Pennsylvania Senate approves Tax Extortion with Online Casino Bill

PA Online Casino BillThe last time I checked, extortion was illegal in the United States. Apparently that doesn’t apply to state governments, as Pennsylvania’s lawmakers are rapaciously seeking at least $100 million from land-based gambling established this year with the latest online casino bill.

The iGaming legislation still has a ways to go before its bloodsucking teeth can sink into the state’s half dozen full-scale casinos. The bill, H.B. 271, passed the Senate with flying colors on Wednesday, gathering an affirmative vote of 32-12. It must now work its way through the House of Representatives before it lands on the desk of Governor Tom Wolf for final approval.

How PA’s Online Casino Bill Works…

H.B. 271 is designed to sweep the state with an immense gambling expansion policy that includes the regulation and taxation of online casino and poker games, plus daily and season-long fantasy sports, and opens the doors for casinos to install tablet-screen slot machines at airports all over the state.

The problem – and the reason pretty much every gambling establishment in Pennsylvania is wholeheartedly opposed to the online casino bill – is the extortionate licensing fees and taxation being imposed by legislators.

First of all, to participate in the online gambling market, a casino will have to fork over a licensing fee of $5 million just to operate interactive slot machines. They’ll need to pay another $5 million if they want to be licensed for online table games (blackjack, poker, etc). So if they want to compete at all, there’s $10 million right off the top.

From there, the tax rate on a casino’s winnings from online gambling activities rises sky high. PA wants a marauding 54% of all online slots dollars, and 16% of all revenue from online table games.

Why PA Is Sucking Casinos Dry

Last summer, Gov. Wolf passed a state budget, despite the fact that his administration had not delivered a funding package to cover it. He ordered his staff to fill the gap in a $3 billion budget deficit, but only gave them so many routes to take.

They’ve already made a few adjustments, like raising the per-pack cigarette tax by $1.60. The gambling expansion and online casino bill was one of the more lucrative options, and they’re obviously milking it for every penny they can get.

Legislators are looking to pull a minimum of $100 million just in licensing fees for next year’s budget.

Can’t Casinos Just Say No?

By definition, “extortion” doesn’t give the “victim” a realistic option of saying “no”. PA’s casinos will be in the same sinking boat if this online casino bill makes its way into the law books.

H.B. 271 gives operators 90 days to apply (and pay the fee) for iGaming licenses. If they don’t, PA will offer the licenses to “other entities” outside the state.

Casinos have two options. Pay the high price to compete among themselves within Pennsylvania, or suffer the consequences of missing the iGaming boat, and competing against outside casino operators. While neither is reasonably affordable, the latter could be fatal to some businesses.

The expansion of slots at airports is designed in the same voracious manner. Casinos can pay the exorbitant license fees to operate slots at the state’s airports – those fees ranging anywhere from $250k to $5 million, depending on the size of the airport – or allow PA to sell the licenses to “other entities”.

At last, casinos are getting a taste of their own medicine as they may soon find out what it’s like to play ‘against the house‘.

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