As the debate on whether to legalize online gambling in Pennsylvania continues, American casino firm Penn National Gaming Incorporated has warned legislators against setting the tax rate for iGaming operations too high.

Proposals for the regulation of online gambling currently being considered in Harrisburg could see iGaming tax rates set between 15% and 25% of gross revenues but some lawmakers are calling for these tariffs to mirror those imposed on land-based operators, which stand at 54% for slots with table games taxed at 16%.

However, Eric Schippers, Public Affairs And Government Relations Senior Vice-President for Penn National Gaming Incorporated, used a recent conference call concerning the firm’s first-quarter financial results to warn that ‘no one will sign up’ to provide online gambling if tax rates are set at such a steep rate.

“iGaming is firmly in the mix on both sides,” said Schippers. “The key question around iGaming right now is focusing on the tax rate that would be applied. We’re trying to knock down some sort of silly notion that you could have tax parity between iGaming and the slot machines and that it could be a successful industry.”

Pennsylvania is projecting a budget deficit of approximately $3 billion for 2017 and it is hoped that legalizing online gambling would immediately bring in up to $126 million via licensing fees with the eastern state projected to rake in around $364 million annually via taxes after the first five years of operations.

“We’re trying to convince [legislators] that if they [set the iGaming tax rate too high], no one will sign up for it and so we’re spending a lot of time trying to educate legislators on that business while at the same time, frankly, fending off an effort by the state lottery to be the provider themselves,” said Schippers.

Schippers seems to believe that the Pennsylvania Lottery does not have the necessary expertise or experience to effectively run regulated online casino and poker games while he predicted that the future of iGaming in Pennsylvania could become clearer later in the year.

“So a lot of fluidity [and] there is still discussion as well around video gaming terminals in the bars and taverns, more so in the [Pennsylvania House Of Representatives] than in the [Pennsylvania State] Senate,” said Schippers. “There’s some discussion around satellite facilities that would take the place of that concept. I would expect that you’re going to see some of the discussions start to gel a little bit more this summer, in the June time frame, but until then, I think a lot of it’s just going to be noise and posturing.”

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