New Pennsylvanian online gambling bill examined

The latest online gambling legalisation bill to hit the Pennsylvanian Legislature, SB900 (see previous reports), is admittedly still subject to debate and amendment, but changes will be needed before it can be regarded as presenting commercially viable prospects for operators.

Industry writer John Mehaffey examined the current provisions of the measure in the publication Online Poker Report this week and outlined specific problem areas in the online gambling legalisation section that will need to be addressed:

* The proposed 54 percent tax rate on GGR will, as a number of land industry executives have already warned, make the nascent internet business unworkable in terms of profit. The rate is far in excess of that levied in other online gambling states like Nevada and New Jersey (6.75 percent and 17.5 percent respectively) and these indirectly affect the quality of marketing and promotions to players that operators can viably offer.

* In addition to the high tax rate the proposed $10 million licensing fee makes recovery difficult in a market the size of Pennsylvania, even over a five year licensing period, and may deter applicants.

* Limiting licensing to one licence per existing land casino will restrict the market and make branding, audience targeting and partnerships with experienced online gambling companies problematic.

* In-person registration at the licence-holder’s physical location could discourage sign-ups for a variety of reasons, and drive punters to unlicensed websites, denying the licensed operator business and the state its tax revenues.

* Excluding Category 3 operators from the nascent online gambling industry restricts competition and reduces the chances of maintaining the present positive consensus among interested parties in Pennsylvania. It could also create problems for Cat 3 operators (resorts that restrict casino activity to guests and members) who have already reached agreements with experienced online gambling firms in anticipation of legalisation.

Mehaffey points out that it is not too late to address these potential problems and produce a practical measure that everyone can support. The alternative could be defeat in the Legislature and the start of years of disagreement as has been the case in California.

Read Mehaffey’s well-reasoned and calculated op-ed here:
http://www.onlinepokerreport.com/17481/sb-900-pa-online-gambling-bill-flaws/