Pennsylvania Pushes Second Poker Bill

A second effort to legalize online poker in Pennsylvania was formally submitted to the House this week; however, in contrast to John Payne’s HB 649, Nick Miccarelli’s bill is strictly poker.

A reworking of an earlier bill (HB 2297), HB 695 seeks to legalize online poker but under a different framework to the one Payne envisions.

Although Payne and Miccarelli both agree on the level of taxation ($5 million licensing fee and 14% tax on gross gaming revenue), they differ in two key areas: the definition of legal igaming and bad actors.

For Payne, both poker and casino games fall under the term “authorized games” or, as HB 649 defines it, “any interactive poker game approved by the board under this chapter.”

This phrasing does suggest that online poker is favored in the definition, but it doesn’t rule out casino games which many industry insiders feel is necessary from a financial standpoint.

The other significant stipulation in Payne’s bill is that he hasn’t made any explicit references to bad actors.  This news is significant for operators such as PokerStars which has previously run into issues when applying for state igaming licenses post-UIGEA.

A Difference of Opinions in PA

In contrast to Payne’s approach, Miccarelli has prefixed his bill by saying that poker and casino games are separate entities and the former is the game he is seeking to regulate:

Poker is unlike banking games in many respects that make it best for the introduction of interactive gaming. Poker operators are not participants in the games and are indifferent as to the outcome,” wrote Miccarelli in his memorandum on HB 695.

Although this stipulation is likely to sit favorably with hardcore poker players and community members, those with a financial interest in a newly regulated industry are unlikely to be as keen. Although New Jersey’s poker returns have been far from disastrous, neither are they enough to inspire much confidence in a poker only bill.

In 2014 New Jersey’s poker platforms raked in a combined $29 million compared to $94 million from casino games and, given the size disparity between the Garden State and Pennsylvania, its unlikely poker alone would generate much revenue.

Because of this, an igaming bill that supports both casino games and poker will be preferable for state legislators. As well as focusing on poker only, Miccarelli’s bill has an explicit bad actor clause which is another reason to believe the Pennsylvania House Gaming Oversight Committee will favor Payne’s bill.

Bad Actors Banned

As stated in the document, bad actors (whether owned by a new company or not, will be unable to obtain a license within the State):

The board may not issue a license to or otherwise find suitable any prospective licensee or significant vendor, or key interactive gaming employee of a licensee or significant vender, who has:

 (i) accepted or made available wagers on interactive games using the Internet from persons located in the United States after December 31, 2006, unless licensed by a Federal or State authority to engage in such activity; or

(ii) facilitated or otherwise provided services with respect to wagers or interactive games using the Internet involving persons located in the United States for a person described in subparagraph (i), if such activities or services would cause such person to be considered a significant vendor if those activities or services were provided with respect to interactive games pursuant to this chapter, and if such person acted with knowledge of the fact that such wagers or interactive games involved persons located in the United States.

It’s All About the Money

Given that one of Pennsylvania’s primary motivators for igaming regulation seems to be a huge budget deficit (projected to be $2 billion), it would make sense to allow one of the world’s largest online poker operators to join a newly regulated market.

As it stands, PokerStars has not yet announced an official partnership with a land-based casino as it has done in other states (in New Jersey PokerStars has partnered with Resorts); however, if a bill is passed then it would likely seek to capitalize on its recent coalition with Caesars.

Whether the House Oversight Committee will approve either bill when meets on April 16 is, as yet, unclear. However, many experts believe that if one piece of legislation has a chance of succeeding over another it would be Payne’s HB 649. By allowing both poker and casino games, as well as clearing a path for a PokerStars/ Caesars alliance, Payne’s bill seems to be the most lucrative for the State.

As stated, money is one of the primary factors fueling the push for regulation and, as many in the poker industry will know, many matters.

To check out HB 695 in its full glory, click here.