Here’s Where PA Stands On Sports Betting And Online Gaming As 2018 Ends

As 2018 winds down, lets take a close look at the changes to the casino gaming picture in Pennsylvania. A lot has happened this year and a lot more can be expected in 2019.

First to the post: sportsbooks!

2018 saw big changes in the US legal landscape and thanks to laws presciently passed in 2017, Pennsylvania now had a clear path for sports betting and online casino gaming to get started this year. Much progress was made on both these fronts, but sports betting (the legal and licensed variety) got to market first.

Hollywood Casino reached the grail first, opening Pennsylvania’s first physical sportsbook at Penn National Race Course in mid-November. They had the field to themselves until mid-December when Rivers and SugarHouse opened retail sportsbooks of their own.

Which casinos will follow suit?

Next on deck is probably either Parx or Harrah’s with Valley Forge hot on their heels. The latter is partnering with heavyweight operator FanDuel, which is already tearing up the market in New Jersey. These three have already had their applications approved. Presque Isle has also applied and we expect Mount Airy to soon apply as well. These five sportsbooks should open sometime in Q1 of 2019.

The remaining five of the thirteen eligible land-based PA casinos never even applied for a sports betting license.

Why not everybody?

Why would a casino operator who is eligible for one of PA’s sports betting licenses decide not to pursue the opportunity? A couple obvious and glaring possibilities spring to mind: the fees and taxes. A license to operate a sports book in PA costs $10 million. Perhaps even more unsettling, the tax rate to be applied to sports betting revenues is a jaw-dropping 36%.

That may be prohibitively high. For comparison, the tax rate on sports betting revenues in New Jersey is 8.5%.

Mobile sports betting?

All the casino operators who are entering PA’s new legal sports betting market will eventually be launching mobile (online) versions of their sportsbooks. When that happens depends on when the Pennsylvania Gaming Control Board (PGCB) gives them the go-ahead to do so. The PGCB is holding back until all operators have proven success and stability running their retail books. Once this has been demonstrated, they will give the green light for online sports betting.

It is currently unknown when this will occur, but when it is announced, we will let you know here.

Online casino gaming is lagging behind.

Just as with the state’s sports betting licenses, Pennsylvania offered online casino licenses initially to their thirteen existing land-based casinos. Each casino could buy the 3-pack of online slots, online table games, or online peer-to-peer (poker) licenses for $10 million or each license could be bought separately for $4 million each.

As of now, ten of the casinos have applied for all (or some) of the new online licenses while three casinos have abstained. The online casino gaming picture looks like this:

Again, why not everybody?

Of the three abstainers, the decision of one makes perfect sense. Rivers Casino and SugarHouse Casino are owned by the same parent company (Rush Street Gaming) and can reach the entire state using just one set of online gaming licenses. It makes little sense to double-pay just to offer the Rivers brand alongside the SugarHouse brand.

Why are the other two sitting out? It could be that they think the hefty license fee is simply too high. Or perhaps (again) taxes might be the problem. Online slot revenue in PA will be taxed at an incredible 54% tax rate. Online table games and online poker revenue will be taxed at 16%.

These rates are extremely high compared to other states (Again, New Jersey’s relevant tax rate is 8.5%). These taxes also seem strangely arbitrary.  What could justify such a big disparity between taxes on slot revenue vs. table game revenue?

For whatever reason, two of PA’s casinos decided to forego this new opportunity.

Other casino operators want in!

After giving local casinos first choice, the PGCB still has ten available online gaming licenses, two each for online slots and table games, and six for online poker.

This has led them to open the door for Qualified Gaming Entities (QGEs) to apply for these licenses. So far two outside entities have stepped forward to take a shot at what others have deemed unprofitable.

The two “outsiders” are MGM and Golden Nugget. Both operators have applied for QGE status and are eager to enter the online gaming market in Pennsylvania. MGM sprung for all three licenses (at the bundled price of $10 million) while Golden Nugget opted to pay $8 million for just online slots and online table games.

At years end, both of their applications are still pending, but given how established these operators are in other US states, they are expected to be approved without any issues.

Hurry up and wait.

Legal sports betting arrived in PA before 2018 came to a close, but online gaming isn’t going to make it in time. Online gaming has taken something of a back seat as most of the PGCB’s attention seems to be on sports betting.

It is also conceivable that the state’s regulators are waiting until all operators have been approved before they give the nod to the entire field. If this is the case, it could serve to circumvent some well-founded potential complaints. After all, nobody wants to lose out on state-wide online market share because a competitor (who paid the same fee as you did) got out of the gate first.

For whatever reason, it’s clear that Pennsylvanians will have to wait at least until the new year for online gaming.

Check back here for all the latest news on this and other Pennsylvania gaming and bonus code issues.