Pennsylvania Gaming Regulator’s Appeal to the Senate

In June 2015, the Pennsylvania Senate committee that is involved with gambling issues hosted a hearing, which discussed the legislature’s existing efforts to allow entrepreneurs venture into online betting among other things. The public hearing featured several witnesses from the States gaming control board who discussed an array of topics ranging from safeguards, regulations and the condition of the local horse racing sector. The hearing occurred only a week after the Pennsylvania casino stakeholders appeared before the Pennsylvania Senate CERD to discuss online betting expansion as well as gaming reforms.

Both Senate hearings produced a positive momentum for online gambling expansion in the Keystone State. However, there are still some few wrinkles that will require to be ironed out if the iGaming is incorporated in the state’s budget. If Pennsylvania is to legalize the internet gambling, it could take almost a year before the activities could commence. A Senate bill could permit the existing casinos that provide slot machines and table games to request permits to provide online gaming services to players in the State. The Senate committee heard testimony regarding that and other online gambling proposals during that session.

Two committee members aired their concerns y noting that allowing online gambling would harm the Pennsylvania’s existing land-based casinos. Additionally, the director of programs of the gaming control board warned that online gambling would create an avenue for more vulnerable citizens to become addicted to gambling. After the hearing, the chair of the state committee, Sen. Kim Ward said there is a lot of interest in regulating online gaming. However, she expressed pessimism regarding gaming legislation being ready by the end of June 2015. The end of June is the end of Pennsylvania’s fiscal year and is hence considered as the deadline for the following year’s budget.

Regulators Welcomes Online Gambling

The key takeaway from the hearing is that the Pennsylvania Gaming body is ready, able and willing to tackle online gaming. Kevin O’Toole, the PGCB Executive Director, was the first person to tout the regulator’s willingness and capabilities to take on the oversight responsibility. O’Toole said that PGCB would be very glad to regulate Internet gambling in a controlled and efficient manner if it is finally legalized. According to the Director, the PGCB could have policies drafted and licenses issued out to the sites at least twelve months after the Senate passes the bill. O’Toole justified the aggressive timeline by noting that it was dependent on the pace of the license application course. Michael Cruz, another witness who is the PGCB’s Chief Technology Officer said that the state would borrow heavily from New Jersey’s online gaming experiences. He declared that he was not interested with “reinventing the wheel.” He added that the Pennsylvania regulator was considering adopting the New Jersey model when drafting its regulations.

The Remaining Issues

Unlike the State of California, the policy disparity among Pennsylvania’s potential online gaming stakeholders does not appear as rigid. The in-person registrations and permission of Category 3 casinos in online gambling license seem to be easily solvable. The pricklier issues appear to be the differences between the Pennsylvania’s casinos and the Senate regarding an acceptable taxation. The online casinos and most iGaming promoter would like to see the tax rate set at around 14 percent. However, the recently presented Senate gaming bill that was sponsored by Senator Kim Ward proposes a 54 percent tax rate on iGaming. These are the trivial iGaming problems the state is grappling. The Senate is attempting to pass a comprehensive gambling reform bill rather than a standalone online iGaming bill. The policies in the some sections of the SB 900, however, seem to be a little bit contentious.

The Real Issues

The challenges that could sideline the essential bill seem to be these proposed brick-and-mortar betting reforms:
1. Loosening limitations on Category 3 license holders particularly the requirement that casino users must be “members” or guests of the casino.
2. Increasing off-track betting areas and slot machines at these sites in Pennsylvania.
3. Allowing liquor to be available day and night at casinos.

Category 3

Under the SB 900 bill, for a one-off $5 million fee, the Pennsylvania’s Category 3 casinos would be allowed to eliminate the membership requirements. Category 3 casinos owners are in favor of the proposal while almost all the other casinos are opposing it. The power of opposition seems to be dependent on the closeness to a Category 3 casino. The provision would prohibit Category 3 license holders to increase slots and table games. Presently Category one and two casinos are allowed 250 table games and 5,000 slot machines while Category 3 casinos are allowed 50 table games and 600 slot machines.

OTB Locations

Another proposal in the SB 900 would permit casinos to operate multiple OTB parlors and put slot machines in the premises. There could be as many as 32 OTBs each one would cost $5 million and the slots income taxed at 54 percent. Category 1 racinos are endorsing this expansion effort while the Category 2 casinos are opposing this kind of expansion.

Liquor Day and Night

The final stubborn point is a proposal that would permit casinos to serve alcohol around the clock once again calling for a colossal $5 million permit fee. All casinos are in favor of increasing the hours that the casinos are permitted to serve liquor. Therefore, this issue will pit legislator against the other since many are opposed to increasing the time for casinos to serve alcohol.

Bottom Line

For the much-followed bill to progress, these three stubborn non-Internet gambling issues that appear to be far more contentious and very difficult to solve the need to be sufficiently addressed or even scrapped. Alternatively, the iGaming can as well be separated from the other sections of SB 900 and consequently added to the State budget. The Pennsylvania’s online gaming future may pretty much hinge on the mood of the legislature.

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