Pa. Senator Proposes Daily Fantasy, Online Gambling Bill, But There’s a Catch

The proposed 25 percent tax rate on daily fantasy revenues would be the highest in the nation.

online gambling

You soon might be able to gamble online in Pennsylvania.

Pennsylvania Sen. Jay Costa issued a co-sponsorship memoranda earlier this week detailing his plans for a bill that would legalize online gambling, daily fantasy and online lotteries.

Online gambling is legal in New Jersey. In Pennsylvania, currently licensed casinos would have to pay a fee of $10 million for a license to offer online gambling; vendors that offer games would have to pay a $5 million licensing fee. Online gambling would be taxed at a rate of 25 percent. Currently, slot machines in Pennsylvania are taxed at 54 percent, while table games are taxed at 16 percent.

The daily fantasy provision in Costa’s memorandum is interesting. In order to be licensed in Pennsylvania, companies would have to pay a $2.5 million licensing fee. Revenues would then be taxed at 25 percent. Legal Sports Report, a site that covers online sports gambling, says the 25 percent tax and $2.5 million licensing fee would be the highest in the country.

“No state has set a DFS licensing fee anywhere near $2.5 million, let alone seven figures,” the site’s Dustin Gouker writes. “The 25% tax rate would be the highest tax rate, by far, of the states that tax DFS revenue. The only ones close are New York (15.5%) and Missouri (11.5%).”

The two major daily fantasy companies, DraftKings and FanDuel, currently operate unlicensed in the state. Costa’s memo says the state expects to generate $5 million from the licensing fee, meaning the state only expects those two sites to pay to compete in the state. (Though it may not even get that — DraftKings and FanDuel agreed on a merger in November, and expect to have it completed by the second half of 2017.)

Per Online Gambling Report, both Sands Bethlehem Casino and Parx Casino oppose the introduction of online gambling in the state. Parx and Sands Bethlehem are the state’s two most profitable casinos.

The bill would also allow the Pennsylvania Lottery to begin operating online lottery games, allow “tablet gaming” at the Philadelphia and Pittsburgh airports, re-enact the slot machine gaming local share provision the state supreme court declared unconstitutional last year, and make other various tweaks to the state’s gaming laws.

Costa’s memo says his bill would generate an estimated $137 million for the state in the current fiscal year.

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