Pennsylvania prepared itself for such a landmark ruling. It positioned itself to potentially be among the first few states outside of Nevada to accept the first wagers in the new legalized sports betting world.
Yet, four months after the US Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) of 1992, the Keystone State still has not had a sportsbook crop up. Four other states have since rolled out regulated industries while Pennsylvania remains on the sideline.
Not all is lost for the Commonwealth, however. Believe it or not, several advantages exist as Pennsylvania awaits its first sportsbooks.
Each week, Cover The Spread will examine the workings of sports betting markets in other states and extrapolate how Pennsylvania can adopt, adapt, and amend to better piece together its own industry.
This week: Why no sportsbooks have opened operations, and why there’s no need to worry yet.
Prepared for legalized sports betting
Because of online gambling legislation signed by Gov. Tom Wolf in October 2017, Pennsylvania gained pole position in green-lighting a regulated wagering industry should SCOTUS repeal PASPA.
The high court did just that Yet nothing came to fruition. And it still has not.
One primary reason surrounds cost. Obtaining a sports betting license would run casinos a whopping $10 million. Should they clear that hurdle, casinos would then have to pay a 36 percent tax on revenue from wagers. Naturally, those figures concerned casino operators.
“We haven’t made a final determination on whether to pursue what is the highest rate on the planet for sports betting,” Penn National SVP Eric Schippers told PennLive in May.
In June, Joe Asher, CEO of prominent bookmaker William Hill US, told the Philadelphia Inquirer that his company was essentially avoiding setting up shop in Pennsylvania because of the lofty costs. That came even as William Hill teamed up with Monmouth Park and Ocean Resort Casino in nearby New Jersey. (It has since partnered with Tropicana in Atlantic City.)
“Pennsylvania is in a different bucket because of the tax rate,” Asher said. “We can’t figure it out. Because of it, we haven’t spent the time or effort in Pennsylvania that we have in New Jersey. The tax rate is such a big challenge. … If you’re paying $10 million up front for the privilege of paying 41 percent in … taxes, plus the infrastructure costs, it’s difficult for me to see how you make money in Pennsylvania.”
While the cost of getting a foot in the door peeved casinos, some still waited for the Pennsylvania Gaming Control Board to craft temporary regulations. (Said regulations were released last month.) Still, no property submitted applications for a sports betting license. Not for three months following the SCOTUS ruling. Pennsylvania lawmakers, though, appeared unconcerned. And this quote from state Rep. Robert Matzie in a June Pittsburgh Post-Gazette story indicates why.
“I think they will all participate and would be shocked if they didn’t. In sports-crazy Pittsburgh and sports-crazy Philadelphia, you’re going to see it bring a lot more people into the casino, watching the big-screen TVs, and when they get those people in the door to bet they’ll also hopefully drop money at the tables or in the slots.”
Essentially, it would only be a matter of time before casinos began submitting applications. In August, patience paid off.
First sportsbook applications arrive
Penn National broke the mold. On Aug. 17, the Hollywood Casino owner officially submitted its one-time, $10 million application to bring sports betting to its property. And partnering with the company that has long been outspoken against PA’s sports betting regulations? Equally outspoken William Hill.
“While we continue to have concerns about the tax rate, we ultimately decided to make a go of it, while continuing to educate the Legislature on the importance of a competitive tax rate,” Schippers told the Pittsburgh Post-Gazette last week. “We felt the best way to do that is to share our first-hand experience with them.”
A week later, Greenwood Gaming & Entertainment filed paperwork to request approval for wagering at its Parx and South Philadelphia Turf Club properties.
New regulations call for a 90-day period to review submissions before operations can begin. Both ownership groups have requested an expedited process to allow for a quicker rollout of their sportsbooks. Even so, the first accepted wagers likely won’t happen until October, November or even December.
The waiting game that drew the first applicants has become a waiting game for the first PA sportsbooks.
But that is not a bad thing
For four months Pennsylvania sat on the sideline while Delaware, New Jersey, Mississippi, and West Virginia launched regulated sports betting. For four months, Keystone State bettors have resorted to road trips (or worse, patronizing offshore sportsbooks) in order to get in on the action.
Of course, patience is wearing thin. But patience can also become an asset, at least for future PA sportsbooks and state regulators.
Penn National, for example, has William Hill in its corner, a company that stands as one of the more respected bookmakers in the world. The American arm of the major British bookmaker has extended its reach beyond its Las Vegas headquarters, including in New Jersey. In doing so, Penn National has experience on its side.
For other casinos and potential sportsbook operators, Schippers’ above quote holds another meaning:
“We felt the best way to do that is to share our first-hand experience with them.”
Schippers, of course, was talking about the “importance of a competitive tax rate.” Though it is the latter segment that should gain attention: “share our first-hand experience.”
Surely Penn National will not divulge its secrets to running a successful sportsbook in Pennsylvania. But with it and Greenwood about to enter the world of wagering, other PA properties will have a first-hand look at how it’s done.
It’s about educating, as Schippers noted. Pennsylvania casinos have become students. Surrounding them are unknowing tutors: Delaware, New Jersey, Mississippi, West Virginia, and even Nevada. But a few peers will soon be among the most-educated students in class: Hollywood Casino and Parx.
The Keystone State, long thought to become one of the first states to launch legalized sports betting, will be far from trailblazers. But time has allowed Pennsylvania and its casinos to study the industry in other states. Time will allow them to examine their in-state peers. Time will soon result in a full-bore industry that Pennsylvania can call its own.
