Controversial Pennsylvania Sports Betting Law Keeping Rollout In Limbo
By Jill R. Dorson | Published: July 12, 2018 at 7:30 am
Since May 14, Delaware sports betting and New Jersey sports betting have been gone live. Delaware on June 5 at three state casinos/racetracks, and in New Jersey on June 14 at Monmouth Park and at the MGM-owned Borgata in Atlantic City. Mississippi casinos will start accepting legal sports bets in late July while West Virginia has rolled out its sports betting regulations. All of West Virginia’s five casinos appear to be on track to offer sports betting as soon as the regulations go into effect. In Mississippi, at least five operators had applied for sports betting licenses as of early July and the expectation was that every casino in the state would submit an application.
Rhode Island passed a law legalizing sports betting in late June and the new law includes an explanation of how sports betting profits will be split between the state, gaming operators and the state’s two casinos, both of which will offer sports betting. The state lottery will run sports betting in the state. So, where is Pennsylvania in all of this? Going nowhere fast.
Zero Potential Licensees Have Applied for a Pennsylvania Sports Betting Certificate, While Mississippi and West Virginia Have Seen Multiple Applicants.
Pennsylvania’s law calls for a whopping $10 million application fee and a combined 36 percent tax rate (34 percent state plus 2 percent local). For comparison, that’s 100 times the initial licensure fee of $100,000 in both West Virginia and New Jersey. On the tax front, New Jersey has an 8.5 percent tax on sports wagering revenue at casinos and 13 percent for online wagering, and West Virginia will levy 10 percent on both. Nevada’s rate is 6.75 percent.
“PNG first notes that the $10 million license fee and 36% tax rate established in the Gaming Expansion Legislation are the highest in the world and may make it impossible for a casino operator to make any return on its investment capital,” Penn National Gaming vice president and general manager Daniel Ihm wrote in his company’s response to the state’s temporary regulations. “Based on the tax rate and the fact that, on average, 95 percent of sports wagers are returned to winning bettors, PNG estimates it could lose approximately 40 cents on every $100 wagered on sporting events.”
Potential Operators Have Called the Sports Betting Landscape in Pennsylvania ‘Not Economically Feasible’ and Say They Will Lose Money.
The PGCB does not control the tax rate or application fee — that is strictly the purview of lawmakers.
Any Unissued PA Sports Betting Licenses Will Go Unused — Only Licensed Brick-and-Mortar Casinos Can Apply.
And what happens to the licenses if all casinos don’t apply for them? According to the law, they would go unused, as the licenses are designated strictly for casinos. An operator that does not have a brick-and-mortar location cannot apply for a license.
Casino companies like Greenwood Entertainment and Penn National have been very direct about the situation in Pennsylvania. The American Gaming Association, which has members across the country, won’t comment on any state specifically, but its public stance is that states with high taxes and fees ultimately don’t make good business partners.
