No Casinos Show Interest in Pennsylvania Online Gaming
It took years for legislators in Pennsylvania to pass the bill it did in 2017 to legalize online poker and casino games. It took conversations and debates, negotiations and changes, but in the end, it was worth it. The legislature passed it, Governor Tom Wolf signed it, and the Pennsylvania Gaming Control Board was ready to establish a framework and begin the licensing process.
The PGCB worked through the beginning of 2018 to prepare the licensing applications and open the window for existing land-based casinos to submit those applications and be vetted. And then…
Two months after the window opened, there had yet to be one application submitted.
Multi-Faceted Application Process
Let’s be clear. The PGCB technically decided to offer online gaming licenses in two parts, and the above dramatic reading only pertains to the first part.
The timeline for applications started on April 16 for existing land-based casinos that wanted to apply for a set of three licenses in one package. This includes online poker, online casino table games, and online casino slot machines. Each singular license was priced at $4 million, but by applying for all three at the same time, they were offered a $2 million discount and could buy the package at $10 million. And that opportunity was for a limited time only; the deal is only applicable through July 16.
This writer is no psychic, but it seems that no casino is going to take the deal. If there are no signs of applications in the first 60 days, the next 30 days are likely to be void of activity as well.
Hey @mcuban can I borrow $10 million for a PA gambling license?
— Mark (@bondizzle024) May 16, 2018
When this window closes, the next will open for one month, from mid-July to mid-August. This is the time that existing land-based casinos can apply for singular licenses to offer online poker, table games, or slot machines, or any combination of the three. Each license will cost $4 million.
After that 30-day window closes, other qualified petitioners can apply for licenses.
Bright Side Explanation
There is an explanation for those wanting to look on the bright side, despite not one casino of the dozen brick-and-mortar casinos in Pennsylvania applying for a complete, all-encompassing gambling license. Overkill.
Most of the casino operators will be diving into the online gaming world for the first time and are not sure that they want to offer all of the games. Online slots and table games are the real moneymakers, as evidenced by Delaware and New Jersey revenue reports, and casinos may want to start with those licenses before diving into poker.
Another possible explanation on this bright side is that the casinos are still in talks with online gaming providers, and those contracts are not yet finalized. One or more casinos could still apply within the next 30 days.
The opposite of the bright side is worrisome, mostly for the online poker industry.
Most of the casinos are very likely to apply for licenses to offer online slots and table games. As mentioned, these are the bread-and-butter revenue items in neighboring New Jersey. These games draw many new players to expand the casino’s base, deliver significant revenue, and give the house a big edge over players.
Online poker is not the same. There is profit to be made, but revenue from the online poker sites in New Jersey and Delaware is on the very low end of predictions and consistently dropping over the past several years of operation. While the opportunity to share liquidity with other states opens them up to more poker revenue, the situation in New Jersey is showing that liquidity not only takes quite a bit of time to secure and launch, there are also few sites that offer online poker in other states. WSOP/888 is the only option in Nevada and Delaware, showing the limitations of liquidity at this stage of the US online poker market.
There are other concerns for casinos. As Online Poker Report noted, some of the policies established by the PGCB thus far are problematic, such as the 54% tax rate for online slot game revenue. This is the same rate that land-based slot games pay, but there are fewer ways for online casinos to offset that high tax with other forms of revenue. Other concerns include the prohibition of online gambling at the casinos themselves, constricting rules for skins, and limits on player accounts.
— Steve Ruddock (@SteveRuddock) June 16, 2018
A clearer picture will emerge in the next 30-60 days. When the current licensing window closes and the next one opens, the true intentions of Pennsylvania’s casinos for online gambling will be known.