Senator Jay Costa of Pennsylvania fired the opening shot this week in the state’s bid to advance a bill to introduce legal online gambling. Costa launched a co-sponsorship memorandum which is practically identical to last year’s HB 1887 that failed to make it to a Senate vote, despite being passed by the House.
The main difference between Costa’s proposal and HB 1887 is the fact that potential operators have discovered that they will be saddled with high taxes and licensing fees if they are successful in their application to operate in Pennsylvania’s market.
A preliminary draft of Costa’s bill proposal shows that state airports and Daily Fantasy Sports operators will be charged licensing fees of $2.5 million, while online technology suppliers will have to pay fees of $5 million. However, the group that will be saddled with the highest licensing fee will undoubtedly be land casinos that choose to take their businesses online. They will be charged a $10 million licensing fee.
In addition, tax rates have also been hiked compared to the sum proposed through HB 1887. There will be a tax rate of 25% on gross gaming revenue for all operators and suppliers across the board.
Other noteworthy points from Costa’s draft include:
# Pennsylvania’s State Lottery will be allowed to take its products online, thus permitting residents to play online lottery games.
# Mobile gambling in airports is a controversial subject and for that reason it has been proposed that the initiative be limited to five years initially, with the option to extend it after a reassessment.
# Only state casino license holders may apply for and receive an online gambling license. In addition, operators will not be allowed to offer online gambling on land casino premises.
Also, according to the text of Costa’s proposal:
“When the Pennsylvania Supreme Court ruled the municipal local share assessment unconstitutional, the court cut off a vital source of funding used by counties and local municipalities to defray the costs associated with hosting a licensed facility.”
“While some municipalities have entered into agreements with their casinos to ensure the funding continues, legislative action is necessary to ensure that communities are made whole.”
“Under this proposal, counties and municipalities would receive the same dollars they were receiving before the court decision was handed down. Category 1 and 2 licensed facilities would be required to pay an annual slot machine license renewal fee equal to 20% of the cost of the $50 million original slot machine license,” he said. “The distribution of the money for both the counties and municipalities will remain the same with minor changes that were included in HB 1887.”
