Pennsylvania Gaming Control Board

Two More Sets of Online Gaming Licenses Issued in Pennsylvania, One Operator Pulls Out

We are now into October and though online gambling has yet to launch in Pennsylvania, the industry’s picture is coming further into focus. On Wednesday, two more casinos had their interactive gaming applications approved by the state’s Gaming Control Board: Sands Bethlehem and Valley Forge Casino.

How Pennsylvania Licensing Works

Pennsylvania StampAt the outset of the application process, only the twelve brick-and-mortar casinos (their operators, specifically) – and a thirteenth that is under construction – could submit applications. There are three different licenses available: online poker, online table games (craps, blackjack, etc.), and online slots. The fee for each licensing application alone is $4 million, but if the fee for all three combined is $10 million.

There was some significant concern leading up to first deadline of July 16th, as not only were the application fees quite steep, but the gaming taxes were prohibitive. Taxes on internet poker and internet table games gross gaming revenue wasn’t bad – 14 percent plus a 2 percent local tax – but internet slots were a different thing altogether. Taxes on slots are to be 54 percent plus the 2 percent local tax, potentially making them completely unprofitable.

That tax rate is the same as that for the land-based casinos, as proponents of the tax would tell you, but online gaming sites don’t have the other revenue streams that casinos do, like hotel rooms, restaurants, entertainment, and shopping. Brick-and-mortar casinos can use some games as a loss leader (or as very thin revenue sources), but online sites can’t.

Who Has Filed an Application?

Days before the July 16th deadline, just three casinos had submitted licensing applications, but on the due date, six more did, allowing legislators and other stakeholders to breathe a sigh of relief. Those operators and their associated casinos were:

Greenwood Gaming and Entertainment, Inc. (Parx Casino)
Chester Downs and Marina, LLC (Harrah’s Philadelphia Casino & Racetrack)
Mount Airy #1, LLC (Mount Airy Casino Resort)
Mountainview Thoroughbred Racing Association, LLC (Hollywood Casino at Penn National Race Course)
Sands Bethworks Gaming, LLC (Sands Casino Resort Bethlehem)
Holdings Acquisition Co., LP (Rivers Casino)
Sugarhouse HSP Gaming, LP (SugarHouse Casino)
Valley Forge Convention Center Partners, LP (Valley Forge Casino Resort)
Stadium Casino, LLC (Live! Philadelphia Casino)

Downs Racing, LP (Mohegan Sun Pocono) also submitted applications for all three licenses, but waited until after the discount deadline to do so. Presque Isle Downs, Inc. (Presque Isle Downs Casino) also filed applications for table games and slots, but not poker, so the deadline was not important.

In August the Gaming Control Board approved the licenses of Harrah’s Philadelphia, Parx Casino, and Mount Airy Casino Resort. In September, it did the same for Sugarhouse Casino and Hollywood Casino. Thus, the approvals of Sands Bethlehem and Valley Forge bring the total to seven.

Rivers Casino Did a 180

Interestingly, Rivers Casino has decided to withdraw its applications (let’s hope it got its $10 million back) and will now focus its online efforts on sports betting. A spokesperson told Online Poker Report, “Rivers Casino Pittsburgh intends to provide iGaming to Western Pennsylvania and the Commonwealth; however, we’re taking additional time to explore the various options for doing so. Rivers is actively pursuing a sports wagering certificate to offer both land-based and mobile sports betting.”

Rivers didn’t give a reason for it, but OPR is almost certainly correct in assuming it is because Rush Street Gaming owns both Rivers and Sugarhouse (though the operators who submitted applications are different) and probably feels it doesn’t need two sets of online gaming sites in Pennsylvania.

As such, there are now ten online gaming license application spots still available (I’m not saying “licenses” still available, as I’m assuming those that have been applied for will be approved). There are 39 total application spots, three for each of the thirteen casinos. Ten sets of three applications have been filed, so that’s 30. Presque Isles filed two applications, which took the number up to 32. But with Rivers Casino withdrawing, the total applications filed is down to 29. That breaks down as four applications still open for online poker and three each for table games and slots.

The Pennsylvania Gaming Control Board is now accepting applications from operators outside of the state. In a September hearing, PGCB Executive Director Kevin O’Toole said that “qualified gaming entities” are eligible to file petitions. Such an entity is defined as “a gaming entity licensed in any jurisdiction which has satisfied the requirements set forth in the act and any other criteria established by the board.”

Interested operators can submit their applications soon, between October 15th and October 30th. Once every operator who can be approved is approved, there will be a random drawing to determine who is granted their licenses. Good luck!

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