PA on track to approve gambling expansion, senator says

PA on track to approve gambling expansion, senator says

  • Mark Gruetze, CDC Gaming Reports
January 15, 2017 1:16 PM
  • Mark Gruetze, CDC Gaming Reports
  • Other

Within two months, the Pennsylvania Legislature could approve a comprehensive gambling expansion bill that includes iGaming and fixes a legal problem with an annual $10 million payment to casino host communities, a key senator says.

“Sometime in March, we’ll have something done and passed in the House and Senate,” said Sen. Mario Scavello, R-Monroe County, chairman of the Community, Economic and Recreational Development Committee, which handles gambling legislation.

“It looks like online gaming has the support to pass,” he said. “We can look at other expansions.”

Scavello declined to specify what the bill might include. He plans to meet on Jan. 17 with other legislators to discuss details.

For the past two years, approval of online gaming has appeared close in Pennsylvania, the country’s No. 2 state in gambling revenue. Last year, the state House twice approved wide-ranging gaming bills but they died when the legislative session ended in November without Senate action on them. Two factors could speed consideration of a gaming bill when the state Senate and House formally resume work Jan. 23 in Harrisburg:

  • The Legislature faces a court-imposed deadline for replacing a “local share assessment” fee that casinos pay annually to their home municipalities. The state Supreme Court ruled in September that the method of calculating the fee – $10 million or 2 percent of gross slot revenue, whichever is more – is unconstitutional because it treated casinos unequally. The ruling gave the Legislature until Jan. 26 to rectify the problem, but Senate leaders asked for a 120-day extension on Jan. 12.
  • The state budget for the 2016-17 fiscal year, which started July 1, includes $100 million in revenue from gambling expansion, notably licensing fees for online operations.

Leaders of both parties have said they plan to introduce comprehensive gambling bills early this year.

State Sen. Jay Costa of Pittsburgh, the chamber’s Democratic leader, detailed his plans in a memo posted the day before legislators took their oath of office. It calls for fixing the local share assessment process, allowing all forms of casino gambling online, regulating Daily Fantasy Sports and launching a five-year test of tablet gaming for travelers at the Philadelphia and Pittsburgh airports.

“I think it’s a natural progression of gaming in Pennsylvania, the next logical step,” Costa said. “To some degree, both (iGaming and DFS) are already present, particularly fantasy sports. What we’re doing is regulating it.

“I think the people of Pennsylvania believe this is something that’s appropriate right now.”

Costa’s memo estimates the bill would generate $137 million for the state’s 2016-17 budget, all from licensing fees. An Internet gaming license, available only to the state’s 12 large casinos and racinos, would cost $10 million. Other proposed fees: Internet gaming vendor, $5 million each; airport tablet gaming fee in Philadelphia and Pittsburgh, $2.5 million each; and DFS license, $2.5 million each.

Costa’s memo says the state tax on gross iGaming and DFS revenue would be 25 percent. That compares with a 54 percent tax on slot revenue and 16 percent tax on table game revenue in land-based casinos. The most recent House-approved bill set an online tax rate of 16 percent and a DFS rate of 12 percent. Costa’s proposal would allow all casino games, including slots and table games, to be available online, although Internet gaming would be prohibited on casino property because of the difference in tax rates.

His proposal also would authorize iGaming tablets at the Philadelphia and Pittsburgh airports for a five-year pilot period and permit online lottery games.

Currently, only Nevada, New Jersey and Delaware allow online casino gaming, with Nevada permitting only online poker.

Although Pennsylvania Gov. Tom Wolf is a Democrat, Republicans hold a 34-16 majority in the Senate and a 121-81 majority, with one vacancy, in the House.

Costa said Democrats want to ensure that their ideas and parameters are considered.

Casey Long, director of policy and legislative affairs in the office of Senate President Joe Scarnati, R-Jefferson County, said Republicans expect to move a comprehensive bill through the Senate this session.

Sen. Kim Ward, R-Westmoreland County, said she will work with Scavello and other Republican leaders in the Senate before putting out a co-sponsorship memo on a comprehensive gaming bill. She cited several issues that legislators might want to address in addition to online gaming and the local share assessment: allowing ancillary slot facilities; permitting gambling for travelers in airports; removing the $10 access fee for patrons of the state’s two resort casinos; and targeting new casino tax revenue toward economic development in counties that don’t have casinos, especially those adjacent to counties with casinos. Ward, now chair of the Senate’s Labor and Industry committee preceded Scavello as chair of the Community, Economic and Recreational Development Committee.

Scavello and Ward emphasized a desire to raise additional gambling revenue from expansion rather than boosting existing tax rates.

“They pay enough already,” Ward said. Noting the economic development and jobs casinos have brought to the state since the first one opened in 2006, she added: “We don’t want to do anything to hurt that.”

“The goal is not to hurt the casinos,” Scavello said. “The last thing I want to see is us expanding in a way that hurts them.”

Mark Gruetze is a veteran journalist from suburban Pittsburgh who covers casino gaming issues and personalities.