Pennsylvania House says 'yes' to online gambling

VGTs and tax rates are the major sticking points.

Two weeks after Pennsylvania's Senate passed HB 271, a bill to legalize online gambling, the House concurred on Wednesday night, passing the bill as a gaming package that includes the legalization of online gambling and daily fantasy sports. The final vote was 102-89. Now the bill will head back to the Senate to settle differences.

The bill would put to bed the local share tax issue, which has plagued Pennsylvania for some months, legalize online gambling and daily fantasy sports, allow the state's lottery to sell tickets online and permit tablet gaming at certain airports.

But two significant hurdles remain: the presence of video gaming terminals at nongaming properties and the issue of the online gambling tax rate.

The House bill seeks a 16% tax rate for all forms of online gambling with a licensing fee of $8 million. The Senate put forth an unwieldy 54% tax rate for online slots and table games with a 16% tax for online poker.

Additionally, the bill was amended by the House to authorize the placement of video game terminals – up to five in establishments with a liquor license and up to 10 at truck stops and off-track betting parlors. Brick-and-mortar casino operators, like Rush Street Gaming and Penn National, are in favor of allowing VGTs. Others are concerned that VGTs would cannibalize casino profits.

Michael Bailey, a spokesperson for Pennsylvanians for Responsible Government, told the Allentown Morning Call, "This proposal would destroy the brick-and-mortar casino industry and risk the nearly $1.4 billion in tax revenues that these establishments generate annually. Worse yet, because VGTs are designed to operate without employees, the 18,000 people casinos collectively employ in Pennsylvania will be put in serious jeopardy."

If online gambling is legalized in the state, it could potentially generate over $400 million in tax revenue over the next five years, according to PlayPennsylvania.