Future of gaming expansion up in the air

Future of gaming expansion up in the air

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Future of gaming expansion up in the air

When the state Senate returns to Harrisburg at the end of the month, legislators will have plenty of work to keep busy over their nine-day pre-election stint.

However, that work might not include passing the omnibus gaming expansion bill from which the approved 2016-17 state budget expects $100 million of revenue.

“I think it remains to be seen whether we consider any gaming legislation this fall,” said Senate Minority Leader Jay Costa, D-Allegheny. “We seem to be at different places right now, especially from a Senate Democratic standpoint.”

The Senate has been cool to the idea of expanding gaming to generate additional revenue. As recently as late June, Costa had indicated his caucus wasn’t enamored with the idea of expanded gambling. And during the 2015-16 budget impasse, Senate Majority Leader Jake Corman, R-Centre, also indicated his caucus wasn’t supportive of a gambling expansion.

House Bill 2150, sponsored by Rep. George Dunbar, R-Westmoreland, has been waiting in the wings while the Legislature is on summer leave. The bill was a focal point of the budget season and passed the House 114-85 on June 29, after which it was referred to the Senate Community Economic and Recreational Development Committee.

The bill would legalize casino-controlled internet gaming, or iGaming, as well as regulate fantasy sports betting and allow slot machines at off-track-betting sites and international airports.

While Costa couldn’t confirm whether Senate leaders would let the clock to run out on the bill, he said his colleagues need more time for discussions and a vote on gaming legislation may be best left until after the New Year.

A number of Democrats have “varying concerns about the bill the way it is drafted right now” and those concerns need to be addressed before they move forward, he said.

“iGaming was something we committed to having a conversation about,” he said. “But whether in the fall or spring wasn’t concluded. We still have plenty of opportunities to get it done.”

Some Senate Republicans also appear wary of taking up the bill.

HB2150 is only one of many potential vehicles for gaming legislation in both the House and Senate, said Jason Brehouse, policy developer for Sen. Kim Ward, R-Westmoreland, who chairs the Community Economic and Recreational Development Committee.

“Certainly some bills over here could be used as a vehicle,” Brehouse said, alluding to the idea that the Senate could craft their own gaming legislation as they see fit.

Ward’s office continues to look at and discuss gaming expansion, yet it remains unclear how Republican leaders will choose to proceed, said Brehouse.

“There have been some discussions of the gaming expansion over the summer,” wrote Senate GOP spokeswoman Jenn Kocher in an email. “We are working to find the right mix and are hopeful to address it in the fall.”

The Legislature will eventually need to tackle some variety of gaming legislation, as the FY2016-17 budget assumes $100 million in revenue from gaming expansion.

Costa said he isn’t too concerned about the revenue right now because gaming legislation passed next legislative session could still bring in the necessary revenue for the fiscal year.

The $100 million would come from fees related to licenses purchased by brick-and-mortar casinos to operate iGaming, he said, using the scenario that the Senate could “go into May and May 1 implement gaming and then demand the payments be made by June 30.”

With little consensus on the issue and tight-lipped responses from those in leadership, it’s possible the fall season could be more talk than action.

“All sides agreed to work on expanded gaming in the fall and the governor looks forward to continuing that conversation,” Wolf spokesman Jeff Sheridan said.

Once the conversation does get rolling, Costa said it is vital that members share their concerns across party lines in order for anything to get done.

“It will require a consensus of both parties,” he said. “We need to be on the same page going forward.”

The bill would legalize internet gaming with sites owned by the state’s 12 brick-and-mortar casinos, a model similar to that employed in New Jersey. Operators would pay $8 million each for licenses to operate iGaming sites. Online gaming revenues would be taxed at 16 percent, with 14 percent going to the state and 2 percent to a new program of grants that could be applied for by local governments.

Players over age 21 would have to register with the casinos to play games on smartphones, tablets or PCs. The casinos would be required to offer systems through which players could voluntarily limit bets and/or losses, and players could self-impose a suspension of their accounts when reaching a predetermined loss limit. Account statements showing a history of wins and losses would be available at log-in.

The system would employ age- and location-verification technology to prevent underage gambling and to ensure that online play only occurs within the state’s boundaries.

In addition to legalizing iGaming, the bill would authorize slot machines at airports under one of two methods—traditional gaming machines lining airports as currently exist in Las Vegas and Reno, or online via electronic tablets.

Casinos would be able to petition the Gaming Control Board for permission to install traditional slots at Pennsylvania airports, with the number of games and other regulations to be set by the gaming board. Casinos would be required to create plans for slot installation in conjunction with airport managers. Licensing fees in the bill would be $5 million for Philadelphia International Airport, the state’s largest; $2.5 million for Pittsburgh International Airport, and $1 million each for the state’s four other international airports.

Airport slots would be taxed at 54 percent, with 34 percent going to the state and a 20 percent local share to be reinvested in the airport.

The bill also permit airport slot machines to be offered on tablets, with games streamed online. Cost to licensees would be $1 million. The tablets would be fixed in airport lounges that would also offer food, drinks and other services. Taxes on tablet gaming revenues would be 34 percent, with 14 percent earmarked for the state and 20 percent as the airport’s capital-improvement share.

Rep. John Payne, chairman of the Pennsylvania House Gaming Oversight Committee, told the Pittsburgh Tribune-Review last week that he envisions airport slots as tied to the iGaming bill that he authored, which was the basis of the measure passed last week.

Payne said he envisions the electronic tablets to offer online slots, blackjack, roulette, poker and other casino games. “These machines, if they’re on a tablet, can be so simple,” he told the newspaper. “You can do all the game right on the tablet. It’s a secure system.”

He also said the tablets could be used to order food or drinks, or check on flight status.

Under the measure, casinos could also apply to place slot machines at the state’s off-track betting facilities. The state’s five racetrack casinos would be permitted to put up to 250 slot machines at up to four off-track betting parlors apiece. They must be outside a 50-mile radius of an established casino.

The casinos would pay a $5 million license fee for each off-track facility with slots, and daily gross revenue would be taxed at 54 percent, with 92 percent to the state, 4 percent to the host county and 4 percent to the host municipality.

Among other measures in the package are provisions to regulate daily fantasy sports, a framework for sports betting and changes to the current brick-and-mortar rules designed to increase revenue to the state.

The DFS measure would not require sites like FanDuel and DraftKings to partner with the state existing casinos, but casinos could operate their own fantasy sports contests. Participation in the DFS contests would be available to anyone over age 18, as opposed to the 21-year minimum age for other gaming.

The bill would require the participating commercial companies like DraftKings to obtain a license through the Gaming Control Board, and pay 5 percent of its revenues to the state, after player payouts. Contests would be restricted to professional sports.

The measure creates a framework to proceed with traditional sports betting should the federal sports wagering ban be eliminated. The bill provides that the Gaming Control Board will develop regulations to allow the state’s casinos to implement sports books in the event of repeal of the federal Professional and Amateur Sports Protection Act (PASPA). Licenses would be $5 million each, and revenue would be taxed at 18 percent, with 2 percent going to local communities.

Finally, the bill would relax rules that restrict gaming for Category 3 resort casinos. Patrons of the smaller casinos would no longer be required to spend money on other property amenities for entry to the casino, and the resorts would be able to add more machines—to a maximum of 850, compared to the current 600-game maximum. Maximum table-game count would be increased from 50 to 65 under the bill.

The expansion package, which passed on a 155-80 vote, is projected to add as much as $200 million to state coffers in the first year.

The bill’s passage was applauded by groups headed by the Poker Player’s Alliance, an advocacy group that has pushed for years for Pennsylvania iGaming. “It is about time,” said PPA Executive Director John Pappas in a statement. “This legislation is long overdue. Pennsylvanians deserve robust consumer protections and today the Pennsylvania House delivered. Additionally, this legislation will create jobs and help the commonwealth close its budget gap.

At the time the bill was approved by the House, the online poker community applauded the action. “This common-sense legislation is a win-win for Pennsylvania. The online poker community urges the Senate and Governor Wolf to act swiftly to approve this measure.”