On October 30th, Pennsylvania Governor Tom Wolf signed House Bill 271 — effectively authorizing regulated online poker and casino operations in the Keystone State.
Less than two weeks have passed since PA became only the fourth state to pass online poker legislation in the U.S. Nonetheless, a slew of information has been released indicating how licensed online operators might prioritize their offerings for the state’s 21-and-over population of roughly 10 million.
Online Poker, Table Games to Receive Priority?
An article published November 7th by PAOnlineGambling editor Robert DellaFave points towards a potential side-stepping of slot machine focus for incoming Pennsylvania online gambling operators.
The newly-signed i-Gaming legislation in PA calls for a 54% tax rate on Gross Gaming Revenue (GGR) generated by authorized Internet slot products in the Keystone State, which DellaFave says will create a “hostile climate” for online casino operators.
“Whether or not Pennsylvania operators can find a way to thrive despite the hostile climate remains something of an open question,” DellaFave wrote.
To counter this, the PAOG lead analyst suggests that operators could place a greater emphasis on Internet poker along with online table games (which will be taxed at a “more reasonable” rate of 16%), to offset licensed entities’ overall tax commitment to Pennsylvania’s state coffers.
“Operators stand to make a larger portion of their revenue from online poker in PA than NJ, as the industry will benefit from PA’s larger population base.”
DellaFave also reminds his readers that online poker — which is uniquely reliant on large player pools compared to its casino product counterparts — could benefit even more if Pennsylvania joins a liquidity sharing deal recently agreed upon by lawmakers in the states of New Jersey, Nevada and Delaware.
The PAOG article goes on to include data showing how land-based casinos in Pennsylvania have adapted in recent years to generate more revenue from table games, being that brick & mortar slot machines in the Keystone State are also taxed at the 54% rate.
Rush to Quickly Mature Keystone State i-Gaming Offerings
There is reason to believe that future i-Gaming operators in Pennsylvania will pursue an aggressive strategy aimed at complete platform rollouts once online games become available.
In a recent interview with NJOnlineGambling contributor Julian Rogers, Rush Street Interactive President Richard Schwartz alluded to how SugarHouse Casino’s online platform in New Jersey has benefited from in-house competence during its first year of operation in the Garden State market.
“Our first year was all about the learning experience and maturing our platform and operations,” Schwartz said. “A key priority was to successfully launch a new platform and accelerate its maturity as quickly as possible.”
Schwartz’ team — which includes 20 operations and development personnel — was faced with an especially daunting task due to SugarHouse’s proprietary online platform. However, the brand now appears to be in prime position to compete in the regulated Pennsylvania i-Gaming market.
The anticipated fast-tracking of complete offerings by leading PA Internet gambling operators bodes well for poker players and casino gamblers in the state. Much of the guesswork (in terms of marketing and player preferences) should be removed due to the established model of success that exists in New Jersey.
More States to Regulate Online Poker in 2018?
Pennsylvania online gambling legislation has sparked a wave of optimism among regulated i-Gaming proponents in the United States. However, the narrative that recent events in PA will result in a domino effect is “probably oversold,” according to industry representative Adam Small.
“I don’t hate this theory, but it does ignore and/or oversimplify some realities on the ground,” wrote the PocketFives co-founder in a November 6th opinion piece for the PAOG website.
Small believes that the U.S. regulated online poker landscape in 2018 could shift to smaller states as lawmakers in i-Gaming holdout jurisdictions such as California and New York continue to argue over how to best incorporate real money online wagering within their own borders.
“One of the biggest changes I’m expecting as a result of the interstate deal between Nevada, New Jersey and Delaware, is that we’ll start hearing a lot more about smaller states getting serious about passing online gambling legislation,” noted Small while pointing out that online poker is a “more broadly accepted product” compared to internet casinos in many U.S. regions.
Observations on Future U.S. Regulated Online Poker Market
The allure of a consolidated market of 25 million-plus potential customers (assuming Pennsylvania joins the NJ/NV/DE compact agreement) would be a primary factor in this scenario — as states like New Hampshire, West Virginia and Connecticut are not populous enough (using existing models in Nevada and Delaware) to support an Internet poker market on their own.
As far as California is concerned, there is no indication that the sixth largest pre-Black Friday global online poker market would agree to have any future regulated gambling products hosted within another state’s borders. Which leads one to believe that the regulated U.S. online poker industry will likely be segregated if/when more populous states such as CA or New York pass i-Gaming legislation, at least until subsequent agreements are reached.
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