Pennsylvania House Bill 1235

Pennsylvania House Bill 1235 was introduced in April 2013 by Rep. Tina Davis. Unlike the majority of bills that have been introduced or passed thus far, the goal of this bill isn’t only to legalize online poker, but to legalize all kinds of online games. This includes poker, slots and table games like blackjack, baccarat and craps. The bill will prohibit small games of chance, such as bingo, keno and lottery-style games.

Now, this isn’t Davis’ first attempt at Bill 1235. She has brought it up before, and there are a couple of noticeable differences between previous versions and what was reintroduced in April. For example, the licensing fee was reduced more than 300%, from $16.5 to $5 million. The taxable rate was dropped, too, from 45 to 28 percent.

Benefits to Passing House Bill 1235

There are several reasons why the state should consider passing this bill.

For one thing, the revenue generated (for the state) would be allocated to helping the elderly. More specifically, taxes would be reduced and transit (costs) would be reduced / improved. The remaining funds would go to the Pennsylvania Race Horse Development.

There would be plenty of opportunity for growth, too, as the language in this bill indicates the state would not be opposed to working with other states to increase the player pool / liquidity. More players equals more money for the state.

Finally, players would be protected. This bill would prohibit (and prevent) underage gambling and illegal offshore operators from taking advantage of the residents of Pennsylvania.

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House Bill 1235 Cliff Notes

Here are the statutes from House Bill 1235 that will impact operators and players the most.

  • Established brick and mortar casinos with existing slot machine licenses will be favored (for licensing).
  • Applicants will need to be void of any criminal activity or reputation that could conflict with their ability to run an online gambling business.
  • There doesn’t appear to be a bad actors clause. This means that operators like PokerStars may have an opportunity to operate in the state, despite their history.
  • The Regulatory Authority of Board will have the power to license, regulate and investigate all aspects of online gaming.
  • Licenses are valid for 3 year terms, cost half a million to renew and applicants would know within 90 days if they were approved or not.
  • Authorization fees are $5 million. This is a one-time fee that needs to be made within 60 days of the approval to do business online.
  • Impacts with other nations would require federal approval.
  • Operators will have to post minimum and maximum wagers for each (online) game.
  • Operators will need to ensure that all players are 21 or older.
  • The board will be given the tools they need to prevent illegal gambling from being conducted over the internet by offshore operators.
  • The board will need to establish rules for how to run and oversee online gambling. This includes guidelines for testing and approving games, calculating gross revenue and notices for min/maxes for each game.
  • Operators will need to have systems and/or software in place to exclude players based on age, location and self exclusion requests, as well as protect players’ privacy and record, report and/or collect taxes.
  • The board will need to create a classification system for different people involved with the online gambling process, including those that manage or control the games, and those that provide the games.
  • Operators will need to be sure that all bets offered / made are within the boundaries of Pennsylvania.
  • Dormant (stale / unused) accounts will have the money divvied up. Fifty percent will be paid to the slot machine licensee and the other fifty percent will be paid to the State Gaming Fund (which is related to the compulsive and problem gambling program).
  • Gaming equipment will need to be located on the grounds of the licensee’s facility, which is within the boundaries of the state. With permission, equipment used temporarily may be located outside of the state.
  • Procedures for problem gamblers, security, suspected tampering of games, verification, etc. will need to be created (with narrative and diagrammatic representations).
  • Games will need to be tested first before it’s made available for play online.
  • Operators will not be allowed to extend credit, accept credit or debit cards. Licensees that have table game or internet gaming certificates may be allowed to extend credit.
  • Operators can deny access to any person convicted of a misdemeanor or felony committed on the premise of any licensed facility.
  • It is illegal to cheat, use counterfeit cards or chips, loaded dice, bots or any other form of equipment or software.
  • Penalties will vary from misdemeanors to thousands of dollars, depending on the violation and whether it’s an operator or player that committed the violation.

Sources

http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2013&sessInd=0&billBody=H&billTyp=B&billNbr=1235&pn=1566