Parts of Pennsylvania’s wide-ranging gambling expansion bill might be delayed as lawmakers focus on how to pay for a $1.3 billion spending increase, the bill’s prime sponsor said today.
State Rep. George Dunbar, R-Westmoreland County, called regulation of Internet gaming and Daily Fantasy Sports a “no-brainer” but said other proposals, such as locating slots at off-track-betting parlors, are more contentious.
Democratic Gov. Tom Wolf announced Sunday that he would let a $31 billion spending plan become law without his signature but challenged legislators to “pay for the promises” in the budget. Republicans control both the Senate and House, and leaders have vowed to assemble a $1.3 billion revenue package. Components include $1-per-pack increase in cigarette taxes and a broad expansion of casino gambling, from online gaming to Daily Fantasy Sports and additional slot machine locations.
Dunbar said House members from both parties hope to agree today or Tuesday on a revenue package to send to the Senate, which would have to agree before the plan can be sent to Wolf. Gaming will “certainly” be part of that, he said, although “we’re just not sure what will be in it.”
His gambling expansion bill currently includes:
Internet gambling: Casinos could offer all types of casino games, including slots, blackjack and poker. Players would have to be physically in Pennsylvania, but the state could agree to allow those in Pennsylvania to play against bettors in other states that allow online gaming. Currently, only Nevada, New Jersey and Delaware allow online gaming.
Daily Fantasy Sports: Bettors would be able to draft teams of professional athletes and win based on their statistical performance. Participants would not be allowed to write their own computer scripts to automate the process.
Off-site slots: Racetrack casinos would be allowed to install up to 250 slots at as many as four locations off the main casino property.
Skill-based slots: These games allow a player’s skill at a video game shoot-’em up or similar challenge to determine a payout. Currently, all slot payouts are purely a matter of luck.
Simulcast expansion: Through agreements with licensed racetracks, casinos without racetracks would be able to take horse-race bets and simulcast races from across the country.
Airport gambling: Casinos would be allowed to install slots for passengers in the secure areas of major airports. Fliers wouldn’t necessarily see rows of traditional one-armed bandits in the waiting areas, as in Las Vegas. Instead, players could use an electronic tablet that would allow them to try their luck at a favorite slot online; play blackjack, roulette, poker or any other casino game; or order food or a drink or check the status of their flight.
While Pennsylvania could reap millions of dollars in licensing fees and gaming taxes by becoming the fourth state to approve Internet gaming, “we shouldn’t be looking at it solely from a revenue perspective,” said Bill Thomas, spokesperson for Rep.Rosita Youngblood, D-Philadelphia, sponsor of the iGaming amendment to Dunbar’s bill. The state should bring online gaming out from “the shadows of the offshore black market websites” regulate it to protect consumers, prevent underage and problem gambling, he said. “Regulation should trump any need for revenue.”
Dunbar said casinos without racetracks fear they may lose customers and money if racinos are allowed to place slots at OTB parlors.
The bill calls for a 16 percent tax on gross online gaming revenue. Pennsylvania’s tax rate on gross slot revenue is 54 percent; on gross table game revenue, 14 percent.
Pennsylvania generates more gambling revenue than any other state except Nevada. State Rep. John Payne, R-Dauphin County and chairman of the House Gaming Oversight Committee, said the state can’t afford for the casino industry to fall behind.
The idea of allowing slots in Pennsylvania airports developed last year during a series of committee hearings on keeping the state’s casinos competitive, he says. Even though Las Vegas and Reno, Nev., airports are famous for their slot machines, Payne says many in Pennsylvania doubted the idea. But in the past year, Chicago’s O’Hare and New York’s LaGuardia signed contracts for slots in the airports, and five other states are looking at the idea, he said. The concept of online gaming and Daily Fantasy Sports is similar.
“We have to get into the new technology if we’re going to be competitive with the surrounding states,” Payne says. “As we talk about it, they’re now doing it.”
Estimates of state revenue from gambling expansion range from $100 million to $266 million in the first year, depending on which components are approved. Most of the money would come from licensing fees; an online gaming license would cost $5 million. Dunbar said that if OTB slots are allowed, the state could get an additional $200 million a year in casino taxes. In fiscal 2015-16, which ended June 30, the state received $1.28 billion from slot machines, up by 2.3 percent from last year but less than the peak of $1.35 billion in 2011-12.
Thomas doubted that all of the state’s 12 casinos would set up online gaming immediately. The state’s second most profitable casino, Sands Bethlehem, is operated by Las Vegas Sands Corp., which opposes online gaming, while some smaller casinos might not be ready to launch.
