Will 34 Percent Pennsylvania Tax Stymie Sports Betting?By Jill R. Dorson | Published: May 18, 2018 at 9:27 am
True or false? Pennsylvania will be one of the first states in which residents can place sports bets legally. The answer would seem to be a slam-dunk “true.”
After all, the Keystone State passed a law making sports betting legal in 2017 pending a change in federal law and on Monday, the Supreme Court struck down the Professional and Amateur Sports Protection Act, thereby removing the last stipulation for Pennsylvania’s law to take effect. In fact, the head of the state’s gaming commission says that while the state won’t have sports betting as quickly as neighboring New Jersey or Delaware, Pennsylvanians should count on being able to place wagers sooner than later. But that could be wishful thinking.
Pennsylvania lawmakers certainly got ahead of the curve on sports betting by passing a law that went into effect immediately after the Supreme Court decision. But exactly what that law says may keep potential gaming operators from offering sports betting in Pennsylvania. The law, which came before the professional leagues began lobbying states for an integrity fee, calls for a $10 million application fee and a 34 percent tax on gross sports wagering revenue. The application fee is 100 times higher than the $100,000 West Virginia application fee. And the tax rate is five times the current 6.75 percent in Nevada and nearly 3.5 times as much as the 10 percent included in the new West Virginia law.
Pennsylvania’s High Tax Rate and $10 Million Application Fee May Be Prohibitive, and Keep Operators From Offering PA Sports Betting.
Doug Harbach, the spokesman for the Pennsylvania Gaming Control Board told Philadelphia Magazine he’s excited about introducing sports betting, but also has to wrap his arms around implementing an iGaming expansion: “Sports betting certainly has the opportunity to bring in a new type of patron to the casinos, so from that standpoint, it’s a positive. Certainly at a 34 percent tax rate it should bring in some additional significant revenue to the commonwealth. At the same time, this is another great challenge for our agency because we are in the middle of the largest gambling expansion that any other state has ever undertaken.”
But it’s those same numbers that are giving potential operators pause.
“There is a huge black market that pays zero tax,” Greg Carlin, CEO of Rush Street Gaming, whose company operates two casinos in Pennsylvania, told USA Today. “If legal sports betting is going to be a regulated and successful business, the tax rates can’t be so high that it makes it impossible to compete with the black market.”
Sports Betting in Pennsylvania? It’s Legal, But Might Be Too Expensive for Gaming Operators to Offer.
Carlin’s company already operates two casinos in Pennsylvania — the Rivers Casino in Pittsburgh and Sugar House Casino in Philadelphia — but he’s wholly unsure those venues will offer sports betting. Carlin told that the company hasn’t decided for sure if it will have sports betting at its Pennsylvania locations.
That sentiment was echoed by rival Penn National, which owns the Hollywood Casino in Grantville. “In addition to the high application and annual licensing fees, the challenge will be trying to make the 34 percent tax rate work – this would be the highest tax rate in the world on sports betting,” Jeff Morris, vice president of public affairs and government relations at Penn National Gaming, told USA Today.
In the meantime, Pennsylvanians can look to neighboring Delaware and New Jersey, both of which look to be ready to offer legal sports betting in June, where the state tax rate on operators will be much, much lower.