The Pennsylvania Gaming Control Board (PGCB) reported last week that Mount Airy Casino Resort and Mohegan Sun Pocano have applied with the state regulatory body for licenses to operate sports betting operations.
These two applicants join a Pennsylvania sportsbook launch party already in full swing. The PGCB has already overseen the launch of the sportsbooks of five PA casinos that operate in seven retail locations – Parx Casino has three all by themselves. Two other casinos have already applied and been approved and are just waiting for PGCB approval to open their retail sportsbooks.
Pennsylvania has thirteen land-based casinos and nine of them (so far) are taking part in the newly legalized sports betting market while four others (again, so far) have not. The Pennsylvania casino sportsbook landscape looks like this:
- Parx Casino – Began taking bets Jan 2019 (three locations)
- Hollywood Casino at Penn National Race Course – Began taking bets Nov 17, 2018
- Rivers Casino (Pittsburgh) – Began taking bets Dec, 2018
- Sugarhouse Casino – Began taking bets Dec, 2018
- Harrah’s Philadelphia Racetrack and Casino – Began taking bets Jan 2019
- Valley Forge Casino – Approved. Partnering with FanDuel
- Presque Isle Downs and Casino – Approved. Partnering with BetAmerica.
- Mount Airy Casino – Applied Mar 2019.
- Mohegan Sun Pocono – Applied Mar 2019
Standing on the sidelines (so far) are:
- Sands Bethlehem Casino
- Lady Luck Casino at Nemacolin Woodlands Resort
- The Meadows Racetrack and Casino
- Stadium Casino
What casino wouldn’t want to operate a sportsbook?
Why are these four casinos holding back? Clearly the ability to legally run a sportsbook is a valuable privilege, so what’s going on? The answer lies in the heavy taxes and fees charged by the state in this new legal landscape. In Pennsylvania, a shiny new sports betting license costs $10 million. This is high compared to the other US states who have recently moved to legalize sports betting for their own in-state casinos.
If you think the fee is high, just wait until you hear the taxes. Pennsylvania charges a whopping 36% tax rate on sports betting gross profits. Like the fees, this tax is also much higher than that levied by other states on sportsbook operations. As a comparison, New Jersey’s rate is 8%, West Virginia’s is 10%, and Nevada’s tax rate is 6.75%.
The powers-that-be in Pennsylvania have elected to impose a very high burden on legal sports betting in their state compared to other states. What impact this will have is yet unknown. The best-case scenario is that sports betting remains popular and successful despite these high taxes and fees. If this is the case, the state gets a nice boost in revenue that can be used for worthy state-funded projects.
Less optimistically, it’s possible that the high tax rate cripples legal sports betting, causing marginal casino operators to close their sportsbooks (or, as four have already opted, to not even open one). If this happens, gambling on sports will be pushed back into the black market, with all the well-known societal harms associated with prohibition.
Will sportsbook operators offer mobile gaming?
Yes! The Pennsylvania sports betting license also allows for casinos to offer online (mobile) wagering as well as physical retail sportsbooks. These mobile sites aren’t up and running yet as the PGCB is holding back authorization for a little while longer. State regulators want to make sure all the retail sportsbooks are operating smoothly with no hiccups before they give the green light on mobile wagering.
The official date for the approval is unknown, but it is expected that sometime in 2019, mobile sports betting will be up and running in Pennsylvania.
Are we seeing a normalization of legal sports betting across the US?
The necessity to travel to Las Vegas to find legal sportsbooks in the US may soon be a relic of the past. Last year, the US Supreme Court struck down a 1992 law that had given Nevada a de facto monopoly on legal sports betting (with small, limited exceptions). Since then, several states have begun licensing, regulating, and taxing sports betting. New Jersey, West Virginia, and Pennsylvania were among the first to seize this new opportunity and more and more states are quickly piling on.
It is very possible that soon states that still disallow sports betting will be the exception, rather than the norm.