Legal Online Poker in Pennsylvania
This article will discuss poker laws in Pennsylvania, and the effects of the changes of these laws as they have occurred, in order to address the question: Is online poker legal in Pennsylvania?
Pennsylvania Online Poker Gambling Laws
The short answer? Yes, online poker is now legal in Pennsylvania. On October 30th, 2017, Pennsylvania Governor Tom Wolf signed into law HB 271, a House of Representatives-sponsored bill that made online poker, as well as a long list of other changes, legal in Pennsylvania.
The result is that this single bill has caused the biggest expansion of gambling in the history of the United States that could occur outside of bills that have allowed casinos in a new state. This has also resulted in a huge online gambling expansion, because now the number of US residents who will have access to online gambling has doubled.
We will now explore the laws that have changed over the years and how these have affected Pennsylvanians.
Law Changes and Attempts to Change the Law
In 2011, the federal government’s Department of Justice rendered a legal opinion on an existing legal bill, the Wire Act, in which equipment could not legally be used to transmit money over state lines for sport betting. Until this time, operators in states were not allowed to host sites for the purpose of gambling online, under this law.
However, the 2011 legal opinion clarified that online gambling games such as poker and blackjack did not constitute sporting events, so the Wire Act no longer covered online gambling, apart from online sports betting, which remained illegal under the Wire Act.
This meant that states could now set their own laws on online gambling. Pennsylvania, with the second-largest gambling industry in the United States, was a sure contender to be a state that could see online gambling expansion.
Nevada was the first state to take advantage of this law clarification, managing to complete the legalization process for online poker before Pennsylvania could even get its first bill through the door. Pennsylvania’s first bill came in the form of Rep. Tina Davis’s HB 1235 of April 2013, and it would have permitted online casino games and poker in Pennsylvania, with licensing fees of $5 million and tax rates of 28 percent.
This first bill was not a success, although by the end of 2013, the Senate did call for a study to be done that would measure the impact of online gambling to Pennsylvania’s economy. When this study was completed halfway through 2014, it showed that, with a 20 percent tax on table games and a 60 percent tax on slots, that Pennsylvania could receive $68 million in its first year and $110 million in each year thereafter.
Emboldened by this, Sen. Edwin Erickson sponsored Senate Bill 1386, which would have allowed certain online games at tax rates of 14 percent and set licensing fees at $5 million, but the bill did not go any further.
No fewer than four bills were proposed in 2015 – Payne’s HB 649, Davis’s HB 920, Miccarelli’s HB 695 and Ward’s SB 900. It is clear from the above that the House of Representatives was showing greater impetus to clear the way for online gambling than the Senate. The House’s three tax proposals in 2015 were:
- Payne’s HB 649: 14 percent tax, $5 million license fees
- HB 920: 28 percent tax, $5 million license fees
- Miccarelli’s HB 695: 14 percent tax, $5 million license fees, poker only
Meanwhile, Senator Kim Ward’s SB 900 had a proposed 54 percent tax rate and $10 million licensing fees, both of which were way above all of the House’s proposals.
From this, it should be clear that the Senate’s interested parties supported much higher fees and taxes than the House’s, and this dispute could be one of the reasons that, even though Payne’s HB 649 ended up passing the Gaming Oversight Committee by a vote of 18-8, the only 2015 bill to be submitted to a vote, it did not make it any further.
2016 was a year of confusion and false starts for online gaming legalization. While it was obvious that 2015 had shown that many interested parties were planning to push for legalization. Two highly similar amendments were proposed, A7622 and A7619, but they were defeated amongst misunderstanding over who had written the bills, and the controversy of video gaming terminals at non-casino locations.
One more bill, Dunbar’s HB 2150, which avoided the video gaming terminals outright, would have charged 16 percent tax and $8 million licensing fees, and was actually passed by the House, but ended up not being voted on by the Senate, possibly because it was late in the year and the Senate had to focus on the national election.
By the beginning of 2017, no fewer than nine separate pieces of legislation had been proposed, all seeking, under slightly different conditions and with different provisions, to legalize online gambling and expand the Pennsylvania gambling market and help to reduce the Pennsylvania budget deficit.
Lawmakers must have realized they were close, so they did not give up. Rep. Jason Ortitay, along with seven other sponsors, including Rep. George Dunbar, began drafting House Bill 271 in January 2017, the bill that was finally to result in full legalization of online gambling by October 2017.
What Will Pennsylvania Online Gambling Bill HB 271 Change?
The most pertinent change in HB 271 is the change to Pennsylvania online poker and other gambling laws. Existing casino license holders in Pennsylvania have priority to bid on the twelve, soon to be thirteen licenses available, but after 120 days, operators from out of state will also be allowed to bid.
Taxes will be charged at 16 percent of online poker and other table games’ revenue, and 54 percent of online slot gaming, in a reasonable compromise between the House and the Senate. Licenses will cost $10 million and will be valid for five years from the date of issue.
Surprisingly, the aforementioned controversy surrounding provision for video gaming terminals at truck stops and even tablet gaming machines at airports was not enough to hold back HB 271. The bill was so substantial that it even created an entirely new form of casino in Pennsylvania, Category 4 Casinos, a maximum of ten of which can be built in certain satellite locations, a specified distance away from competing major casinos.
Other provisions inside HB 271 include the legalization of daily fantasy sports, online lotteries, and the potential for expansion to existing category 3 or ‘resort’ casinos, in that, in return for extra license fees, they may remove their entrance fees, add more slot machines, and add extra gambling tables.
All in all, some may say that it was worth the five-year wait to have the Pennsylvania online gambling bill pass the state legislature and finally acquire the governor’s signature.
When Will Pennsylvania-Based Players Be Able to Play Online?
This question presently does not have a sure answer. The Pennsylvania Gaming Control Board has a number of changes to implement following the passage of HB 271, and the construction and licensing of the satellite casinos is surely a priority for them.
However, given the urgency of the budget deficit that Pennsylvania is facing, it is likely that the state government will want to have the license fees collected by the end of the 2017/2018 fiscal year in June, for which $200 million has already been allocated as expected revenue from online gambling expansion.
Considering that the date of the license issuance to online poker operators is the single biggest variable influencing the rollout of online poker sites, it is likely that at some point in the second half of the year, such sites will be ready to accept players, as long as they are physically located in the state of Pennsylvania at the time of play, and over the age of 21.
If you simply cannot wait for the second half of the year, it may be better to play on an offshore site, which there is no federal or state law currently prohibiting you from doing. If you do this, three of your best options for Pennsylvania are Bovada, Ignition and Intertops.
How Much Money Will the State of Pennsylvania Make?
The state is currently projected to take in $110 million from licensing fees upfront, as long as the high taxes for online slots do not dissuade too many participants.
If they do, such operators could wait for the first 90-day limit after license issuance opening to pass and then purchase the $4 million online poker and $4 million online table game licenses, leaving out the slot licenses.
Play Pennsylvania and Online Poker Report collaborated to produce a white paper that forecasts the first year to bring in $154 million, and for this to increase to $275 million in the fifth year. In total, over five years, the revenue gained from online gambling may well surpass $400 million in upfront fees, revenue tax, and renewal fees.
