Pennsylvania officially became the fourth US state to legalize online gambling when Gov. Tom Wolf signed the comprehensive gambling expansion bill on his desk last week. Now, the question is: Who will get online first? The Pennsylvania Senate approved H 271 on Oct. 25, legalizing online poker and online gambling in PA. The very next day, the House approved that bill by a vote of 109-72. New Jersey, Delaware and Nevada were previously the only US states to pass online gambling legislation. The PA gaming expansion The new law makes it legal to operate online slot machines, online table games and online poker throughout Pennsylvania. However, there are also a number of other gambling expansion initiatives attached. The new law regulates:
Daily fantasy sports
Sports betting (should it be legalized federally)
Online lottery sales
Video gaming terminals at approved truck stops
Tablet gaming in approved airports It also authorizes the construction of up to ten satellite casinos at under-serviced locations a specified distance from one of Pennsylvania’s 12 existing casino operations. Online gambling in Pennsylvania now legal Tax rates were heavily debated in the lead up to the passage of the law. PA lawmakers ultimately settled on the very same tax rates brick and mortar casinos in the state are already paying. This includes:
54 percent for online slots
16 percent for online poker
16 percent for online table games The state’s existing 12 casinos now have 90 days to apply for a license to operate the three different forms online gambling. PA casinos can apply for a license for all three. It will cost $10 million. PA casinos are also welcome to apply for any of the three separately. These licenses will cost $4 million each. If any of the 36 available licenses remain unclaimed following the 90-day period, companies outside of the existing 12 PA casinos will be allowed to apply for them. Getting ready for market While it took New Jersey close to nine months to launch of regulated online gambling from the day online gambling legislation passed, PA is expected to get things done a little faster. Regulators in New Jersey have paved a path for Pennsylvania. Plus, the process may be fast-tracked because it will only involve existing gambling licensees at the outset. It is also worth noting that Pennsylvania’s fiscal year ends in June. Lawmakers are certainly hoping to see the initial licensing fees come in before then, ensuring the revenue is on the books for the current fiscal year. Still, the question remains as to which of PA’s 12 existing casinos will be applying for the first licenses. Possibly passing Penn National Gaming operates the Hollywood Casino at Penn National Race Course. The organization has been critical of some aspects of gambling expansion, particularly satellite casinos. It is unlikely to apply for one of the first online gambling licenses as it is reportedly pursuing legal options to combat the law entirely. Parx Casino was critical of proposed tax rates in the creation of the bill. Parx executives also expressed a fear online gambling operations would cannibalize the brick and mortar casino business. It remains unclear if the legislation that passed will draw Parx online. Sands Casino Resort Bethlehem owner Las Vegas Sands Corporation and its CEO and Chairman Sheldon Adelson have represented the largest opposition to online gambling legislation in the US for years. It might appear hypocritical if Sands applies for a license in PA. However, the competition may force its hand. Ready to roll Philadelphia’s SugarHouse Casino and owners Rush Street Gaming launched a New Jersey online gambling site under the Golden Nugget Atlantic City’s internet gaming permit in September 2016. Considering the company’s interest in online gambling, and the fact it has the software ready to roll, SugarHouse Casino could very well be one of the first to apply for table games and slots license in PA. Caesars Entertainment owns and operates Harrah’s Philadelphia Casino and Racetrack. Its Caesars Interactive Entertainment subsidiary also runs World Series of Poker-branded online poker rooms in New Jersey and Nevada. The Nevada site also shares player pools with 888 Poker online poker sites in Delaware under an agreement between the two states signed in 2015. New Jersey also signed on to join the agreement in October. As a result, Harrah’s and Caesars are a good bet to apply for one of the first online poker licenses in PA.

The Pennsylvania House will have three online gaming bills to choose from following the introduction of an online gaming bill by Representative Tina Davis. The Pennsylvania House of Representative Gaming Oversight Committee will also host two online gambling hearings in the coming weeks, one on April 16 and a second one on May 6. Davis is a known commodity on this issue as she was an early adopter of legalizing online gaming in PA. Davis first took up the cause back in 2013, but despite her history on this issue, the bill that is likely to be acted upon is the one introduced by Gaming Oversight Chairman John Payne. Representative Payne and HB 649 Payne’s bill (HB 649) is good reflection of the current landscape, as it doesn’t contain bad actor language and expressly allows for interstate compacts. Additionally, as the GO Committee Chair, and with the support of GO Committee Democratic Co-Chair Nick Kotik, the bill has top-down support from both sides of the aisle. In addition to the details noted above, Payne’s bill calls for the following:
Online gaming sites to be run by brick and mortar casinos licensed in Pennsylvania.
$5 million licensing fee for operators and $1 million for “significant” vendors.
A 14 percent tax on gross gaming revenue. While similar in nature, the other two bills that have been introduced have significant flaws. Representative Davis and HB 920 Davis’s bill is a carbon copy of her 2013 bill and is simply too short on details to be a contender, especially when you consider the crux of Davis’s bill (HB 920) is the same as the more detailed Payne bill. This shouldn’t be an issue, as Davis, who is also a member of the House Gaming Oversight Committee, cosponsored Representative Payne’s bill. Put this all together and it seems highly unlikely Davis’s bill will be the one that moves forward. Representative Miccarelli and HB 695 In contrast, Representative Nick Miccarelli’s bill (HB 695) calls for a starkly different path forward for PA online gaming. Unfortunately, the bill doesn’t really reflect the online gaming landscape of 2015. The bill would legalize online poker only and contains strict bad actor language that would prohibit PokerStars from applying for a license. Like Davis, Miccarelli is also a cosponsor of Payne’s HB 649. Last year this would have been a perfectly reasonable bill (Caesars was lobbying for just such a bill in 2014), but the consensus opinion in the industry in 2015 is online poker by itself will not produce enough revenue for the state to bother regulating, and with the new alliance between Caesars and PokerStars, the calls for strict bad actor language have diminished. Miccarelli’s bill is a legitimate alternative to the legislation introduced by Representative Payne, but it seems unlikely to gain any traction due to its restrictive nature. April 16 hearing On April 16 the House Gaming Oversight Committee will, for the first time in 2015, host a hearing focused completely on online gambling. The hearing is part of a host of hearings (dealing with online gambling, skill versus chance, and the 2014 small games of chance bill) scheduled by GO Chairman Payne in what he calls an effort to keep Pennsylvania’s gaming industry healthy and competitive. Online gaming has already been discussed this session, as a pair of informal hearings on gaming held at Harrah’s Philadelphia and Sugarhouse Casino on March 18 turned into impromptu online gaming hearings in their own right. You can watch one of the hearings here. A second hearing, dubbed an informational hearing on online gaming (the hearing also tried to define games of skill versus games of chance) was held on April 1. You can also watch that hearing here. According to the legislative calendar, the April 16 hearing will also be broadcast. May 6 hearing added Yet another online gaming hearing has been added to the legislative calendar on May 6. It’s unclear at this time if the hearing will be broadcast at this time. The series of hearings seems to be a strong indicator of Pennsylvania’s interest in online gaming expansion. Payne’s plan Representative Payne told that his goal is to gather all the facts and then present them to the legislature: These hearings could culminate with one of the above mentioned online gambling bills passing the GO Committee and possibly being called to the floor for a vote. Another path forward might be for the bill to be swallowed into the state’s budget, as it has tax implications. It would seem that with his online gaming bill and the slew of hearings he has called, Payne’s plan to keep Pennsylvania gaming healthy and competitive is on the right track.

1 VGTs could lead to sleepless nights
2 Not every truck stop will qualify for VGTs Truck stops just got a little more interesting last week. The recently-passed Pennsylvania gambling expansion law contained many new bits of legislation, one of them being the introduction of video gaming terminals (VGTs) into truck stops. The state’s coffers are happy; more VGTs means more revenue. Casinos, not so much; more VGTs means less foot traffic on their gambling floors. Truck stops and truckers? That’s an interesting one, according to Pennsylvania newspaper The Daily Item, which interviewed truckers and employees at a PA Flying J truck stop. “Truck drivers now are mandated to spend hours resting and they need something to do,” employee Randy Snyder told the paper. “They get bored. I’ve seen some people play these non-lottery games for hours. I believe they’d welcome another diversion. It would be a good way to pass the time.” The Morning Call talked with a trucker named Barb McDonald, who agreed with Snyder. “I think it’s great. Drivers can sit and gamble when they have their breaks,” McDonald said, going on to point out that a trucker’s break is 10 hours. VGTs could lead to sleepless nights As Snyder mentioned in his defense of VGTs, truckers are mandated to rest for a certain number of hours each day. Truck stops like Flying J provide a place for that rest to take place. Truckers can park their rigs in designated spots, fill up on gas, take hot showers and get a hot meal. Only problem is, the presence of VGTs could pull truckers away from their bunks and into a night-long poker binge. One trucker told the The Daily Item he didn’t object to VGTs being in truck stop, but he’s concerned that truckers won’t use their resting time for resting. Not every truck stop will qualify for VGTs The new Pennsylvania gambling legislation is pretty specific about which truck stops are allowed to have VGTs and which one’s won’t. First, it’s important to point out that eligible locations will be allowed to have up to five video poker terminals. Second, truck stops will have to meet the following requires in order to be eligible for video gaming:
Average diesel sales of $50,000 per year
At least 20 truck parking spots
Property includes a convenience store
At least three acres of non-turnpike land These regulations do the obvious work of making sure a business is a legitimate truck stop and not a gas station parading as a truck stop just to get their video poker terminals.

1 New forms of gaming coming to Keystone State
2 In Wolf’s words…
3 Not everyone is thrilled about PA gambling changes
4 Time for legal online casinos in PA has come Even with support from the Pennsylvania House and the Senate, skeptics weren’t sure what Gov. Tom Wolf would do with H 271, the state’s sweeping gaming expansion. After much tweaking and amending, the Pennsylvania Senate approved the bill 31-19, legalizing online poker and gambling throughout the state. On Oct. 26, the House approved the bill by a vote of 109-72. The governor signed the bill into law shortly before the 10-day waiting period expired, on Oct. 30. Pennsylvania is the fourth state to legalize online poker and casino games, following New Jersey, Delaware, and Nevada. The government expects additional revenues brought in by this bill are around $250 million. A key sticking point for Wolf was to make sure that this new revenue did not cannibalize Pennsylvania’s existing gaming industry. New forms of gaming coming to Keystone State The bill legalizes online slot machines, online table games, and online poker throughout Pennsylvania. It also regulates daily fantasy sports, sports betting (if federally legalized), online lottery, video gaming terminals at truck stops, and tablet gaming in airports. Companies like FanDuel and DraftKings were all smiles about the new bill, even considering the tax rate of 15 percent is on the higher end for companies operating daily fantasy sports. The initial license fee is $10,000. Truckers and truck stop operators seem to have mixed reviews regarding the legalized video gaming terminals. While they would welcome the additional revenue and the occasional break for entertainment, many caution against the dangers of gambling and the lack of space to accommodate any new gaming customers. It also authorizes up to ten satellite casinos, which are micro-footprint gambling centers set up in lower population zones. Penn National made it clear it is worried that these smaller gaming centers will take business away from its strategic geographic positions. Additionally, the bill changes Category 3 licenses to remove the membership fee for a higher one-time fee. In Wolf’s words… Wolf spoke in blanket terms regarding H 271. Wolf was quoted in CapitolWire: While never taking an outspoken stance on the issue, his words regarding Pennsylvania online gaming have always been consistent. His message seems to be that as long as it doesn’t disrupt Pennsylvania’s current gaming industry, online gaming makes perfect sense as a means of adding revenue to the budget. Not everyone is thrilled about PA gambling changes Still, opponents of the bill are skeptical of the money it can provide, as well as the claim that it won’t hurt existing business. Of course, online gaming expansion is just a small part of the larger picture. When the entire state budget is on the line, of course there are going to be some heated arguments. Maybe the biggest red flag includes the plan to issue $1.5 billion in bonds to cover the remaining shortfall. But that puts online gambling into perspective: It’s one of the best opportunities Pennsylvania has to balance its budget. Time for legal online casinos in PA has come Regardless of the political reasons, it is evident that online gaming makes sense for Pennsylvania. Proactively welcoming these online business models to Pennsylvania puts the state in a great position to increase revenue in the future, should the demand of the market dictate that. In fact, considering that Pennsylvania has the second-highest gambling revenue after Nevada, it would be foolish to deny online gaming companies an opportunity to operate in the state. Image credit: George Sheldon /

1 PA’s comprehensive gambling expansion
2 Which states will be next to legalize online gambling?
2.1 California
2.2 New York
2.3 Illinois
2.4 Michigan
2.5 Massachusetts
2.6 New Hampshire and West Virginia
3 PA stands alone When Pennsylvania officially became the fourth US state to legalize online gambling last month, it immediately spawned great interest in which state will be next. Several states are considering or have considered joining Pennsylvania, New Jersey, Delaware, and Nevada in legalizing online gambling in one form or another in 2017, including:
New York
New Hampshire
West Virginia While it appears none of these seven states will get online gambling laws on the books this year, they would have to be considered the favorites to be the next do so. The question is: Will they go as far as Pennsylvania has? PA’s comprehensive gambling expansion Online gambling laws passed in PA as a part of a comprehensive gambling expansion package. The new law makes it legal to operate online slot machines, online table games and online poker throughout the state. Plus, the other gambling expansion initiatives attached include:
Daily fantasy sports
Online lottery sales
Video gaming terminals at truck stops
Tablet gaming in airports
Up to ten satellite casinos at under-serviced locations
Sports betting (should it be legalized federally) Since it first approved the operation of slot machines in 2004 and table games in 2010, PA has grown into the second largest casino revenue generating state in the country, next to Nevada. In fact, the Pennsylvania Gaming Control Board claims the state’s 10 stand-alone and racetrack casinos, and two smaller resort casinos, generate close to $1.4 billion in tax revenue from slot machines and table games annually. The new gambling expansion initiatives, including PA internet gambling, are aimed at growing that number exponentially. The big dollar figures PA gambling is already pumping out, and the new ones the state is hoping to create, may be extremely attractive to lawmakers from other states. However, it’s doubtful they’ll want to follow Pennsylvania’s lead in such a comprehensive manner. Which states will be next to legalize online gambling? California Up to now, California has only considered standalone legislation for online poker. Plus, it has been such a contentious issue with so many different stakeholders, including dozens of card room operators and tribal casinos, the state has failed to come to any kind of consensus as to how it will work. Adding further gambling expansion initiatives to the mix would only confuse things further. New York On the other side of the country, New York appears poised to get online gambling legislation on the books next year. Bills brought to the floor this year will get a head start in 2018 thanks to changes in legislative procedures in the state. However, these are online poker-only bills, and lawmakers in the state are committed to a step-by-step approach when it comes to gambling. So that would likely rule out any kind of comprehensive expansion. Plus, NY just expanded gambling in the state by issuing its first four commercial casino licenses. Further gambling expansion will likely have to wait until the state has seen the impact of all that. Illinois Illinois was looking at bills that would legalize online gambling, poker and daily fantasy sports. The session just ended without any movement on that legislation. Further gambling expansion beyond those products is doubtful. Plans to build a casino in the city of Chicago have been so contentious over the years, they stall everything. Michigan Michigan is also considering online casino and poker legislation. However, the state already runs online lottery sales and isn’t looking at any further gambling expansion besides online casinos. Massachusetts In the meantime, the construction of two commercial casinos is underway Massachusetts. As a result, it looks like that state will be waiting to see the impact of of these properties before going online. New Hampshire and West Virginia The bills put forward in New Hampshire and West Virginia are also online gambling-only. In fact, these bills aren’t likely to be attached to any kind of further gambling expansion. PA stands alone It’s highly likely that one of these seven states will become the fifth in the country to pass some form of online gambling legislation in the very near future. However, it’s just as likely that fifth state to pass online gambling legislation will not do anything like the comprehensive gambling expansion seen in PA. Unless some state comes out of nowhere to surprise everyone, that is.

The gambling expansion bill signed by Pennsylvania Gov. Tom Wolf at the end of October includes in it the legislative thumbs-up for sports betting. The catch? The Professional and Amateur Sports Protection Act (PASPA) doesn’t allow sports betting in Pennsylvania because the state didn’t have it when PASPA was signed. So, in order for sports betting to take place in Pennsylvania, PASPA needs to be overturned. Up until 2017, the thought that PASPA would be dissolved was merely conjecture. That changed when, earlier this year, the Supreme Court of the United States agreed to hear the appeal of New Jersey and its Thoroughbred Horsemen’s Association. The two parties fought their way through the legal system to the highest court in the land in an effort to bring legal sports wagering to the Garden State. The state and the association are arguing that PASPA violates what’s known as the anti-commandeering principle. This is an aspect of the 10th Amendment asserting that Congress can’t pass laws violating states’ right to pass their own laws. A brief the state filed earlier this year put it this way: “PASPA compels States to regulate—indeed, prohibit—sports wagering and therefore exceeds Congress’s authority.” Will SCOTUS overturn PASPA? Trends say yes Over the past few months, there have been several studies that indicate public sentiment about sports betting has changed, namely in the way that Americans seem to have stopped viewing it as a scourge. The most notable of these studies was one highlighted in a Washington Post article that pointed out that, for the first time since PASPA kicked in in 1993, the public is in favor of sports betting. A few weeks later, think tank Competitive Enterprise Institute indicated that New Jersey will be the first of many states to legalize sports betting once PASPA falls. The organization’s report addressed the anti-commandeering principle. It further noted that PASPA’s initial intent — curbing illegal sports betting by regulating legal sports betting — failed in the midst of a multi-billion black-market gambling economy in the US. “No matter how one feels about sports betting or any other issue in particular, the importance of preserving the states’ right to make their own decisions on these matters should be painfully clear,” the report said. “PASPA has failed to stop the spread of illegal sports gambling, prompted the rise of an enormous gambling black market, increased criminals’ profits, prevented states from raising millions in tax revenue and enacting consumer protections.” SCOTUS will hear the case on Dec. 4 and make a decision by the beginning of next summer. At that point, we’ll know the extent to which PA can apply its theoretical legalization of sports betting.

1 How opt-outs will work
2 Arguments for satellite casinos in Pennsylvania
3 Arguments against satellite casinos in Pennsylvania Various townships and boroughs across Pennsylvania are debating if they want satellite casinos in their communities. Amid all the legalese of the recent gambling expansion bill that includes satellite casinos (and PA online gambling), a new Pennsylvania Gaming Control Board (PGCB) resolution notes that cities, boroughs, townships, and incorporated towns have the ability, by law, to opt out. Information and guidelines for opting out, as well as locales that have declined to host satellite casinos, are available here. How opt-outs will work The PGCB says opting out will take place through a two-step process. First, its manual says, “The governing body of the municipality should officially adopt the Resolution at a public meeting.” (That meeting must be in accordance with the state’s rules for meetings.) From there, the decisions must be mailed to the PGCB’s Harrisburg address. The resolution also notes that the PGCB recommends opt-out letters include a reference to the legislation that allows each municipality to opt out, the date of the governing body’s decisions, and any necessary seals or signatures to make the decision official. Arguments for satellite casinos in Pennsylvania Proponents of satellite casinos say they’ll bring in millions in revenue. Up to 750 slot machines are allowed at each location. And it’s worth noting that Pennsylvania’s slot taxes are the highest in the nation at 54 percent. This means satellite casinos will be formidable revenue earners for the state’s various funds. The state’s ailing coffers will receive a nice boost with the 10 satellite casino licenses up for grabs. They will be auctioned off with opening bids starting at $7 million. Plus, these satellite casinos can purchase a $2.5 million license to allow table games. From the gambler’s perspective, more casinos across the state means reduced commuting from home to tables. Arguments against satellite casinos in Pennsylvania The flip side of the argument is that even though satellites can’t be built within 25 miles of an existing casino, there’s bound to be some cannibalization. But the argument, according to Hollywood Casino at Penn National Race Course, isn’t so much that it will lose gamblers to other casinos, but that those lost gamblers will reduce race purses. Smaller purses aren’t good for race tracks. While the bill allots money from expanded gambling revenue to struggling casinos, that money won’t go directly to race purses. “If our business was to decline, the brick and mortar or Hollywood Casino, we would be giving less to the horse racing purse fund,” a Hollywood vice presient told ABC 27. “For satellite casinos, it’s not written or designated that any of their money would be for horse racing purses.”

Amid all the hoopla of the Pennsylvania gambling bill was one small sentence that made a huge difference for the future of Mount Airy Casino and Resort. That sentence was an amendment to the satellite-casino section of the bill, in which lawmakers were able to slip in the following legal jargon, the meaning of which we’ll cover after the quote: As we’ve detailed in past articles, the satellite casino portion of the PA gambling expansion bill allowed for up to 10 mini- casinos with considerably fewer slots and table games than non-satellites. Part of that rule included a 25-mile buffer between all current casinos and future satellites. The idea is that the 25-mile buffer cuts down on competing casinos losing customers to satellites. The uniquely-worded amendment mentioned earlier takes that casino protection to the next level, but only for Mount Airy. Mount Airy is a Category 2 casino; satellites are Category 4. Moreover, the counties surrounding Mount Airy’s county are considered sixth-class counties. What do all these categories add up to? Well, all those various designations mean that Mount Airy has a sweetheart deal. The buffer around the casino is massive and, as the closest PA casino to New York, it guarantees that no satellite will stand in the way of gamblers coming from the Empire State. Harrisburg mum on who added amendment Perhaps the greatest mystery in this whole situation is who added the amendment that provide Mount Airy such a clear advantage over other casinos in the state. The Pittsburgh Post-Gazette brought up this interesting discussion in an article earlier this month. After pointing out that lawmakers and politicians in the state capitol have stayed silent on who added the amendment. The paper then went on to point out that the casino’s original owner, Louis DeNaples, sold off his share in the casino “after he was dogged by claims of ties to organized crimes.” It’s quite a leap to even allude to the fact that the casino’s found had alleged ties to the mob — the implication is that organized crime had something to do with the amendment. While that theory is certainly far-fetched, it’s not crazy to think that such a sweetheart deal for Mount Airy had to be added at the last second by virtue of more than just a few convincing conversations with the unnamed penman behind the amendment.