2017 has just begun and the state of Pennsylvania is not wasting any time getting back into discussions of online gambling as well as daily fantasy sports. Earlier this week, Jay Costa, a Senator of the state, filed a memo that details his plans to propose a bill in the near future that would be based on HB 1887. This was the House bill that failed last year, in December, as the legislative session ended and the Senate made no move to vote on the measure.
Fees and tax rates to be proposed are a bit high which will most likely not be pleasing to operators. In Costa’s bill, casinos would have to pay a $10 million licensing fee to be able to offer services online with vendors of online technology paying $5 million. These fees would be placed in the General Fund of the state. In the past, bills of the state had suggested an $8 million licensing fee for casino operators and $2 million for vendors.
Costa would also like to include every category of casino games online including slots and table games. However, casinos would not be allowed to offer online gaming on the casino property ‘to deter tax avoidance by casinos’.
As far as taxes are concerned, Costa would see a 25% rate imposed on the online gaming revenues with 3/5 of that amount going towards the state Property Tax Relief Fund. The remainder of the money will be used for economic development projects via the Commonwealth Financing Authority.
The 25% rate actually fits into the middle when considering what has been on the table before in the state. In 2015, Senator Kim Ward had proposed a 54% tax rate which was seen as extremely high when looking at other states. The House bill last year had a 16% tax rate so the amount Costa is suggesting is somewhat of a middle ground.
The legislation will include the proposal for table gaming for airports from 2016 but only for the airports located in Pittsburgh and Philadelphia. The option would include a five-year pilot program. Mobile operators at the airport would have to pay a licensing fee of $2.5 million as well as the 25% tax rate. For daily fantasy sports, the same 25% tax applies on revenues and $2.5 million would have to be paid in fees.
The state lottery would also have the option to go online as Costa feels that fiscal challenges have put an increased strain on the State Lottery Fund. According to the Senator, the Lottery should be provided with the tools needed to adjust and remain solvent.
On top of all this, the bill will also take on the host community casino payment which became an issue last year when the state Supreme Court ruled the payment unconstitutional in September of last year. The plan by Costa would ensure that the host communities receive the same amount they were receiving before the ruling was made.
So far, the state of Pennsylvania has held a meeting on Tuesday, one that was called by Senator Ward, having representatives from the state’s casinos to come together to discuss the gaming legislation plans for the year. This along with the bill announcement by Costa indicate the state is serious about gaming expansion, including online gaming services.