iGaming Industry Players Speak out against Onerous PA Tax Rates

While the Pennsylvania Senate Community, Economic, and Recreational Development Committee (CERD) discussed the viability of Sen.

Kim Ward’s iGaming bill, SB 900, last month, many believe that the proposal’s skyhigh tax rate could cripple online gambling before it even gets started in the state.

The bill would levy a massive 54% tariff on Internet gaming operators, a figure which some believe will be counterproductive to the state’s goal of raking in a steady flow of long-term tax dollars. “People won’t invest proper marketing dollars to drive revenue if the tax rates are too high,” said All-American Poker CEO David Licht.

John Pappas, Executive Director of the Poker Players Alliance, also spoke out on the issue, pointing out some side effects which a high tax rate could produce. “If the tax rate is exceedingly high, the operator is going to take that out on the consumer,” said Pappas.

The estimates

Licht believes that, taxed at 15%, with a $5 million licensing fee, the industry could bring around $100 million into the state coffers in its first year. Gross revenue could easily exceed $300 million in the first year of legalization, as the state is home to a population of 9 million people, many of whom are familiar with the state’s land-based casinos.

Representative John Payne is the author of the online gaming bill 649, which, at 14%, would offer the most attractive tax rate to operators. According to his estimates, iGaming could bring $120 million to the state in its first year, with that figure shooting up to $700 million if a slew of other changes, like allowing venues to serve liquor 24/7, offering airport slot machines and skill-based gaming,  are also pushed through.

Payne called for a compromise, saying that a 15% tax rate is “apparently” too low, while a 54% rate is too high.

PA market could eclipse other states

Licht mentioned that Pennsylvania could more easily enter the market by learning from the mistakes made by New Jersey, Nevada and Delaware, the three states which have legalized iGaming thus far. He believes that passing iGaming legislation is “a very safe way for the government to try to balance its budget.”

He says that fears of underage gamblers and out-of-state players accessing the site were vastly overblown. “When you legalize, you have better safeguards against minors, you have safeguards against fraud, you have tax revenue that is being generated,” he said.

Licht believes that Pennsylvania could quickly become a “leader” amongst the country’s gambling sites relatively easily. “I think it’s an enormous opportunity both for the government to raise money and the operators to operate in a profitable fashion.”

He said that legalizing online gaming in Pennsylvania could cause a “domino effect”, leading other states to do the same.