online gambling tax Pennsylvania

Penn National Gaming Says High PA Online Gambling Taxes Could Kill The Deal

[toc]Penn National Gaming officials say they are mired in a battle over iGaming tax rates in Pennsylvania. They are trying to convince lawmakers the fate of the proposed local online gambling industry hangs in the balance.

“The key question around iGaming right now is focusing on the tax rate that would be applied,” Penn National Gaming’s SVP of Public Affairs Eric Schippers. Schippers made the remarks during the company’s quarterly earnings call Thursday.

“We are trying to knock down some sort of silly notion that you could have tax parity between iGaming and the slot machines and that it could be a successful industry. And we’re trying to convince them that if they do this, no one will sign up for it.”

PA has highest taxes on gambling in the country

Proposed Pennsylvania legislation, which would legalize and regulate online poker and casino operations, includes two bills seeking a 14 percent tax on iGaming. There is also a third, which proposes to charge operators a 25 percent tax.

The state’s 12 brick and mortar casinos currently pay a 16 percent tax on table games. They also pay a 54 percent tax on slot machines. Combined, this is the highest tax rate on casino operations in the United States.

Some Pennsylvania legislators are beginning to make noise about adopting similar tax rates for iGaming operators.

Schippers said tax rates seem to be the biggest sticking point right now. However, the state is also considering a number of other gambling expansion options. It is even pondering the possibility of cutting the existing casino industry out of iGaming in the state. The plan there would be to  have the Pennsylvania Lottery run it.

“We’re spending a lot of time trying to educate legislators on that business, while at the same time frankly fending off an effort by the state lottery to be the provider themselves,” Schippers said.

“There’s still discussion as well around video gaming terminals in the bars and taverns. More so in the House than in the Senate. And there’s some discussion around satellite facilities that would take the place of that concept.”

It’s all a matter of time and taxes

Schippers said hammering out all these issues is going to take time.

“I would expect that you’re going to see some of the discussions start to gel a little bit more this summer in the June timeframe, but until then, I think a lot of it’s just going to be noise and posturing,” he remarked.

Any plan to allow the the Pennsylvania Lottery to run iGaming in the state would seem to be a non-starter for a legislature looking at iGaming and gambling expansion as a way to reduce a budget deficit.

Allowing the Pennsylvania Lottery to run iGaming would ensure profits stay with the state. However, the state would likely be giving up on more than $100 million in upfront licensing fees from private iGaming operators.

When Penn National speaks the state should listen

Penn National Gaming, Inc. has its headquarters in Wyomissing, Pennsylvania. It operates dozens of racetrack, casino, and gaming facilities across 18 states and one casino in Canada.

In Pennsylvania, Penn National Gaming owns and operates the Hollywood Casino at Penn National Race Course. It also runs two off-track wagering facilities in Lancaster and York.

Hearing Schippers say “no one will sign up for” iGaming in Pennsylvania under excessive tax rates should have a sobering effect on lawmakers thinking parity with land-base casino tax rates is a possibility.

However, the notion that a “June timeframe” is when discussions will start to “gel” at the state level means PA online poker and casino gaming legislation is not expected to get done over the next couple of months.