High Tax Rates Remain a Threat for Pennsylvania Online Regulation

Publish: 28.05.2017

Having made initial steps to legalize sports betting in April, Pennsylvania’s efforts to introduce an online gaming bill could suffer a major blow as high tax rates threaten to ruin all progress.

Pennsylvania Setbacks

An amended version of an online gaming bill first introduced in February got approved by the two Pennsylvania Senate Committees  – Gaming and Over sight Committee in the state’s House of Representatives which voted to move the legislation forward – but the most recent update which relates to taxation rates could thwart all attempts to get closer to passing the bill into law.

The bill was last week passed in the State Senate by a 38-12 vote.

The new updates to the bill include new language which proposes a tax rate in excess of 54% on online slot and table game revenue, whereas internet poker would be taxed at 16%.

Compared to an average 20% of gross revenues Canadian casinos pay in taxes, the proposed Pennsylvania tax rates would be the highest for any regulated market on the planet. Additionally, they could prove to be a major stumbling block for any further attempts to attract possible operators to the Pennsylvania market.

High-Priced Tax Rates

Potential operators would, no doubt, get deterred by the steep price and could get scared away even if the new bill gets passed eventually.

In addition to high tax rates, any potential operator would have to purchase two licences – for online poker and casino – each of which would cost $5 million. As for the daily fantasy sports, these would cost operators $50,000 of 7.5% gross revenue to secure and licence, whereas it would also command a tax rate of 12%.

Additionally, the proposed bill stipulates that Pennsylvania Gaming Control Board should oversee the regulation of online gaming in the state.