Pennsylvanian pols lack knowledge on online gambling

The Pennsylvanian Senate proposal of a prohibitive 54 percent tax rate on legalised online slot action (see previous reports) came under attack by Mark Gruetze, the Tribune-Review’s gambling columnist over the weekend.

Gruetz wrote that as proposals for legalising online casino gambling in Pennsylvania lurch from one bad idea to another, one thing becomes apparent: Legislators need a better sense of the business and attraction of gambling.

The respected columnist uses the factual figures and graphics from Chris Grove’s Online Poker Report explanation of how online operators break down their operating costs to illustrate that at a 5 percent profit margin, a 54 percent tax simply is not feasible.

Gruetz also rewinds the past three years, which have seen repeated attempts to legalise online gambling in the state in order to protect consumers and raise tax revenue for the state government, pointing out that last year the state House twice passed online gaming measures, only to see them die in the Senate despite provision already having been made for a $100 million contribution to the state budget.

“Several gambling measures have been introduced this year besides the legalization of Internet gaming, including daily fantasy sports betting; skill-based games; online gaming tablets in airport passenger areas; ancillary slot locations operated by casinos; and up to five slots at bars, restaurants and clubs that hold a liquor license,” the writer observes, noting the success and safety achieved in legalised online activity in neighbouring New Jersey.

“Estimates of Pennsylvania’s gross online gaming revenue range from $307 million, made in a 2014 study done for the Legislature, to $413 million in a report presented in March by Paul Irvin of the Innovation Group,” Gruetz recalls.

“Using those estimates and the originally proposed 16 percent tax rate, the state would get $49 million to $66 million a year from online gaming, in addition to one-time licensing fees that totaling $100 million or more.

“But with the abandon of a gambler refusing to pocket a sure win, some legislators argue instead for a 54 percent rate, saying online and land-based slot revenue must be taxed the same.

“What could possibly go wrong with that? That is, other than insisting on 54 percent of nothing?” Gruetz asserts.

“At that tax rate — more than triple New Jersey’s and higher than France, the Czech Republic and Greece – operators simply wouldn’t offer online slots and table games in Pennsylvania.”

The article concludes that an onerous tax rate would be a huge mistake, along with two other ideas that have recently appeared in the Senate: putting the state lottery, rather than the Pennsylvania Gaming Control Board, in charge of online gaming and allowing operators other than casinos to get online licenses.

Access the full article here: http://triblive.com/aande/moreaande/12265805-74/54-online-gaming-tax-betrays-lack-of-understanding