Pennsylvania Governor signs gambling expansion bill into law

Pennsylvania Governor Tom Wolf has signed legislation to authorise a major expansion of gambling, in the process becoming the fourth US state to regulate iGaming.

House Bill 271 was signed into law Monday after the Republican-controlled House of Representatives and the Senate both approved the bill last week.

The bill legalises iGaming and iLottery, creates 10 new satellite slot machine locations, permits video game terminals (VGTs) at truck stops, and regulates fantasy sports contests. 
It will be the biggest expansion of gambling seen in the state since it legalised land-based casinos more than a decade ago.

Cenkos Securities analyst Simon French noted that Pennsylvania was a large state (12.8m population) with a strong land-based gaming offering comprising 12 casinos including Parx Casino and Racetrack, Sugar House Casino, Sands Casino Resort Bethlehem, Mount Airy Casino Resort, and Mohegan Sun Casino at Ponoco Downs.

“We think Pennsylvania is a viable market - which should go live in H2 2018 - with third party projections of $154m gross gaming revenue in year 1, rising to $275m in year 5,” said French. “Given the high effective tax rate of c40 per cent we would expect lower marketing spend to be a feature of the market but given the existing propensity to gamble in the state we do not view this as insurmountable.

“We also think the potential for licensed operators from outside the state to be able to acquire a license as an attractive development for those operators licensed in existing legalised US states such as Nevada and New Jersey.”

French said that the tax rate of 16 per cent on poker, which can be compacted with other states, and table games was “attractive” (and marginally less than New Jersey) but slots at 54 per cent appeared “prohibitive”.

There are a total of 36 licences available (three per category of poker, casino and slots) at a maximum of $4m each, although existing land-based operators will have the ability to acquire all three for $10m in the first 90 days of the licensing process.

Operators from other licensed jurisdictions will be able to acquire licences if any remain after 120 days of the licensing process.

The bill also provides for a regulated sports betting offering should it become legal at a federal level if the US Supreme Court overturns PASPA.


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