Damaging 25% Tax Included within Pennsylvania Online Gambling Plans
Published on by Adam
Another week, another disappointing attempt to cull the potential of Pennsylvania’s online gambling future. However, unlike last week’s house bill which looked to criminalise all forms of betting using the internet within the Keystone State’s borders, this new piece of legislature does advocate for its regulation – so that’s something at the very least. Furthermore, despite the continued opposition to finding an online gaming in Pennsylvania solution, there is quiet confidence that some sort of deal will be struck in the end.
For now, though, we’re disappointed to hear that a new bill (SB 524) has outlined the state’s intentions to raise online gambling tax in Pennsylvania to higher than originally thought. Senator Jay Costa initially sought a 14% tax rate for revenues made from this environment, but SB 524 has amended that – and it’s not particularly good news.
Costa now wants to see this figure rise to 25% for any future online gambling law. To put that into perspective, that’s 10% higher than neighbouring New Jersey, while also going directly against Play Pennsylvania’s excellent report which claims the state could form a billion-dollar market from online gambling – but only if they make tax charges hospitable.
Pennsylvania’s Latest Online Gambling Bill (SB 524) Examined
As tax is such an important aspect of any budding new industry (iGaming being no different), our optimism of a future with regulated online gaming in PA may well be consigned to long-term. The 11% tax increase is so drastic that it was never going to go unnoticed and without comment – with pro online wagering supporters quick to jump on it.
Considering that New Jersey’s tax is 15%, many are suggesting that this increase will only suffocate the industry before it’s even had chance to breath, and could end up costing Pennsylvania more money in the long run due to several consequences.
Why the 25% PA Online Gambling Tax is a Problem
As we noted upon in our previous article regarding Pennsylvania’s billion-dollar opportunity with online gambling, ensuring an appropriate tax rate is crucial for maximising iGaming’s potential. The author, Robert DellaFave, suggests a middle-ground between the two suggestions – with 20% yielding a total of $426.3m (including licensing fees) within 5 years, according to his projections.
Anything too high could well have negative results as casinos in Pennsylvania may decide to reduce their spending on promotions, tighten certain games, or worse deem the whole project too expensive – leaving fewer operators. Senator Boscola, amongst others, had previously voiced concerns about the low tax, especially when compared with land-based casinos who have a 54% slot machine revenue tax imposed upon them. While the insane suggestion to match this was initially discussed for online gambling a couple of years back, it thankfully didn’t get very far.
SB 524’s Other Amendments
While tax is the main adjustment that Senator Costa has made, it’s not the only one. He wants to raise the upfront cost of online licenses by $2m to $1om overall, with certain technology partners also facing an expanded bill of $5, up from $2m.
These are hefty increases which may well eat into DellaFave’s numbers if written into law. While it’s understandable that the state shares concerns about the initial 14%, they need to think very carefully about whether short term gains from a too-high tax rate would cause lower profits in the future when Pennsylvania’s iGaming market matures (if it manages to get off the ground, that is).
The Next Date for Our Pennsylvania Online Gaming Diaries
If you’re feeling particularly confused about the various online gambling Pennsylvania bills being thrown around, then be sure to check in with us next week due to a big discussion being scheduled for 28th March. The state’s House Gaming Oversight Committee is set to meet that Tuesday, with all forms of iGaming bills being at the forefront – including those that want the market outlawed.
Let’s hope the latter isn’t the concluding thought from this meeting, as Pennsylvania really would be shooting itself in the foot if it passed up this billion-dollar opportunity. Whatever the outcome, you can learn about it here on Netent Casino.