Complete legalisation of online gambling in Pennsylvania is looking brighter than ever as good news pour in one after the other. It was just yesterday that the Pennsylvania online gambling bill, formally known as House Bill 271, passed two separate State Senate committees by decisive margins. Now, just 1 day after, HB 271 easily passed a vote of the full state Senate. This marks the first time an online gambling bill had ever made it through Pennsylvania, and the hope to make this the fourth state after Nevada, Delaware, and New Jersey to legalise online gambling is edging ever closer to reality.<\/div>\n

On Tuesday, the Senate Appropriations Committee voted 24-2 in favour of the bill while the Senate Community, Economic & Recreational Development Committee voted cleared the bill with a 24-2 vote.<\/p>\n

Senate Makes Amendments To Bill 271<\/h2>\n

The Legislation HB 271 includes what you would typically expect from a gambling bill, such as players must be at least 21, operators must have all legal licences etc. However, much amendments were to the bill by the Senate in order to address concerns that were raised regarding gaming taxes in particular. The amendments included setting taxes on internet poker revenue at 16 percent, and also imposing a sky-high tax rate on gross gaming revenue (GGR) generated by table a=gambles and online slots, which make up the vast majority of online gaming revenue in New Jersey.<\/p>\n

High Taxes & Licensing Fees<\/h2>\n

As expected, the industry has expressed concerns with a 54 percent tax on non-poker games, and not many will be very willing to jump into the online casino market giving such low profit margins. To illustrate the importance of this significant tax percentage, Steve Ruddock over at Online Poker Report\u00a0did an excellent breakdown on how each dollar wagered online is distributed.<\/p>\n

Based on his research, he concluded that even online casinos in New Jersey whose revenue are taxed at a comparatively reasonable rate of 17.5 percent aren\u2019t printing money. Here was how each dollar was distributed:<\/p>\n

\n
• \u27a4 24 cents to advertising<\/li>\n
• \u27a4 20 cents to player reinvestment (player promotions and retention costs)<\/li>\n
• \u27a4 18.5 cents to payment processing, KYC, geolocation costs, and platform and content royalties<\/li>\n
• \u27a4 17.5 cents to taxes<\/li>\n
• \u27a4 12.5 cents to general and administrative needs, including staff<\/li>\n
• \u27a4 2.5 cents to other regulatory fees<\/li>\n<\/ul>\n

  As you can see, after accounting for all these things, online operators in New Jersey pockets roughly 0.05 of each dollar wagered online. This is based around the 17.5 percent tax on GGR.<\/p>\n

  Without going deeper in to all the mathematics, in short, there is zero incentive for casinos to risk investing in the online business, especially considering the high upfront fees for securing all the required gaming licenses, which are $5 million for online gambling licence, $5 million for online casino games licence, and another $5 million for online poker rooms license. That\u2019s right. $15 million just to get started.<\/p>\n

  Legislators in Pennsylvania are looking to raise as much as $250 million from the licensed online gambling industry, but with the current stipulations, only a few of the bigger operators will be able to shell out that kind of money to invest into the online gambling industry.<\/p>\n

  Even though the whole purpose of this bill was to get the online gambling industry up and running, this astronomical tax percentage along with the absurd licensing fees will simply kill the industry before it begins.<\/p>\n

  Back to the House for further amendments<\/h2>\n

  After having passed the full State Senate, the bill is passed back over to the House, where state Rep. George Dubar expects the House will further amend the bill over the next two weeks and then send it back to the Senate. He stated that the bill will go through the House Rules Committee, hared by House Majority Leader Dave Reed, in its first step for concurrence.<\/p>\n

  \u201cI don\u2019t think that\u2019s the final product at all,\u201d Dunbar said. \u201cThe $5 million license fee for peer-to-peer games isn\u2019t going to fly because no one is going to pay $5 million just for poker, as they\u2019d never be able to recoup that money, and I don\u2019t know who is going to buy a non-peer-to-peer license with that tax rate.\u201d<\/p><\/blockquote>\n

  Dunbar, who is the author of the gambling expansion bill H 392 that passed the House last year, was an online poker player himself prior to Black Friday in 2011, is highly regarded as the figure with most experience on iGaming in the statehouse.<\/p>\n

  Dunbar stated his concerns for the high taxes and licensing fees, and suggested a much lower percentage as well as a single license for both poker and casino games is necessary. He stated that he will continue advocating for the figures in H 392, which is 14 percent for all online gambling.<\/p>\n","protected":false},"excerpt":{"rendered":"Complete legalisation of online gambling in Pennsylvania is looking brighter than ever as good news pour in one after the other. It was just yesterday that the Pennsylvania online gambling bill, formally known as House Bill 271, passed two separate State Senate committees by decisive margins. Now, just 1 day after, HB 271 easily passed […]","protected":false},"author":6,"featured_media":4570,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-4632","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-headline"],"acf":[],"yoast_head":"\n