Pennsylvania Lawmakers File Gaming Expansion Bill

Pennsylvania lawmakers have filed an omnibus gaming bill that would legalize and regulate online gaming and daily fantasy sports, create tablet gaming at airports and install a new host-community fee. However, a bill to allow VGTs in the state introduced by state Rep. Anthony DeLuca (l.) could derail the entire proposal.

Lawmakers have filed a massive omnibus gaming expansion bill in Pennsylvania, which includes legalization of online gaming, daily fantasy sports, mobile gaming at airports and other expansion measures.

HB 392, sponsored by Reps. George Dunbar, Rosita Youngblood and a few others, mainly replicates the expansion bill passed by the state House last year, which died as the session ended amid opposition by the state Senate to some of the expansion measures. It includes a replacement for the local-community host fee struck down last September by the state Supreme Court, contemplating a flat $10 million annual fee to the host communities of all but two Category 3 resort-class casinos.

For iGaming, the bill follows the tax scheme approved by the House last summer. Online gambling revenue would be taxed at 14 percent, with an additional 2 percent going to the host communities of the casinos sponsoring the gaming sites. Current land-based operators would pay an up-front fee of $8 million for a five-year interactive gaming license, with renewals set at $250,000. Technology partners such as content and platform suppliers would pay a one-time $2 million fee with renewals at $100,000.

HB 392 also would allow wagering on the new online sites by people outside Pennsylvania in states where iGaming is legal—currently, meaning New Jersey, Delaware and poker-only Nevada—providing a reciprocal agreement is reached between the states.

Daily fantasy sports licensees who already have a state gaming license would pay a 12 percent revenue tax under the measure, with a $50,000 up-front fee for a five-year license. Smaller DFS operators would pay 7.5 percent of their previous year’s annual revenue, with renewals at $5,000 or 7.5 percent of revenue, whichever is less.

The measure also would authorize new game styles for Pennsylvania slot floors, including skill-based slots, hybrid electronic table games and wide-area progressive slots. The bill contemplates linking Pennsylvania WAP jackpots with other states, pending multi-state agreements.

Other measures included in the omnibus bill would:

• Allow gaming tablets in international airports;

• Remove the Category 3 casino amenity requirement, which currently requires purchase of at least $10 in goods and services at a resort-class property for access to the casino;

• Streamline non-gaming vendor registration requirements;

• Permit gaming manufactures to utilize private laboratories to test gaming devices;

• Increase license, permit and registration renewal periods; and,

• Require uniform advertisement of the problem gaming assistance number.

The measure has been referred to the House Gaming Oversight Committee. The first hearings were scheduled for last Thursday, February 16, but were canceled as House and Senate leaders attempt to schedule a joint hearing to discuss the expansion measures, and the discrepancies between the House and Senate legislation on iGaming and other expansion measures.

Preliminary bills in the state Senate are likely to have significant differences from the House version, particularly in the area of taxation. Senate leaders are championing much higher taxes—25 percent for iGaming, for instance—and higher fees than House advocates.

Meanwhile, another issue that could muddy the waters in Pennsylvania is a controversial measure introduced by state Rep. Anthony DeLuca to authorize a limited number of video gaming terminals in nonprofit clubs across the state.

While not going as far as last year’s measure to add VGTs to all state liquor-licensed establishments, VGTs have been a thorny issue in Pennsylvania, and the issue has been one of the elements holding overall expansion measures back. All VGT legislation has been opposed by the state’s 12 operating casinos.

Under DeLuca’s bill, the video slots would be limited to nonprofit clubs such as VFWs, Moose Lodges, etc. “It is imperative that the commonwealth is able to strike the delicate balance between closing the state’s revenue gap, acknowledging the mutually beneficial arrangement with the gaming industry, and supporting the clubs and organizations that give so much back to the citizens of Pennsylvania,” DeLuca wrote in his co-sponsorship memoranda from January.

The bill is still a stand-alone measure, but observers said last week that it could possibly be rolled into the larger omnibus gaming bill.

Whatever ends up clearing the legislature, Governor Tom Wolf is counting on the additional gaming revenue. Last week, Wolf submitted a budget proposal to the legislature that contemplates $250 million in additional revenue from gaming expansion in the next fiscal year. “Given developments within the legislature, the governor’s proposed budget does not put forth a specific proposal for expansion, but merely assumes revenues within the current ideas being discussed,” the proposal said.

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