Contents
1 How PokerStars will fit into the legal PA online poker landscape
2 What the tax structure looks like for PA iGaming PokerStars is an online gambling titan in New Jersey. Now, it’s setting its sights on Pennsylvania online gambling. Earlier this month, Stars Group CEO Rafi Ashkenazi said during the company’s third-quarter earnings call that PokerStars is ready to offer online gambling in PA. “We are poised to take advantage of the positive momentum in the growth of online gaming globally and the continued march towards regulation, including in the United States where we aim to be among the first operators to launch in Pennsylvania when that state opens its door to online poker and casino,” Ashkenazi said. How PokerStars will fit into the legal PA online poker landscape The Pennsylvania gambling expansion bill passed at the end of October legalized online gambling, an umbrella term that includes PA online poker, slots, and table games. Each type of online gambling will require a license, which means the law opened up a total of 36 permits for the state’s 12 brick-and-mortar casinos. Within the first 90 days of the permits becoming available, casinos can purchase all three licenses for $10 million. Once the 90 days have passed, the price will go up to $4 million per license. Should PokerStars operate in the state, it will have to pay a $1 million fee to do so. What the tax structure looks like for PA iGaming Projections show the average tax rates for Pennsylvania’s online gambling products will be 42 percent. That breaks down to 67.5 percent for slots, 22.5 percent of table games, and 10 percent for poker. However, that tax rate isn’t the only fee PA casinos will pay. According to estimates, once taxes, administrative needs, regulatory fees, advertising, marketing, and payment processing are taken care of, casinos will be left with approximately five percent of the money generated through their online gambling sites. As for the state, Harrisburg should see $400 million from Pennsylvania online gambling in the first five years. That number includes $120 million from the licensing fees mentioned earlier, revenue tax, and fees associated with casinos and operators renewing their licensing fees. The projections are that Pennsylvania’s online gambling market will grow from $154 million in Year 1 to $275 million in Year 5. These numbers take into account Pennsylvania joining a player pool with the other states currently offering legal online poker: Delaware, New Jersey, and Nevada.

Sheldon Adelson’s anti-online gaming lobby group, the Coalition to Stop Internet Gambling (CSIG), recently touted a poll on Pennsylvania’s appetite for online gaming expansion. As is normally the case with polling data, the wording of the questions garnered precisely the results CSIG was hoping for. The poll in question was conducted by Harper Polling between April 22 and April 27, with 513 registered Pennsylvania voters polled via landline and cell phones. Here is why this poll should be filed in the “grain of salt” file. A little background on Harper Polling Harper Polling is a right-wing polling company founded by Brock McCleary. McCleary currently serves as Harper Polling’s President. Prior to Harper Polling, McCleary had most recently worked as the Polling Director and Deputy Executive Director of the National Republican Congressional Committee during the 2012 election cycle. That being said, skepticism of Harper’s polling results goes beyond its partisanship. In an article from May of 2014, New York Times prediction guru Nate Cohn called Harper Polling “a newcomer to the land of cheap, partisan, automatic polling,” and said of its methodologies in previous polls, “Harper underrepresented urban voters… inconsistently weight for age.” Cohn said of Harper (and similar polling outfits on both sides of the political spectrum), “They may not be reliable for precise measurements of public opinion.” FiveThirtyEight.com’s Nate Silver grades Harper Polling as a C+ in his pollster ratings. Results of PA online gambling poll were expected Given that Harper Polling doesn’t have the confidence of the experts, the results from the recent online gaming poll shouldn’t be overly surprising and fall within an expected range on this issue. A 2013 poll by Quinnipiac had opposition to online gaming expansion at 62% – in the same poll, a full 70% of Pennsylvanians were opposed to further land-based expansion as well. Gambling expansion issues have always polled poorly historically, particularly when the poll was commissioned by an anti-gaming group expecting certain results. This illustrates why the crafting of the language is so critical in polling. If you’re curious as to how biased the poll was, simply scroll down to the final page of the results and read the list of “messages” Harper’s pollsters asked the respondents. These are almost word-for-word the talking points of CSIG and anti-gambling crusaders. This polling ploy is clearly evident when we consider Harper’s first question about legalizing online gaming in Pennsylvania showed 73% of respondents opposed, but the same question posed just two questions later saw opposition rise to 83%. What changed 10% of respondents’ minds in the span of two questions? The answer is Question 2 of the poll which reads: First, notice scenario two mentions “key problems and potential abuses” but scenario one doesn’t mention “key benefits or safeguards.” This careful construction would lead the average citizen (who has scant knowledge of online gaming) to the impression that the risks outweigh the rewards. Scenario one paints online and land-based gaming as the same; scenario two depicts them as different and sneaks in a warning about potential issues. Second, touting the results as “68% find online gaming different than land-based gaming” when respondents were instructed to choose the scenario that was closest to their opinion is disingenuous. Particularly when just two scenarios were supplied. Many people likely fall into a gray area between the two. Finally, had Harper added a few lines to scenario one, detailing the revenue and consumer protections the regulation of online gambling would introduce, the swing may have been ten points in the opposite direction. Takeaway Harper Polling designed this poll with a single objective in mind: To obtain the desired results for whomever commissioned and paid for the poll.

Contents
1 Reading wants in the satellite casino business
2 The entire city council is behind it
3 The good outweighs the bad From Adams Township in Snyder County to Woodward Township in Lycoming, the number of Pennsylvania municipalities exercising the option to prohibit the opening of a satellite casino inside their borders is growing every day. In fact, the list of municipalities opting out on the Pennsylvania Gaming Control Board website was up over 200 by 4:30 p.m. on Dec. 4. However, at least one PA municipality is taking a different tack. The City of Reading in Berks County wants the local gambling industry to know it’s doors are open to them. Reading wants in the satellite casino business In fact, Reading City Council voted unanimously Monday to pass a resolution urging the Pennsylvania Gaming Control Board to approve plans for a satellite casino there. With a population of a little less than 90,000, Reading is the fifth-largest city in Pennsylvania. It is perhaps best known for lending its name to a now-defunct railroad that was one of four on the classic Monopoly board. Or possibly for the large number of pretzel bakeries that call it home. Of course, Reading made national headlines in 2010 for all the wrong reasons. The National Census identified it as having the highest share of citizens living in poverty in the entire country. Now, the city government is hoping a satellite casino can help turn its economic fortunes around. State lawmakers passed a comprehensive gambling expansion bill in October. Among several measures, it authorized the construction of up to ten satellite casinos across the state. These mini-casinos could house anywhere from 300 to 750 slot machines and 30 table games. However, none are allowed to be built within a 25-mile radius of one of the state’s 12 existing casino properties. Plus, municipalities are able to opt out, prohibiting the opening of a satellite casino near them. Reading is opting in. The entire city council is behind it It all started with Reading Mayor Wally Scott telling the local press he fully supported the idea of bringing a satellite casino to the city. Before long, Reading City Council President Jeff Waltman was calling the city a prime location. Soon after, Reading’s Managing Director Glenn Steckman was touting the benefits of such an operation. He said a satellite casino would create jobs and help re-energize certain areas of the city. He pointed to the economic development seen around other casinos like the Sands Casino Resort in Bethlehem as an example. By Monday of this week, Waltman was introducing a resolution urging the PA casino industry to consider Reading for a satellite casino. Plus, the entire City Council was behind the idea. The good outweighs the bad Concerns about potential societal ills brought on by the presence of casinos may have hundreds of municipalities opting out. However, the members of Reading City Council stand by the idea the state is already funding problem gambling initiatives and a satellite casino in Reading would do everyone a lot more good than bad. “With gambling facilities, there are always negatives, but the positives far outweigh them,” Councilman John Slifko said at the meeting where the resolution was passed. “This is an opportunity to help with the revitalization of downtown. Gambling is going to go somewhere. We might as well have it here and reap some of the good aspects.” Next up for Reading is to see if any PA casinos want to bid on opening up a mini-casino there. The Pennsylvania Gaming Control Board will be accepting bids early 2018. In the meantime, other municipalities across the state have until Dec. 31 to opt out.

Contents
1 Online gambling legislation in the US
2 Anti-online gambling fear mongering
3 A reiteration of RAWA In response to Pennsylvania passing online gambling legislation last month, two US Senators are asking the US Department of Justice to change the legal opinion that allowed the state to do it. Sens. Diane Feinstein (D-CA) and Lindsey Graham (R-SC) co-wrote a letter to Deputy Attorney General Rod J. Rosenstein asking that the DOJ revisit and withdraw its 2011 legal opinion on the 1961 Federal Wire Act. It was that same opinion that paved the way for PA and three other states to legalize and regulate internet gambling. The DOJ issued its legal opinion that 1961 Federal Wire Act only applies only to sports betting in December 2011. It was in response to questions about the legality of online lottery sales. However, several states took this to mean the act did not apply to online gambling either. Online gambling legislation in the US Four states have since passed online gambling legislation, including Delaware, Nevada, and New Jersey. New Jersey’s online gambling industry is now averaging approximately $20 million a month in revenue. In October 2017, Pennsylvania became the fourth state to pass online gambling legislation. The state is still at the licensing and regulation stage. PA’s first online gambling sites have yet to open up. In the meantime, Sens. Feinstein and Graham say the question of whether online casinos should be allowed in the US is one better left to Congress to decide. They are now asking that the the DOJ reverse its position, fearing that if it does not, online casinos will soon “sweep across our country.” Anti-online gambling fear mongering This latest letter from Sens. Feinstein and Graham is a follow-up to one from three years ago. At that time, Sens. Feinstein and Graham said the the DOJ opinion could turn “every smartphone, tablet, and personal computer in our country into a casino available 24 hours a day, 7 days a week.” It provides no evidence to back it up. However, the letter also claims online gambling preys upon children and society’s most vulnerable. The internet itself, and online gambling, are still not yet 50 years old. However, the letter from Sens. Feinstein and Graham claims the DOJ opinion “reversed 50 years of interpreting the Wire Act to prohibit all gambling online.” The letter also mentions a 2013 Federal Bureau of Investigation statement that online casinos are vulnerable to a variety of criminal activity, like money laundering. However, the FBI claims clearly referred to offshore online gambling operations, not online casinos that are legal and regulated by US states with a variety of consumer protections in place. A reiteration of RAWA The letter appears to be a reiteration of the arguments made in favor of a bill called the Restoration of America’s Wire Act (RAWA). RAWA was first introduced in 2014. The legislation would effectively rewrite the Federal Wire Act to ban most forms of online gambling. This includes state-regulated online gambling in PA, New Jersey, Delaware and Nevada. RAWA is widely believed to be backed by casino mogul Sheldon Adelson. He is founder, chairman and chief executive officer of Las Vegas Sands Corporation. Sands owns and operates Sands Casino Resort Bethlehem in PA. Several drafts of RAWA have been introduced in both chambers of Congress, but have failed to advance. Sens. Feinstein and Graham are clearly hoping to shut down online gambling in the US and take away states’ rights to pass online gambling legislation. However, they readily admit it is a growing market. In fact, their letter suggests other states are “lined up to follow suit” after PA passed online gambling legislation last month.

Contents
1 NJ signs interstate online poker agreement
2 PA’s comprehensive gambling expansion
3 Is New York next?
4 Building up US online poker through satellites New Jersey online gambling sites are setting new records this year, averaging $20 million a month in revenue. However, less than 10 percent of that revenue comes from online poker. In Nevada, online poker numbers spike during the annual World Series of Poker. This is partly due to the WSOP.com Nevada poker site offering online satellites into live WSOP events and online WSOP bracelet events of its own. However, throughout the rest of the year, the numbers aren’t all that impressive. In Delaware, the third state with legal and regulated online poker, the market is too small to count. Alas, two things happened last month that have renewed hope the online poker market in the US can be revitalized. NJ signs interstate online poker agreement First, New Jersey signed on to an agreement to share player pools with Nevada and Delaware. Those two states have already been operating under a similar agreement since 2015. However, hope for growth in online poker lies in the size of the New Jersey market, which is potentially twice that of the other two states. Once sites can get the necessary regulatory approval and start sharing player pools across all three states, the number of cash games and tournament prize pools should rise exponentially. That, in turn, could draw an even bigger number of players back to the online game. PA’s comprehensive gambling expansion But the second and biggest thing to happen for online poker in the US last month was Pennsylvania joining the mix. As a part of a comprehensive gambling expansion bill passed by lawmakers, Pennsylvania legalized online poker last month. The potential market in PA is even bigger than New Jersey. The state will likely open up PA-only online poker sites at the outset, but the legislation passed allows it to join the interstate agreement with New Jersey, Nevada, and Delaware in the future. If and when PA signs that agreement, it could potentially double the size of the existing US online poker market. Those kind of numbers will certainly help propel online poker in the US, but there’s more to it as well. In fact, the Keystone State could be the key to unlocking online poker legislation in other states. It may even create a cascade across the country that grows the legal and regulated US online poker market by leaps and bounds. The list of states already considering online gambling or online poker legislation is already a big one, and it’s growing all the time. It includes:
New York
California
Illinois
Michigan
Massachusetts
Mississippi
New Hampshire
West Virginia With a large state like Pennsylvania now on board, these states are going to have an increasingly difficult time ignoring online poker as a potential source of revenue. Plus, other states on the sidelines could move to jump in the game as well. Is New York next? The closest state to passing online poker legislation on the list may be New York. Online poker legislation has passed through one branch of the state legislature the past two years. But it has died on the floor of the other. However, new legislative procedures in the state will see NY online poker legislation begin where it left off in 2018. That should give it more time, and an even better chance of passing. If a state with close to 13 million people like PA can help move New York towards online poker legislation, imagine what New York and its almost 20 million people can do for the rest of the country. In fact, if New York falls, most of the rest of the country can’t really be far behind. Building up US online poker through satellites US online poker operators are already doing everything they can to revive the game stateside. A number of offshore sites that used to operate in the US built up the original online poker market through offering online satellites to live events. Now, sites like PokerStars and playMGM are trying to follow that same path in New Jersey. PokerStars NJ offered at least one satellite to its popular PokerStars Caribbean Adventure event in the Bahamas this year. Meanwhile, playMGM has been running a series of online satellites into a World Poker Tour event in Las Vegas. Plus, the WSOP.com satellites into live WSOP bracelet events are among that site’s most popular and are growing every year. Live poker events have grown in PA over the past few years. The Big Stax series at Parx is increasing in popularity and the annual WSOP Circuit event at Harrah’s Philadelphia is well-attended. It’s easy to see how PA online poker sites might look to the local satellite market as a way of growing from the ground up. It’s also easy to see how if all goes according to plan, PA will soon be seen as the catalyst for re-energizing the online poker market across the US. Image credit: Willrow Hood / Shutterstock.com