Pennsylvania senate’s online casino tax plan a non-starter

Pennsylvania’s state senate amended its online gambling proposal on Tuesday, but its tax plans will likely prove a non-starter with operators.

On Tuesday, two Pennsylvania senate committees approved the latest version of HB 271, which seeks to authorize online gambling, daily fantasy sports and fix the state’s unconstitutional host community slots share program. Just for fun, legislators added provisions for the state lottery to launch online operations, because there simply weren’t already enough moving parts to this regulatory centipede.

As telegraphed earlier this month, the main takeaway from the amended bill is the 54% tax on online casino revenue, which mirrors the nation-high rate applied to land-based slots at the state’s 12 casino operators. Online poker operators get off comparatively scot-free with a mere 16% revenue tax rate, the same rate applied to brick-and-mortar casino table games.

In a word, no. While one can sympathize with legislators’ desire to close their nine-figure budget gap, trying to do so on the backs of online casino operators won’t work when no operator applies for a license. (Which will cost $5m upfront for either online casino or poker, $10m if you want to offer both, and these fees aren’t credited against future tax obligations. Renewals cost $250k. )