Another Look at Legal Online Gambling

Tuesday, October 31, 2017

Lynn "Queen of Hearts" ParisLynn “Queen of Hearts” Paris

From time to time we have tried to keep you up-to-date on the status of online gambling in the U.S.  We imagined it would be an ongoing update with states falling in line to follow Nevada’s lead, but boy were we wrong!

In fact, since 2013 only New Jersey and Delaware have followed Nevada’s lead to legalize and regulate online poker, despite the millions of dollars generated in each state.

FINALLY, there is an update! As of October 30, Pennsylvania became the fourth state to legalize i-gaming, which includes i-poker. In a new white paper, “ Analysis: Pennsylvania Moves to Regulate Online Gambling,” several key points regarding the regulations as well as the revenue potential for the state are described.

For example, Pennsylvania will have a unique licensing structure, dividing licenses into three categories of Interactive Gaming Certificates (IGCs) – poker, table games, and slots. Licenses can be in only one or in all three categories, but buying an IGC will cost a hefty $4 million.

Also, Pennsylvania has some of the highest taxes on land-based casinos in the world and the same will apply to online gambling, with a 42% blended tax rate for the three online gambling options . . . more than twice the tax rate in New Jersey.

That means that New Jersey can afford to spend more than twice what Pennsylvania can on critical items like advertising and promotion. This explains why the online gambling market in New Jersey has been so successful, generating over $100 million in tax revenue in 2017.

On the positive side, the Pennsylvania bill is designed to facilitate a quick to market approach, taking advantage of the four years of experience and templates available to them from New Jersey and Nevada. The bill is also designed to make it easy for the state to share the online poker player pools already established by the other three states.

It will be fascinating to see how it goes in Pennsylvania. Just counting the projected upfront licensing fees, the state should see approximately $120 million injected into their state budget.

As Greg Raymer, Board member of the Poker Players Alliance states, “Every state has a chance, and the best way to get online poker in your state is to let your representatives know you want it, and that their decision on this issue makes a difference when it’s time for you to vote.”

In the meantime, we’re predicting that New York will become the fifth state to legalize online gambling. Which state do you think will be next?

Send me your comments or thoughts!

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