Since the U.S. Supreme Court lifted the federal ban on sports betting, a number of states have been enacting legislation with reasonable tax rates on the sports betting revenue, which has been a great factor in the growth of the industry. Unfortunately, Pennsylvania has lagged behind in this regard thanks to a wave of criticism from the gambling industry that the state regulator has been subject to due to a tax structure that many industry stakeholders think is untenable.
While two casinos in the state have already had their licenses approved and are now preparing to launch their sports books, the laxity of the remaining casino operator to apply for the sports betting licenses is quite worrying. This might, of course, change in the near future but there needs to be a lot of liberation on the issue before everything finally conforms to the industry’s expectations.
Every state has implemented a tax rate of some sort which may beg the question of why Pennsylvania is being singled out for its tax rates and license fees. Well, if you have been paying attention to the state’s gambling proceedings, you may already be aware of the hefty $10 million initial license fee that the casino operators have to part with. As if that is not enough, once the sports books go live, the gross gaming revenues of these casinos will be subject to a 36 percent tax rate. Both of these are part of the statewide gaming expansion bill that was passed in October last year.
Will It Drive Operators Away?
A number of gaming advocates have expressed concerns that the rather exorbitant tax rates will eventually trickle down to the customer levels in the form of higher vigorish. Others are anticipating that the casinos will shy away from offering sports betting services because of it.
Susan Hensel, the Pennsylvania Gaming Control Board (PGCB), maintains that the double-digit tax rate is best as it is. Speaking at the Sports Betting Symposium at the Global Gaming Expo (G2E) 2018 in Las Vegas, Hensel referenced a 55 percent tax rate on slots machine revenue while defending the controversial tax rate. She further mentioned that the gaming control board has received five sports betting applications from the state’s licensed casino operators. Evidently, just like in the case of interactive gaming, the board is banking on the fact the Commonwealth’s sports betting industry is too lucrative for the operators to pass on.
What About the Professional Sports Leagues?
In addition to the controversial tax rates, the sports books will also have to deal with the pro sports leagues who have been relentlessly campaigning to get a cut from sports betting revenue not just in Pennsylvania, but the whole country. There are a lot of differing opinions pertaining to this particular issue and it is among the most heated debates at the moment. In fact, some of the leagues have even tried to seek federal intervention, with little success. Still, till sports betting officially goes live all we can do is speculate. A lot can change between now and then.
