Pennsylvania Stamp

Pennsylvania Online Poker Bill HB 649 Provides for Interstate Player Pooling

Earlier this week, Pennsylvania state lawmaker John Payne introduced his House Bill 649, which would create a framework for the regulation of Pennsylvania online poker.  The Keystone State has been on the short list of the next round of US states to give the regulation of online poker a serious look, and with the introduction of this bill, the topic of Pennsylvania online poker will receive its first serious consideration.

pennsylvania-stampThe full text of HB 649 has now become available through the state’s online legislative portals.  A look inside the bill’s details shows a basic framework designed to support the state’s existing licensed casinos and gaming outlets, but with an eye toward quick expansion into a multi-state network pooling action with players from other licensed states.

Payne’s HB 649 has already been referred to the House Committee on Gaming Oversight, which Payne himself, a Republican from Dauphin, chairs.  Eighteen PA state House reps have already signed on as primary co-sponsors of the bill, including nine Republicans and Democrats each.

The complete list of co-sponsors includes: Nick Kotik (D), William F. Adolph (R), Susan C. Helm (R), Thomas H. Killion (R), William C. Kortz (D), Steven Barrar (R), Mark B. Cohen (D), Dom Costa (D), Tina M. Davis (D), Anthony M. DeLuca (D), Garth D. Everett (R), Joseph T. Hackett (R), Nick Miccarelli (R), Dan Moul (R), Eddie Day Pashinski (D), P. Michael Sturla (D), George Dunbar (R) and Rosita C. Youngblood (D).

The evenly spread, bipartisan support for the introduction of the Pennsylvania online poker bill bodes well for HB 649’s chances of serious consideration in Pennsylvania’s current legislative session, as does the chairmanship of the initial committee by Payne, the bill’s primary sponsor.

In its introductory statement, HB 649 declares that legalized gambling has already created 15,000 jobs in the state, has generated significant property tax relief and spurred significant economic development.  With a tacit acknowledgment that online gaming is a physical reality, whether or not the state’s laws currently address it, HB 649 declares that proper regulation of the activity belongs to the state.  Here’s how HB 649 sets the table:

… Developments in technology and recent legal decisions have created an opportunity to legalize interactive gaming as a means to further enhance and complement the benefits delivered by casino gaming, licensed facilities and the communities in which they operate.

Interactive gaming operates by having players establish and draw funds from an individual account to place a wager in authorized games through the Internet and similar communications media. The Commonwealth currently authorizes gaming in the form of slot machines and banking and nonbanking table games, including poker. These gaming operations provide licensed entities in this Commonwealth the appropriate level of experience to introduce a platform for interactive gaming that protects the player and the integrity of the game.

It is a vital public interest that licensed entities retain responsibility for the interactive gaming software and hardware which shall remain under their ultimate supervisory control. Vendors’ ability to provide the interactive gaming platform must depend solely on, and be tied to, the status of the licensed entity for which they are providing their services. Any interactive gaming enforcement and regulatory structure must begin from the premise that participation in a lawful and licensed gaming industry is a privilege, not a right and that regulatory oversight is intended to safeguard the integrity of the games and participants and to ensure accountability. …

The bill continues by establishing the purview for Pennslyvanians to gamble online against each other as well as against the regulated gamblers of other states:

Authorized interactive gaming, once fully developed, will allow persons in this Commonwealth to participate in interactive gaming, not only with other persons in this Commonwealth, but with persons in other cooperating United States jurisdictions where interactive gaming has been authorized.

Poker, of course, is the only significant house-banked, player-versus-player game that traditionally falls under the purview of casino and gaming regulatory oversight.  While the general language of the bill could otherwise be construed to allow all forms of online gambling, Section 13B02 of the bill’s “Definitions” section clearly limits its scope only to online poker:

“Authorized game.” Any interactive poker game approved by the board under this chapter.

As mentioned, the bill would grant the authority to the Pennsylvania State Gaming Control Board to create player-pooling contracts with other licensed jurisdictions.  Here’s the relevant clause:

Interactive gaming agreements.–To the extent practicable, the board shall negotiate interactive gaming agreements with other states, territories or possessions of the United States in which interactive gaming has been authorized to allow players in this Commonwealth to participate in authorized games with players in other jurisdictions.

Licensees would be charged a $5 million licensing fee, and license eligibility would be limited to only those entities already possessing a live gaming license in the state — meaning Pennsylvania’s existing casino properties.

The bill does institute a ban on unlicensed operators offering online services in the state.  Similar clauses in the three states that have already enacted online-poker regulation (Nevada, Delaware and New Jersey) has resulted in offshore services chosen to withdraw their offerings from those states in the face of specific sanctions.  The bill also does not include any specific “bad actor” restrictions on would-be licensees, though the need for a live gaming license as a prerequisite would provide an even higher barrier to outside entry.

Players themselves would not face criminal sanctions for playing on unlicensed states, though their profits would be subject to seizure.  Here’s the section of HB 649 that deals with unlicensed sites, the significant penalties such sites would face:

13B04. Prohibition on unauthorized Internet gaming.
(a) Unauthorized gaming.–

(1) It shall be unlawful for any person to willfully and knowingly operate, carry on, offer or expose for play any interactive game or to accept a bet or wager associated with an interactive game from any person physically located in this Commonwealth at the time of play that is not within the scope of a valid and current license issued by the board under this chapter or by another state, territory or possession of the United States with which the Commonwealth has an interactive gaming agreement that permits the activity.

(2) It shall be unlawful for any person to willfully and knowingly provide services with respect to any interactive game, bet or wager specified in paragraph (1).

(b) Grading of offense.–A person who violates subsection (a) commits a misdemeanor of the first degree. For a second or subsequent violation of subsection (a), a person commits a felony of the second degree.

(c) Penalties.–

(1) For a first violation of subsection (a), a person shall be sentenced to pay a fine of:
(i) not less than $75,000 nor more than $150,000, if the person is an individual;
(ii) not less than $150,000 nor more than $300,000, if the person is a licensed manufacturer or supplier; or
(iii) not less than $300,000 nor more than $600,000, if the person is a licensed gaming entity.

(2) For a second or subsequent violation of subsection (a), a person shall be sentenced to pay a fine of:
(i) not less than $150,000 nor more than $300,000, if the person is an individual;
(ii) not less than $300,000 nor more than $600,000, if the person is a licensed manufacturer or supplier; or
(iii) not less than $600,000 nor more than $1,200,000, if the person is a licensed gaming entity.

And here’s the portion dealing with penalties for people who might want to continue playing on unlicensed sites:

(d) Forfeiture.–If a person places a wager on an interactive game from a location in which the activity is unauthorized, the person shall forfeit all entitlement to any winnings and the money associated with any forfeited winnings shall be deposited by the licensee into the Compulsive and Problem Gambling Treatment Fund established under section 1509(b) (relating to compulsive and problem gambling program).

Hearings on HB 649, the Pennsylvania online poker bill, have yet to be scheduled.  Pennsylvania is expected to be a significant battleground in the future of US-regulated online gambling, with both pro- and anti- forces marshalling their energy and finances in the state.  Among other interesting components to the developing Pennsylvania battle is the fact that Pennsylvania is the only state other than Nevada where anti-gambling activist Sheldon Adelson and his Las Vegas Sands Corporation has a gambling presence, owning and operating the Sands Bethlehem casino in the eastern part of the state.

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