Penn National Takes Aim At DFS Sites In PGCB Letter

The Pennsylvania Gaming Control Board (PGCB) has begun publishing responses to its proposed sports betting regulations.

The group drafted the preliminary framework last month, and stakeholders took full advantage of the window for public comment on PA sports betting.

We covered the response from sports leagues and teams at length yesterday, so read that first if you haven’t already. It’s worth the time. Each of the four professional leagues has franchises that call PA home, so their words, while controversial, carry some weight.

Today, we’ll delve into the response from another key PA resident: Penn National Gaming.

Penn National central to PA gambling

No other company is as invested in the PA gambling industry as Penn National Gaming is.

The group owns both Hollywood Casino outside of Harrisburg and Meadows Casino near Pittsburgh, making it the only operator with two PA casinos. Call it four, actually. Penn is also the only operator that purchased two of the new mini-casino licenses at auction.

The group has been expanding outside of the Commonwealth, too, maneuvering into markets with an appetite for both sports betting and online gambling. Count Tropicana Atlantic City among its recent purchases, for example, giving it an entry point into neighboring New Jersey.

PNG was one of several operators that took the PGCB up on its offer for public comment on PA sports betting.

Penn cries foul over sports betting fees, taxes

The law itself spells out of much of the framework, including the blueprint for taxes and fees. Regulators are only seeking comment on what they can control. That didn’t stop Penn from leading with an airing of its grievances:

While the existing sports wagering licensing fee and tax rate are outside the PGCB’s purview, PNG first notes that the $10 million license fee and 36% tax rate established in the Gaming Expansion Legislation are the highest in the world and may make it impossible for a casino operator to make any return on its investment of capital.

Citing the mechanics of the sports betting economy, Penn estimates that “it could lose approximately 40 cents on every $100 wagered on sporting events.” The group essentially implores the legislature, via the PGCB, to look to New Jersey and West Virginia for better models.

This will allow for the Commonwealth’s gaming operators to effectively compete with bordering jurisdictions and, importantly, the unregulated and untaxed illegal sports betting market…

These sentiments are echoed in comments from another PA gaming group, as well as a surprise letter from the NFL.

Penn wants preferential treatment for NV operators

With the complaints out of the way, Penn digs into some of the details over which it might actually have some influence.

Licensure and timeline

By the way… Penn’s ever-growing portfolio also includes a pair of properties in Las Vegas, both of which offer sports betting. The letter covers ways in which the group hopes to leverage that expertise and infrastructure in Pennsylvania.

Penn asks regulators to grant preliminary approval to any platform that has already been tested and approved for NV sports betting. The same goes for staff. Penn would like to see its NV employees and vendors immediately granted temporary licenses in PA. It also hopes to use its NV risk management partner, “as is the practice for Delaware, New Jersey, and The Bahamas.”

Penn also asks for removal of the provision requiring servers to be located in PA, as well as the one requiring in-person registration.

Provided these conditions are met, PNG says it’ll be ready to take wagers by the start of the NFL season. That’d be on or before Sept. 6, if you’re wondering.

The letter urges regulators to meet that timeline, too.

Penn says FanDuel, DraftKings shouldn’t be part of the betting market

One very noteworthy request centers around the branding and partnerships permitted for online and mobile platforms — skins, as they’re called.

From the letter:

PNG is opposed to the issuance of any “skins” that would allow for new “white label” online/mobile sports wagering operations by third parties in Pennsylvania which ultiize brands that are currently not in use in the state (for example, DraftKings or Fan Duel).

Shots fired! Sorry to interrupt, but the brands of the two daily fantasy sports leaders are currently in use in the state. The PGCB regulates DFS, and DraftKings and FanDuel have served the state for years.

Continue, Penn National:

The failure to prohibit “skins” with respect to online/mobile sports wagering would present significant new competition to the incumbent casino operators and result in overall saturation of the marketplace, as is occurring in the online gaming marketplace in New Jersey.

Hold on again, sorry. Since when is competition a bad thing in a free market? And another thing, citing New Jersey’s model as one to avoid is misguided at best. NJ online gambling is thriving, bolstering Atlantic City casino revenue with near-monthly records. Bad example, Penn.

This request is entirely self-serving, but you can’t really blame them for asking.

Of all the things Penn wants, limiting skins could arguably provide the largest advantage. It intends to use its established Hollywood brand online, and it would rather not face competition from DraftKings and its marketing team. DraftKings Sportsbooks billboards are already up alongside New Jersey highways.

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