Taxes Could Halt the Development of Pennsylvania's Online Gambling Industry

Publish: 26.11.2017

Pennsylvania has recently legalized online gambling, becoming only the fourth U.S. state to have done so, joining New Jersey, Delaware, and Nevada. However, many supporters of online gambling fear that Pennsylvania’s high tax rate could be an obstacle to the development of the state’s young industry.

Under the provisions of the bill signed by Governor Tom Wolf, the licensing fee is set at $10 million, with a 16% tax on poker and table games revenue and a 54% tax on slot machines revenue.

Tax Rates Too High

And while the poker and table games tax is pretty much a standard one, the 54% tax on slots is regarded as an extremely high one that could have devastating consequences.

New Jersey and Nevada have a tax rate of 17.5%, while Nevada’s tax on slot games, though pretty high at 43%, is still quite lower than Pennsylvania’s.

This unfavourable tax regime could prevent casinos from achieving positive results, but most importantly it could deter them from entering the Pennsylvanian market, especially since the ‘entry ticket’ is a licensing fee of $10 million. No licensing fees mean less money in the budget, which in turn would lead to a bigger budget deficit.

State Facing Long-term Problems

Since Governor Wolf approved the bill, Valley Forge Casino paid $1 million to open its casino to the public, bringing the state its first profits from the law itself.

However, it remains to be seen who will be the first to pay the aforementioned $10 million licensing fee and start offering online poker and casino games to customers in Pennsylvania. We guess everyone is waiting for someone to make the first move.

Still, the current taxes, especially those on video slots could pose a serious long-term problem for the state.