Pennsylvania has been one of the ten reported states that has been pushing hard to legalize online gambling during the last couple of years but so far no decision has been taken. The state is facing a major shortage in its budget and legislators are looking for new revenue streams that will help bridge the deficit. One of the revenue streams being considered yet again, is the legalization of the online gambling market and a report released earlier this week has optimistic numbers concerning the potential revenue that Pennsylvania’s online gaming market can generate.
The report which consists of 14 pages studied the potential gaming market in Pennsylvania and estimates that the state can make millions of dollars in the form of licensing applications, licensing fees and gaming taxes. The report which was compiled by and Play Pennsylvania estimates that the state will be able to generate around $126 million in licensing fees alone and an additional $46 million in gaming taxes, during the first 12 months of operation. The online gaming market is expected to generate around $230 million in gross gaming revenues (GGR) during the first year and as much as $364 million by the end of 2022, based on a gaming tax rate of 20 percent.
The report has taken into consideration a number of assumptions after looking at how the New Jersey online gaming market has performed during the last couple of years. The garden state legalized online gaming in 2014 and brought in $122 million in GGR during its first 12 months and finished 2016 with GGR’s at close to $200 million. The report expects the Pennsylvania market to do a lot better as New Jersey has a population of around 12.8 million whereas Pennsylvania has a population of around 16.8 million.
Should Pennsylvania legalize online poker and decide at a later stage to enter into an inter-state compact with New Jersey, Nevada or Delaware – the three states to have legalized online gaming so far, then Pennsylvania’s online gaming market could expand significantly and gaming revenue will also increase. Governor Tom Wolf is in urgent need to get more funds into the state budget and based on his 2017-18 budget proposal, the online gaming industry in the state will account for nearly $100 million in 2017 and $150 million in 2018.
However there are many who are skeptical about the data presented in the report and term it as inaccurate. The report calculates Pennsylvania’s gaming taxes at 20 percent but in the proposed gaming bill, the gaming tax mentioned is at 16 percent. The report looks at the New Jersey online gaming market and takes a positive vibe from its performance in 2016 but before New Jersey could legalize online gaming in 2014, legislators had estimated that the market would generate around $200 million in gaming taxes when in reality the market ended up generating just $20 million in gaming taxes in 2014.
Las Vegas Sands Chairman Sheldon Adelson has financed the ‘Coalition To Stop Internet Gambling’ and is the biggest opponent to the legalization of online gaming. The Sands Corps owns the Sands Bethlehem casino in Pennsylvania which is also the biggest casino in the state. The Coalition released a statement describing the report as highly inaccurate and said that they were not surprised to find the numbers exaggerated as the report was prepared in the best interests of the online gambling industry and their operators.
Rep Scott A. Petri who heads the House Gaming Oversight Committee said that he was interested to read the report and see what had been laid out but also admitted that he would be cautious while reading the report and ensure that his team takes everything into account accurately. The committee is expected to review the bill and start hearings on March 7.
The two companies that prepared the report defended their projections and stated that their made their observations based on how New Jersey’s online gaming industry has performed during the last three years and they were cautious to ensure that did not overestimate the market’s potential and fall into a similar trap like New Jersey. More information about the report, including demographics, interstate gaming and online casino revenue generation numbers is available here.