Will Budget Woes Cause Pennsylvania To Rethink Legal Online Gambling?

Posted on December 6, 2016

[toc]It is not good news for Pennsylvanians in the latest state revenue report.

The report for November 2016 reported tax returns below estimates on several fronts. Total revenue collections for the state were 3.8 percent behind budget estimates for November.

The increasingly troubling PA tax shortfall

This is not the first time the state has come in short of expected revenue for a month. Penn Live reported that the state is over $261 million behind estimates for the fiscal year, which began in July.

October revenue was down two percent compared to 3.2 percent in September.

There is not one particular area that is suffering more than the rest. Sales tax, income tax, and several other categories all came in under estimates. At this rate the state is looking to possibly be $500 million under budget next year per an Independent Fiscal Office report.

How does this affect PA residents?

The more the state comes in under budget, the more the burden for local services could fall on local governments. Already counties are raising real estate taxes to help generate additional revenue on the local level.

Philly.com reports increases of five to 11 percent on property tax at the county level this year.

Earlier this year the state budget reached a partisan impasse. Governor Tom Wolf battled with Republican state representatives for nine months on determining a balanced budget before allowing their version of the budget to pass without his signature.

In the wake of the fight, many counties had to take on additional expenses. Now they might have to deal with a smaller-than-anticipated 2017 budget.

Could online gambling be the answer?

One area not struggling in meeting revenue expectations is gambling tax. So far in 2016 slots revenue for the year has seen year-over-year increases every month.

Many of the brick and mortar casinos are lobbying to legalize online poker and casino offerings to help address the state’s budget issues. The current push to regulate online gaming was in limbo. The measure passed in the House but failed to be heard in the Senate, which recessed for the year on Dec. 2.

A special session of the legislature could be called, but is a long shot. The bill’s future in 2017 is unclear too, as its sponsor Rep. John Payne will be leaving office next term.

The revenue projections for the state should the measure pass vary from $38.9 million to $77 million for year one of online poker and $107 million to $121 million for the first year of online casino.

Keep in mind some of the more generous estimates for Nevada and New Jersey when the issue was being considered were much higher than reality.

Even the conservative estimates suggest that if Pennsylvania were to regulate online poker and casino games, the state could earn at least $160 million per year once the market matures. This is not enough to cover the budget shortfall, but it would make a substantial dent in an increasingly larger deficit.

Jessica Welman Avatar
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Jessica Welman

Jessica Welman is the managing editor of PlayPennsylvania. A longtime poker media presence, Jess has worked as a tournament reporter for the World Poker Tour, co-hosted a podcast for Poker Road, and served as the managing editor for WSOP.com.

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