Legal, regulated sports wagering in Pennsylvania moved out of the hanger, onto the launch pad achieving blast off Saturday morning at the Hollywood Casino at Penn National Race Course in Grantville. It’s now the first venue to accept legal sports bets in the Keystone State, situated about 100 miles northeast of Philadelphia, near Harrisburg.
William Hill US, a subsidiary of UK-headquartered bookmaker William Hill, is running the casino’s sportsbook operations. As part of its deal with Hollywood Casino’s parent company, Penn National Gaming, the sportsbook conducted what it called “live wagering test day” on Thursday to certify the staff and equipment are in compliance with state regulatory requirements. Additional testing was scheduled Friday from 2 p.m. to midnight, satisfying the Pennsylvania Gaming Control Board (PGCB) to subsequently authorize the facility to officially open at 10 a.m. on Saturday.
Although without fanfare or a ribbon cutting seen at official launches in Delaware, New Jersey, Mississippi or West Virginia (at least not one visible from afar), the sportsbook indeed went live on Saturday morning. Two William Hill officials confirmed to Sports Handle that the sportsbook at Hollywood Penn opened and is open for business.
The Pennsylvania Gaming Control Board approved applications for three more sports betting certificates at its Wednesday morning meeting, bringing the total number of casinos licensed for PA sports betting to five. Chester Downs and Marina, LLC (Harrah’s Philadelphia Casino and Racetrack), Holdings Acquisitions Co., LP (Rivers Casino) and SugarHouse HSAP Gaming, LP (SugarHouse Casino) all got board approval. Rivers and Sugarhouse are both owned by Rush Street Gaming.
Wednesday’s meeting went smoothly with all three applicants making detailed presentations. The petitions were approved immediately after the final presentation. Each company reviewed its gaming history, both in Pennsylvania and in other states, shared plans for what their temporary and permanent sportsbooks will look like and briefly touched on the desire to roll out internet and mobile gaming sooner than later. The focus on Wednesday, however, was the brick-and-mortar locations.
Pennsylvania initially made 13 sports betting certificates available — one for each licensed casino — and with Wednesday’s approvals, five have been claimed and approved.
At its Oct. 3 meeting, the board approved sports betting licenses for Mountainview Thoroughbred Racing, LLC, operator of the Hollywood Casino at Penn National Race Track, and Greenwood Gaming, operator of the Parx Casino and South Philadelphia Turf Club.
On Wednesday, it will consider applications from Chester Downs and Marina, LLC (Harrah’s Philadelphia Casino and Racetrack), Holdings Acquisitions Co., LP (Rivers Casino) and SugarHouse HSAP Gaming, LP (SugarHouse Casino). Pennsylvania has 13 sports betting certificates available — one for each licensed casino in the state — and to date, five have been claimed or applied for and eight remain. The application fee is $10 million and gross sports betting revenue is subject to a 36 percent tax (34 percent state, 2 percent local).
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The Pennsylvania Gaming Control Board on Wednesday voted unanimously to pass its temporary regulations for sports betting in PA at a meeting at the Strawberry Square Complex in Harrisburg. The board also granted three interactive gaming licenses – which do not include sports betting – and approved the “change of control” request for the Presque Isle Casino from Eldorado Resorts to the Churchill Downs corporation.
What does all of this mean? The Keystone State regulators are setting the table for to-be operators to begin offering legal sports betting. As of yet the state has not received a single application for a sports betting certificate, but signs including Churchill Downs’ interest in operating in the state indicate that some may be moving in that direction.
“I don’t know if there is a specific reason no petitions have been submitted as of yet,” Director of Communications for the Pennsylvania Gaming Control Board Doug Harbach told Sports Handle, “but it’s our understanding that there is interest from some of the casinos and they have publicly” stated their plan to bring legal sports betting to Pennsylvania.
Pennsylvania Law Requires a $10M Application Fee for Sports Betting Licenses and a 34 Percent State Tax.
Pennsylvania has found itself in a bit of a bind since it legalized sports betting last fall. Lawmakers included high taxes on gross gaming revenue – 34 percent state and 2 percent local – as well as a $10 million application fee for casinos offering sports betting. Operators, casino owners and even the NFL have expressed outrage at the potential cost of doing in business in that environment. By comparison, the New Jersey law calls for a $100,000 licensure fee.
At Wednesday’s meeting, the regulations that were approved deal with what types of sports betting the will be allowed and what will be prohibited, rules regarding the testing of systems that would be used for sports wagering, and reports that licensees would be required to submit to the board. The regulations also cover integrity monitoring, organizational requirements, some consumer protection measures, as well as compulsive and problem gambling issues.
In addition on Wednesday, the board unanimously voted to grant three operators – Chester Downs, Greenwood Gaming and Entertainment and Mount Airy Casino – their interactive gaming certificates. Sports betting is not included under the interactive gaming certificates, which are for poker, slots and table games.
To clarify, the state has 39 interactive gaming certificates currently available – 13 (one for each existing casino) each for poker, slots and table games. Separate from that, casinos must apply for a specific sports betting interactive certificate.
Casinos can apply for sports wagering certificates, which would allow them to offer both an in-house sportsbook and internet based wagering, “which can be accessed by anyone when within state borders,” Harbach said. “They do not have to be in a casino in any case of internet gaming whether casino games or sports betting.”
When Internet Sports Betting Is Up and Running, Bettors in Pennsylvania Will Be Able to Place Bets From at PA Casinos From Anywhere Within the State’s Borders.
Translation? When internet sports betting up and running in Pennsylvania, if you’re sitting at home in Sewickley and want to place a bet on Penn State right now, you could log onto a Pennsylvania sports betting website, put money in your account and place a bet.
That said, it will be at least a few months until internet sports betting is even a possibility in Pennsylvania. Harbach said that as of Wednesday, no applications – in which the applicant would have to explain how deposits would be taken – for internet sports betting had been made, so the earliest the matter would be discussed is at the October Gaming Control Board Meeting.
As Pennsylvania continues to sort out how to handle sports betting, neighboring New Jersey is providing good reason to move forward faster rather than slower. The state released its July revenue numbers on Tuesday and the Garden State took in $3.8 million in gross revenue on a total handle of $40.6 million during a month when baseball – not football – is king.
The numbers translate into a roughly 9.35 percent hold, which includes futures bets, as the report does not filter out futures pending (NJ is using a cash, not accrual method of accounting). Of those numbers, the state collected $327,245 in revenue. That number would be much higher in Pennsylvania at a 34 percent tax rate.
“I think the New Jersey numbers are showing that people want to participate in sports wagering and a lot of it was going on underground and that we feel that sports wagering is going to be very lucrative in Pennsylvania,” Harbach said.
Ten months after creating a law to legalize sports betting in Pennsylvania, the state is on the cusp of having general regulations for sports betting approved. The state’s gaming control board is expected to vote on regulations Wednesday at its regular meeting.
The regulations that will be reviewed and likely voted on will include what types of sports betting the board will allow and what will be prohibited, rules regarding the testing of systems that would be used for sports wagering, as well as compulsive and problem gambling issues.
The gaming control board rolled out temporary regulations in May. Those regulations were subject to a public-comment period, during which many stakeholders criticized the state for its high tax rate – Pennsylvania has a 34 percent state tax and a 2 percent local tax – and astronomical fees – the Keystone State requires a $10 million fee to get a sports betting license. In addition, colleges based in the state asked the state to reconsider its position on allowing bettors to bet on collegiate teams – like Penn State or the University of Pittsburgh – that are based within the state.
Pennsylvania Sports Betting Regulations Set To Come, As Mount Airy Casino Is Among Three Petitioning for an Interactive Gaming License.
The gaming control board has no control over the tax rate or fees, though. Those were set by legislators last year when they passed HB 271, which legalized sports betting in the event that federal law allowed such. The Supreme Court took care of that in May. But the tax rate has made things slow going. No operator or casino has yet applied for a sports betting license, though several casinos have partnered with online gaming companies and/or are applying for interactive gaming certificates.
Other items of note on Wednesday’s agenda are the Pennsylvania casinos petitioning for interactive gaming certificates. According to the agenda, Chester Downs, Greenwood Gaming and Entertainment and Mount Airy Casino Resort are all petitioning. On Friday, The Stars Group, the parent company of PokerStars, announced it will partner with Mount Airy to offer online gaming, including sports betting and poker.
Earlier this summer, the company signed a similar agreement with Resorts Casino in New Jersey that will allow customers in-play wagering on sporting events, as well as sports content professional and college football football, basketball, baseball and a host of other sports.
“Offering internet sports wagering and gaming and partnering with The Stars Group is the obvious next step for us to continue diversifying our casino offerings,” said Mount Airy Vice President of Marketing and Gaming Operations Vincent Jordan in a press release last week. “Introducing internet gaming through The Stars Group will provide compelling opportunities for our customers, particularly our younger customers, who are ready to experience the next gaming challenge.”
GAN, a major British-based supplier of enterprise-level B2B Internet gaming software, services and online gaming content today announced a formal deal with Parx Casino, owned by Greenwood Gaming & Entertainment, Inc., to offer Pennsylvania sports betting in both the retail and online markets in the Commonwealth of Pennsylvania.
Parx Casino, located in Bensalem about 20 miles northeast of Philadelphia, had previously filed a petition with the Pennsylvania Gaming Control Board (PGCB) confirming its intention to launch Internet gaming online in the state, identifying GAN as their wagering software platform provider.
GAN says it will receive a portion of the sports betting revenues generated both within the casino and online. Sports wagering is expected to arrive in Pennsylvania this year, but potential local operators are balking at the $10 million licensing fee and 36 percent tax rate that’s currently in place.
Pennsylvania Sports Betting Still Awaiting Final Regulations Amid Prohibitive Tax and Licensure Plan, But Parx Casino Takes Steps With An Eye Toward Future
Sports betting statewide could generate in excess of $100 million in gross win, according to some estimates, in the first 12 months alone. Sports betting online via the Internet is forecast to add an additional $189 million in the same period.
John Dixon, CTO of Greenwood Gaming & Entertainment, Inc. said,
“GAN has ably demonstrated it abilities with both its overall platform and its integration capability for existing major clients. By leveraging GAN’s platform, Parx Casino will have the opportunity to launch retail and online regulated sports betting together with online gaming in Pennsylvania later this year, subject to the regulatory approval of the PGCB.”
GAN is listed on the ESM Market of the Irish Stock Exchange and the AIM Market of the London Stock Exchange under the ticker: GAN.
GAN has fourteen (14) casino operators as clients of simulated gaming platform in the US and internationally, including two clients of real money regulated gaming in New Jersey.
Last week GAN announced its mobile sport wagering platform would be used for New Jersey sports betting by the FanDuel Group, current operators of the sports book at The Meadowlands in New Jersey, when the group obtains approval for its platform from the New Jersey Division of Gaming Enforcement.
The FanDuel Sportsbook is currently using IGT software for over-the-counter sports betting. GAN says, as in Pennsylvania, it will share in incremental sports betting revenues for online betting at The Meadowlands.
The defending Super Bowl champion Eagles reported to NovaCare Complex, Philadelphia on Wednesday as the NFL season draws closer. Elsewhere, none of Pennsylvania’s eligible sportsbook properties have come to the Pennsylvania Gaming Control Board (PGCB) with an application for a license. The reason, as ever with holdouts, is a financial dispute.
The eventual rollout of Pennsylvania sports betting remains stuck in mud created by the 2017 law (HB 271) permitting sports wagering in the event that the Supreme Court eliminates the federal ban, which occurred on May 14, and has paved the way for New Jersey sports betting and legal sports betting in other neighboring states.
One lawmaker central to Keystone State gaming legislation, Rep. Robert Matzie (D-Beaver County), has remained steadfast in his position that despite the $10 million up-front sports wagering licensure fee and 36 percent tax rate on gross revenue, operators will come to play when kickoff arrives. New Castle News reported this week that Matzie believes that the potential market in Pennsylvania will be too attractive for the 13 potential sports betting licensees to pass up.
Legal Pennsylvania Sports Betting May Not Be Up and Running In Time for Football Season — As Potential Operators Remain On Sideline.
Doug Harbach, director of communications for the Pennsylvania Gaming Control Board (PGCB), confirmed to Sports Handle this week that the board has still not received a single application.
So, Matzie’s theory will soon be put to the test. Matzie did not respond to Sports Handle’s request for comment for this story.
In a June letter in response to PGCB’s call for comments on the temporary sports betting regulations, Penn National Gaming vice president and general manager Daniel Ihm wrote:
“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 capita. Based on the tax rate and the fact that, on average, 95 percent of sports wagers are returned to winning bettors, PNG estimates it could lose approximately 40 cents on every $100 wagered on sporting events.”
Dan Shapiro, vice president of business development of William Hill US, which is now operating three of the four sportsbooks so far opened in New Jersey, said last week: “With a 36 percent tax and a $10 million license fee, there are other states that are more interesting to us. It’s just not something we’re looking at seriously right now.”
Other potential PA sports betting operators include brands with national footprints, such as Caesars (Harrah’s Philadelphia) and Eldorado Resorts (Presque Isle Downs & Casino). Caesars has applied for licenses in both New Jersey and Mississippi.
The National Football League has agreed with the above sentiments, as indicated in their written statement to the PGCB, in which it writes that the costs may “render legal market participants unable to effectively compete with the illegal market,” and suggests lawmakers “reconsider laws and regulations that could have unintended consequences of advancing illegal sports betting.”
The Pennsylvania legislature remains open until November 30.
How Many Chickens Will Try to Get to the Other Side?
According to New Castle News, Matzie said that with the potential market in Pennsylvania, there will be too much pressure for casinos not to jump in and start offering sports betting, whether they like the tax rate or not.
But $10 million off the bat is a large hole to dig out of, never mind the 36 percent tax rate.
Compare Nevada numbers from last year where sportsbooks operated at about 190 locations, some much bigger than others and some accomplishing a higher win rate than others. In a mature market with experienced bookmakers, Nevada books collected a record win of $249 million.
For a simple example, let’s call it $200M at 100 sportsbooks. That would be on average $2 million for the year at each location in an artificially inflated example. And that’s at a 6.75% Nevada state tax rate on gross revenue. Even before quintupling that rate and without inflating the numbers (an impossibility), you’re looking at least five years before they could climb out of the initial licensure fee. (And then there’s a $250,000 renewal fee in Year 5).
And if they attempt to dig out more quickly? It’s likely Joe Consumer would get hosed with 30 cent lines or worse — lots of incentive to remain in the black market.
It seems that Matzie’s assumption is that if one potential licensee moves, they all will. Instead, why wouldn’t the casinos let one competitor go ahead let its property absorb blow, and let it the serve as the example of misguided legislation, taxes and fees?
Complete Regulations Coming.
Harbach said that he’s not aware of conversations about the currently constituted structure between stakeholders and the legislature, outside of the letters the board has received.
“We don’t legislate, we regulate,” Harbach has said. “Our job is to put together the regulations and let the chips fall where they may.”
“I’ve said all along that the target was the start of the football season,” Matzie told New Castle. Elsewhere, he told the Pittsburgh Post-Gazette, “I think they will all participate and would be shocked if they didn’t.”
Harbach said that the state’s fleshed-out temporary regulations (as in West Virginia and New Jersey) to direct sports wagering operations are expected to come on August 15, when the board meets next. That’s one day before the second Eagles preseason game — against the New England Patriots — the Eagles’ foe and victim in Super Bowl LII, of course.
Like the Patriots in February, our bet is that Matzie is in for a surprise.