The market for sports betting in Pennsylvania – particularly online – could be limited thanks to temporary regulations recently released by the Pennsylvania Gaming Control Board (PGCB).
In a closed-door executive session, the PGCB met Wednesday to draft what it dubbed “Conduct of Sports Wagering Generally and Licensing Provisions.” In essence, the group amended the requirements surrounding and what is allowed for sports betting in the Keystone State.
From the released PGCB rules and regulations:
“This temporary rulemaking includes rules to ensure the integrity and security of sports wagering in this Commonwealth and all persons participating in this new form of entertainment in the state.”
Only one online sportsbook per casino
Of all the information contained in the PGCB’s 59-page outline, one area in particular trumps all else.
These regulations include rules to address several issues. The PGCB thoroughly detailed which properties can accept sports bets. The board also elaborated on how they will be able to offer sports betting.
In the temporary regulations, the PGCB wrote that a sports betting certificate holder, or a sports wagering operator licensee on behalf of a certificate holder, can only accept wagers in five ways.
It is the fifth provision that is striking:
“Through a single interactive website or mobile application that clearly and prominently displays the name of the sports wagering certificate holder.”
You read that right. Along with a brick-and-mortar sportsbook, certificate holders get just one sports betting app or website. That provision comes just about a week after Penn National Gaming, a heavy hitter in the state’s gambling market, aired its grievances and offered comment following the last regulations drafted by the PGCB in May.
Skin rule could have bad consequences for DFS sites
In a letter sent to the board, Penn National expressed its disdain for multiple apps and sites, also known as “skins.”
“The failure to prohibit ‘skins’ with respect to online/mobile sports wagering would present significant new competition to the incumbent casino operators and result in overall saturation of the marketplace, as is occurring in the online gaming marketplace in New Jersey.”
Now it seems the PGCB is falling right in line with that request. As a result, should these temporary regulations stand, they would potentially diminish competition from daily fantasy sports giants DraftKings and FanDuel.
The two DFS companies are obviously not licensed casinos in Pennsylvania. As such, they cannot offer sports betting unless they partner with a license holder in the state. Given that the regulations stipulate the name of the casino must be part of the brand of the online book (e.g., “Parx Casino powered by FanDuel”), smaller casinos can’t take full advantage of the brand recognition of the major DFS players.
The PGCB’s rules will go into effect immediately. However, the board is open for comments from the public and “affected parties” that would improve regulations.
Online gambling skin regulations differ
Back in April, the PGCB approved another set of temporary regulations. These rules covered online casinos in Pennsylvania. Last fall, when state lawmakers passed the gambling expansion bill, there was no information addressing how many skins each operator licensee could own.
So two months ago, the PGCB announced:
“There is no limitation to the number of skins that a slot machine licensee may employ to deliver games, but every ‘skin’ that a casino offers must be branded in a manner that makes it clear that it is offered on behalf of the slot machine licensee consistent with language of the act.”
Basically, if a licensee puts its name on the skin, there is no cap on how many skins that licensee can offer. In reality, however, skins are not going to be unlimited based on the limits for offering them.
The PGCB obviously took a much different tack with mobile sports betting.
Comparing to PA’s neighbors
Delaware was the first state outside of Nevada to roll out single-game wagering. Nonetheless, New Jersey has become the measuring stick for other state governments.
The Garden State went live with wagering earlier this month. In New Jersey, each casino and racetrack that is eligible to offer sports betting can operate up to three sports betting brands. Broken down, each licensee gets one physical sportsbook and up to three online skins.
“The New Jersey market has proved that multiple skins are necessary to create a vibrant and competitive marketplace and to provide an incentive for operators to market their services,” Ed Andrewes, who heads up Resorts Casino’s online operation in New Jersey, told Online Poker Report in February. “The current incumbents may feel that by limiting the skins it saves on marketing expense, but experience from other jurisdictions shows that a lack of marketing initiative and effort does not grow the market at all.”
“Such a limitation would be a step back on the nascent online gaming industry as a whole,” Golden Nugget’s Thomas Winter also told OPR. “The only reason to do it would be to protect land-based casino revenues.”