Online Poker May Now Be Possible in Pennsylvania, But at What (Tax Rate) Cost?

Online Poker May Now Be Possible in Pennsylvania, But at What (Tax Rate) Cost? June 5, 2018 July 18, 2018 Doug Carter
 General June 5, 2018 by Doug Carter

pennsylvania pokerIt wasn’t so long ago that a new bill was signed in Pennsylvania, officially authorising the inclusion of online casinos within the state. Land-based operators were then able to start submitting their applications for providing online versions of their brick-and-mortar establishments. And while this all seems like a great step for the Pennsylvania gambling market, the online casino bill comes with a hefty tax revenue too. Let’s take a closer look at what this means for the operators in the state.

When the bill and its subsequent regulations were agreed upon, it soon became known that a huge 54% revenue tax would also be the responsibility of casino operators to pay. Of course, it remains to be seen how much of an impact this monumental sum will have on the actual online industry itself, although it will no doubt have turned away some of the smaller operators from going ahead with online casinos and poker.

It is thought that the reliance of Pennsylvania’s iGaming operators on slot game revenue is less than that of New Jersey, it’s neighbouring state. This is thanks to the fact that New Jersey is now a part of a tri-state online poker network with Nevada and Delaware. However, there is still a grandiose upfront fee that all operators who choose to move online have to pay, and with the 54% tax rate, it makes it nearly enough impossible for a platform providing all three gaming choices – online slots, poker and table games – to be able to notice any kind of profit. At least in the first five years, according to iGaming analyst Steve Ruddock.

What Does This Really Mean for the PA Gambling Market?

When you’re having to pay out so much for providing services to the gambling community, it doesn’t hold such a strong appeal for the iGaming market, it has to be said. Of course, taxes will always be a great benefit for those people and areas that receive them. Although, they’re equally disappointing for the people and companies that have to pay them. It’s also thought that any attempts of getting lawmakers to change the 54% tax revenue on offline and online slot games, would be very much in vain.

Additionally, the time frame that operators have in Pennsylvania for standing up against this tax revenue is narrowing day by day. Of course, the applications process for potential online casino operators has already begun, meaning that it’s more likely that these companies will have to grit their teeth and deal with the high taxes. After all, this is unlikely to be something that will alter or rectify itself within a short time period.

Because figures from New Jersey’s online operator stats show that iGaming companies in the United States only keep about five cents of every dollar wagered as profit (with New Jersey having a statewide tax of 17.5%), this doesn’t really look great for the Pennsylvania outlook. The model that is in place at the moment for taxing online slots at 54% seem to be quite unsustainable for a future that is potentially looking towards a nationwide gambling market in the online world.

Doug CarterAuthor

Doug loves to party in Las Vegas, though always playing responsibly, as our North American poker writer he will be keep us informed with the latest tournaments, players to look out for as well.