{"id":7079,"date":"2018-05-25T15:48:23","date_gmt":"2018-05-25T15:48:23","guid":{"rendered":"https:\/\/www.pokerscout.com\/?p=7079"},"modified":"2018-05-28T04:58:16","modified_gmt":"2018-05-28T04:58:16","slug":"lets-talk-about-pas-insanely-high-sports-betting-tax","status":"publish","type":"post","link":"https:\/\/www.pokerscout.com\/lets-talk-about-pas-insanely-high-sports-betting-tax\/","title":{"rendered":"Let\u2019s Talk About PA\u2019s Insanely High Sports Betting Tax"},"content":{"rendered":"

Pennsylvania<\/strong> lawmakers deserve some credit for putting their state on the leading edge of this trend toward sports betting<\/strong>.<\/p>\n

The legislature passed an enabling law last year, even before the US Supreme Court<\/strong> considered overturning the federal ban known as PASPA<\/strong><\/a>.\u00a0That prohibition is no longer on the books, and PA sports betting is legal pending final regulations<\/strong>.<\/p>\n

Casino operators aren\u2019t exactly lining up at the license office in anticipation, though. The specifics of the PA law leave a lot to be desired, clipping the industry\u2019s wings before it even tries to fly.<\/p>\n

Here\u2019s how host Matt Brown<\/strong> put it on the most recent episode of TheLines<\/strong> podcast:<\/p>\n

\u201cPennsylvania is kind of a wild card this year. The regulations for sports betting currently in place are\u2026 concerning.\u201d<\/p><\/blockquote>\n

What\u2019s wrong with them? We\u2019ll explain.<\/p>\n

PA gets aggro with gambling taxes<\/span><\/h2>\n

As the saying goes, two things in life are certain: Death and high gambling taxes in PA<\/strong>.<\/p>\n

The state\u2019s expansion into these new formats will be taxed at a rate that raises serious questions about sustainability<\/strong>.\u00a0As the law is written, sportsbooks will have to pay\u00a036 percent<\/strong> of their revenue back to state and local coffers. That is a ridiculous number.<\/p>\n

Compare that to Nevada<\/strong>, which has been refining its industry for almost 70 years. Nevada sportsbooks return 6.75 percent<\/strong> of their revenue to the state, and things work just great. Operators make a little profit, the state collects tens of millions of dollars, and bettors get to do what they do in a regulated environment.<\/p>\n

PA operators will pay more than five times<\/strong> the tax rate in Nevada, a\u00a0serious disincentive<\/strong> for some operators.<\/p>\n

Spokesman Eric Schippers<\/strong> says Hollywood Casino<\/strong> isn\u2019t even sure it wants sports betting under those terms. \u201cWe haven\u2019t made a final determination on whether to pursue what is the highest rate on the planet for sports betting,\u201d he told Penn Live<\/strong><\/a>.<\/p>\n

A couple states (like Delaware<\/strong> and Rhode Island<\/strong>) will offer sports betting through more lopsided revenue-sharing<\/strong> agreements with their lotteries<\/strong>. Those are exceptions to the rule, though. Most states are proposing something between 7-15 percent<\/strong>.<\/p>\n

It\u2019s also worth mentioning that the\u00a0oppressive taxation<\/strong> won\u2019t be limited to sports betting. PA will tax online slot<\/strong> revenue\u00a0at 54 percent<\/strong>, more than twice the rate at which operators say they feel comfortable. Slot play accounts for around three-quarters of total online gambling revenue in existing markets.<\/p>\n

By way of another comparison, New Jersey<\/strong> taxes online slot revenue at 17.5 percent<\/strong>.<\/p>\n

A high bar to entry for casinos too<\/span><\/h2>\n

The recurring costs are unfriendly, but some operators might not even be able to squeeze in the door. Obtaining a PA sports betting license requires operators to overcome the tallest hurdle<\/strong> in any US market, existing or proposed.<\/p>\n

Like tax rates, there is no state standard for licensing fees<\/strong>. As an\u00a0example, Indiana<\/strong> recently considered a bill with a proposed fee of just $5,000<\/strong>. There are some big ones, too, including the $5 million<\/strong> suggested in one Illinois bill. In broad terms, a couple hundred thousand dollars seems to be within the range across most states.<\/p>\n

PA sports betting licenses will cost $10 million<\/strong> apiece, though, larger than any other proposal.\u00a0The tax rate makes the market unappealing from the start, and the up-front fee will be a dealbreaker<\/strong> for some properties.<\/p>\n

As the smallest PA casino, Lady Luck Nemacolin<\/strong> is a good example. The property generated around $20 million<\/strong> in total revenue last year, so there\u2019s almost no way it would front the money for a license. Its only real path to sports betting would involve a partnership<\/strong> with an existing operator.<\/p>\n

It\u2019s not just the little guys, though. Hollywood Casino\u00a0tallied more than $100 million<\/strong> in revenue last year, and it seems to have a good foothold on its market. Still, giving away $10 million is not a\u00a0high priority<\/strong>. Schippers said that if Hollywood does offer sports betting, it would try to do so on the cheap<\/strong>. \u201cThe state has strangled the goose on this one,\u201d he said.<\/p>\n

There\u2019s also some disparity between the licensure for sports betting and other forms of online gambling. Casinos will pay $4 million for a license\u00a0in each of these game types:<\/p>\n

    \n
  • Slot machines<\/li>\n
  • Table games<\/li>\n
  • Poker<\/li>\n<\/ul>\n

    While each of these separately cost $4 million, for $10 million, a property can purchase all three. So, casinos can spend the same amount of money to offer sports betting as they would to offer every form of iGaming.<\/p>\n

    So what? The state needs money<\/span><\/h2>\n

    Yes, it certainly does. The fact that Pennsylvania has been operating under a budget shortfall<\/strong> is the only reason we even have a sports betting law to pick on.<\/p>\n

    This is the issue, though. Rather than viewing expanded gambling as an amenity for casinos<\/strong>, the state took it as an opportunity to plug its own leaks<\/strong>.\u00a0Tax revenue is arguably the worst reason<\/strong> to allow expanded gambling, and that\u2019s especially true for sports betting.<\/p>\n

    As any bookmaker (or bettor) will tell you, sports gambling has some of the tightest margins<\/strong> in the industry. Although bettors plunked down almost $5 billion<\/strong> last year in Nevada, sportsbooks earned less than $250 million<\/strong>, holding around five percent<\/strong> of the total \u201chandle.\u201d<\/p>\n

    In simple terms, operators earn about a nickel on every dollar<\/strong> bet. And\u00a0Pennsylvania will take back almost two cents<\/strong> of that in taxes. That take will be counterproductive to what should have been the primary reason for legalization.<\/p>\n

    Sports betting is unique in that operators aren\u2019t competing against each other as much as they are competing against offshore sites<\/strong>. There\u2019s something like $150 billion<\/strong> wagered in the US each year, and almost all of it is done through black\/gray channels.\u00a0In order to provide a tempting alternative, the regulated industry must provide similar convenience<\/strong> and competitive lines<\/strong>.<\/p>\n

    Convenience won\u2019t be a problem as long as there is mobile wagering<\/strong>, but competitive lines might be. If bookmakers want to be profitable in PA, they\u2019ll almost certainly have to pad their lines. And if PA lines aren\u2019t competitive, those in the know will just keep betting with \u201ctheir guy.\u201d<\/p>\n

    By writing their greed<\/strong> and shortsightedness<\/strong> into law, PA lawmakers are actually doing the unregulated industry a bit of a favor.<\/p>\n

    The post Let\u2019s Talk About PA\u2019s Insanely High Sports Betting Tax appeared first on Play Pennsylvania.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Pennsylvania lawmakers deserve some credit for putting their state on the leading edge of this […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"link","meta":{"_acf_changed":false,"_lmt_disableupdate":"","_lmt_disable":"","vebbtech_seo_disable_yoast":false,"vebbtech_seo_hide_author":false,"vebbtech_seo_hide_date":false,"vebbtech_seo_hide_factchecker":false,"vebbtech_seo_fact_check_enabled":false,"vebbtech_seo_post_reviewer":0,"vebbtech_seo_post_review_date":"","footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-7079","1":"post","2":"type-post","3":"status-publish","4":"format-link","6":"category-news-category","7":"post_format-post-format-link"},"acf":[],"yoast_head":"\nLet\u2019s Talk About PA\u2019s Insanely High Sports Betting Tax -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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