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Online Gambling Legalization Effort Doomed To Fail?

Added: May 15, 2017

Perhaps you are aware that there is an effort underway in the state of Pennsylvania to legalize online casino action. Note that to date there has been what looks to be definitive progress with the proposed legislation. Yet as you are about to learn, this supposedly proactive online gambling legislation contains language that could prove to be a fatal flaw.

Following is what this is all about. As it stands now, the Pennsylvania House Bill number 271 only just recently made it through a Senate with a definitive margin of 13 to 1. In other words, all signs to date seem to look rather promising.

Yet, if you look a bit closer, you can spot the looming problem with this online gambling legalization push. You see, there looks to be an effort from a number of Pennsylvania Senators to impose what seems to be nothing less than a punitive tax rate.

What sort of online gambling tax rate are the Pennsylvania Senators contemplating? How about a tax of 25 percent. Does that sound like a lot? Naturally you can understand that the Senate wants any new legislation such as Bill 271 to produce revenue. But 25% or possibly higher?

One Pennsylvania Senator, Tommy Tomlinson has publicly voiced his opinion on the issue. According to Tomlinson, any sort of taxes imposed on online gambling sites must mirror the rates that are being currently charged for the State’s existing brick and mortar casinos.

So what does that really mean? To better understand what this is all about, it is instructive to see what the land based casinos in Pennsylvania are mandated to pay in taxes. Get this: table games at Pennsylvania brick and mortar casinos are subject to a 16 percent tax on gross gaming revenue. That doesn’t look so bad on the surface.

But look even closer and you will discover that Pennsylvania imposes a massive 54 percent tax on brick and mortar slots. As you probably, slots are the most favored of casino games both in land based casinos and online gambling sites.

On the face of it, the intention of Tomlinson seems sort of reasonable. But that is not the reality. You see, due to the dynamics of the online casino business, the margins for online slot machine games are significantly lower than land based slots.

In other words, a 54 percent tax on online slots would most likely result in few if any online slots made available to Pennsylvania casino players.

When you remember that one of the intentions behind Bill 271 is to generate revenue for the State of Pennsylvania, it is hard to conceive of a scenario in which a 54 percent tax will help.

Bottom line, the Pennsylvania legislature efforts to legalize online casino action may not have the results that lawmakers intend, at least as the Bill is currently being discussed.