Slot machines, fantasy sports, mini-casinos. Where’s Pa. online gaming, a year after legalization?
Pa. in 2017 legalized sports betting, fantasy sports, online betting, “mini casinos," and video slots in truck stops. But 14 months later, only sports wagering and fantasy sports has launched.
Fourteen months after the Pennsylvania legislature approved a massive expansion of consumer gambling options, the new offerings are only now beginning to trickle into the marketplace.
With the official launch Thursday of sports betting at Parx Casino in Bensalem, four casinos now offer sports wagering, which was authorized as part of an omnibus 2017 bill that also legalized online betting, video slot machines in truck stops, fantasy sports, and “mini-casinos."
Fantasy sports launched last May, and sports betting came last November, but has not yet moved online.
Last year, it seemed as if online gaming was on the fast track after Pennsylvania’s casinos were required to declare by July whether they wanted to commit $10 million for online gaming licenses for poker, slots, and table games, such as blackjack and roulette. The Pennsylvania Gaming Control Board approved 10 of the 13 casino operators to offer internet gaming. Kevin F. O’Toole, the board’s executive director, said in November that the launch of online gaming was not far off.
But no internet gaming has started, and no start date has been set, a gaming board spokesman, Richard McGarvey, said Wednesday. “We do however, think it will be sometime in the second quarter of this year,” he said.
The Gaming Control Board has a staff of 299, having expanded its workforce by about 3 percent, or nine employees, since 2017, while undertaking the licensing of new operators, and testing of equipment and software used in sports betting and online gaming. But the agency is not experiencing a logjam, O’Toole said Wednesday through a spokesman.
Publicly, casino operators only praise the Pennsylvania regulator.
“I’ve heard some rumblings about how long things are taking, but given the number of new options, it’s not surprising that things are dragging a bit,” said Roger Gros, publisher of Global Gaming Business Magazine in Nevada.
Gros said operators have mixed feelings about investing resources in Pennsylvania because the state’s license fees and tax rates for internet gaming and sports betting, set by lawmakers, are so much higher than other states'. Pennsylvania’s 36 percent tax rate on sports betting, for instance, is four times higher than New Jersey’s.
“Frankly, the operators aren’t that eager to get started, because of the high tax rates on iGaming and sports betting,” he said. “They are seriously questioning whether they can make any money in Pennsylvania in those fields, but didn’t want to be locked out, so they ponied up the stiff fees to at least get started.”
Chris Grove, a managing director of Las Vegas gaming consultant Eilers & Krejcik, said the Pennsylvania Gaming Control Board was given a lot of work at one time, and much of it involved new forms of gambling not just in Pennsylvania, but in U.S. markets.
“Obviously, the industry would prefer the process to move as quickly as feasible,” said Grove. “And so would consumers and the commonwealth, as there’s plenty of evidence to suggest that a decent amount of sports-betting demand is migrating across the border into New Jersey.”
The high price to enter the Pennsylvania gaming market may explain the tepid response in recent months to the gaming board’s solicitation for bids for the leftover online permits that were not snapped up last year by the state’s 13 casino licensees.
Under the state’s expanded 2017 gaming law, Pennsylvania made 13 online licenses available in each of three categories — poker games, slots, and table games. Casinos claimed 29 of the 39 available licenses. Pennsylvania then sought applications for the unclaimed 10 licenses — each with a fee of $4 million — and made plans to conduct a drawing for the prized permits if more operators applied than available licenses.
But only the operators of two Atlantic City casinos expressed an interest: MGM Resorts, owner of the Borgata Hotel & Casino, and the Golden Nugget.
An MGM subsidiary, the Marina District Development Co., and Golden Nugget Pennsylvania Inc. were declared “qualified gaming entities” on Wednesday, and their applications for interactive gaming will now be vetted by state regulators. MGM operates the playMGM-branded online casino and poker sites in New Jersey, and Golden Nugget operates GoldenNuggetCasino.com.
But the launch of online gaming is still months away. And the launch of online sports betting, which has proved to be very popular in New Jersey, is also indefinite.
With five interactive licenses still unclaimed — three for poker, and one each for slots and table games — gaming board Chairman David M. Barasch wondered Wednesday whether the board should reopen the application process for online licenses. But O’Toole, the agency’s executive director, suggested the board wait to be “a little further down the road” to see how the market develops.
The only new gaming activity authorized under the 2017 law that is up and running is the iLottery, the interactive version of Pennsylvania Lottery offerings. The Pennsylvania Lottery is self-regulated and not supervised by the Gaming Control Board.
In August, seven of the state’s 13 casinos filed suit against the Pennsylvania Lottery, complaining that the iLottery illegally mimicked slots games, diminishing the value of the $10 million license fee the casinos pay to offer online games.