slots was floated earlier this year, more recently the figure settled into a more-reasonable mid-twenties range. By comparison, the effective tax rate in New Jersey on online slots is 17.5 percent.

The amended version of H 271 returns to that steep 54 percent number. PA would tax the products as follows:

• Online table games and poker: 14% + 2% local share = 16%
• Online slots: 52% + 2% local share = 54%
• Sports betting: 34% + 2% local share = 36%
• Daily fantasy sports: 15%

Distinct licenses for each product

H 271 establishes three separate licenses:

• Online slots
• House-banked games
• Online poker and other peer-to-peer online games

Operators were required to purchase a license for each vertical they intended to offer. For $10 million, PA casino operators could purchase all three in a bundle. Eight of the 13 eligible casinos chose to do that:

• Parx
• Mount Airy
• Sands Bethlehem
• Hollywood Casino
• Valley Forge
• Harrah’s Philadelphia
• Sugarhouse Casino

Casinos could also buy a la carte licenses for each vertical. Each license carries a $4 million price tag. So far, two casinos opted to do that. Presque Isle applied for table games and slot licenses, as did Mohegan Sun Pocono. Stadium Casino project ended up with a similar result, initially applying for all three licenses in a bundle only to rescind its poker application after the fact.

The remaining 12 interactive licenses became available to interested qualified gaming entities (QGEs) outside of Pennsylvania. MGM Resorts and Golden Nugget submitted applications, which are pending PGCB approval.

Mini-casino licensing

Meanwhile, there are licenses and fee structures for the other gambling expansion elements as well. For example, the 10 mini casinos each carried a $7.5 million fee to offer 350-700 slots. Properties could pay an additional $2.5 million for a right to offer up to 30 table games.

However, that number only covers the license. The mini casinos also featured an auction process. The highest bidders among existing Category 1 & 2 casino license holders in the initial auction obtained a license to pick a qualified location for the property.

After four licenses, the bids dried up, so the process opened up to Category 3 properties. At that point, Category 1 and 2 casinos could bid on a second property. That is what Hollywood Casino did, bidding on a second property.

With five licenses remaining from the 10, outside entities can apply to bid, however, the PGCB has not discussed that possibility. It is safe to assume the mini-casino issue is put to bed for now.

VGT licenses and fees

The contested video gambling terminal (VGT) legislation made it into the final bill. These machines are only allowed at truck stops that meet a range of requirements. Each truck stop can only have up to five machines. These are the licensing costs and feeds:

• Manufacturer/Supplier: $10,000
• Terminal Operator: $5,000
• Establishment: $250 per VGT
• Key Employee/Procurement Agent/Principal: $500
• Any other permit: Up to $100

The pitfalls of high taxation

Industry experts, including Moody’s, have decried the lofty 54-percent tax rate on slots, and for good reason. At that rate, operators will have little left over for marketing, customer acquisition, promotions, and other business-building tools. This could hamper the growth of the industry and thus depress the amount of tax revenue the state is able to generate.

PA already taxes its land-based slots more heavily than any other state in the nation, and only recently have PA casinos managed to break a lengthy slide in slots revenue.