Pennsylvania Stamp

Pennsylvania Online Poker Bill Officially Introduced

Pennsylvania State Senator Edwin B. “Ted” Erickson has officially introduced SB 1386, which seeks to authorize online poker in the Commonwealth of Pennsylvania by amending existing gaming statutes to allow for interactive gaming. Erickson announced his intent to submit this bill several weeks ago, via an official state memo called “Interactive Gaming in the Form of Online Poker,” which remains the working title of the bill.

pennsylvania-stampSB 1386 contains a handful of minor modifications from draft versions of the measure that had been floated in recent weeks.  The bill was referred yesterday to the Senate’s standing committee on Community, Economic and Recreational Development.

FlushDraw has examined the text of the bill, and the following are the highlights of the official version as submitted:

Authorized Games:

The bill makes it clear that online poker games are to be authorized under the statute, via its statement on legislative policy: “Authorized interactive gaming, once fully developed, will allow persons in this Commonwealth to participate in interactive poker… .”  A line stating that “The board only may approve poker games pursuant to this chapter,” was removed from the final version, which another analysis cites as possible evidence that casino games could also be authorized.  However, the phrasing of the removed line suggests it was removed due to its redundancy or reference to “the board only,” meaning that the general legislature could also authorize poker variants via future bills or amendments.

Interstate Compacts Approved and Planned for:

SB 1386 in its official version plans on a future where online-poker authorizing US states are openly compacting with one another to share players and improve liquidity.

Tax Rate:

This remains at 14% under the bill, the same as in earlier draft versions, and is a declared ceiling even in the case of compacts with other states that might charge a higher rate.

License Fee:

Set at $5 million per license, due within 60 days of licensee approval.

“Federal Presumption” Tax Plans:

In the event that a federal online-poker or online-gambling measure is passed, this bill allows that the federal tax — up to the entire 14% — shall supersede the tax charged to licensees via this bill.

“Bad Actor” Provisions Included:

As expected, and mindful of reports that Erickson’s online-poker bill is backed in large part by Caesars Entertainment, the bill itself carries bad-actor provision tying “suitability” to the passage of the 2006 UIGEA, despite that law’s lack of language mentioning online poker.  From SB 1386:

(7) With the passage of the Unlawful Internet Gambling Enforcement Act of 2006 [ ] (relating to prohibition on funding of unlawful Internet gambling), clarified issues concerning the scope and interpretation of State law, including the importance of the location of the wager, wagering activity and website. For purposes of suitability for licensing under this act, persons who provided goods or services related to Internet gaming involving citizens of this Commonwealth that ceased operations after the enactment of the Unlawful Internet Gambling Enforcement Act should be regarded differently from those that continued to flout Federal and State law.  Granting licenses or allowing the use of the assets of persons who ignored Federal and State law would reward unlawful gaming activity, permit manifestly unsuitable persons to profit from their unlawful gaming activity and create unfair competition with licensees that respected Federal and State law.

The passage as written is designed to target PokerStars (and possibly its “tainted assets,” in the wake of the announced sale of PokerStars owner Oldford Group to Canada’s Amaya Gaming), and perhaps prevent anything Stars-related from being authorized for use in a future Pennsylvania market.  A cutoff date of December 31, 2006 is also included elsewhere in the bill.  Software, databases and customer contact lists are are specifically mentioned as “covered assets” that would be excluded given the presumptive lack of suitability for post-UIGEA, US-facing service providers.

No Criminal Penalties for Players:

Unlike excessive and punitive clauses put forth in other states, calling for criminal penalties for players who participate on authorized sites, no such clauses exist in this bill.  Instead, the only player sanctions would be for the forfeiture of funds used to gamble on unauthorized sites if seized by the commonwealth.  Gaming operators who attempt to service Pennsylvania residents would be subject to criminal and civil penalties, which could include fines of up to $1.2 million.

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