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Pennsylvania House of Representatives
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House of Representatives
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted: April 23, 2018 12:46 PM
From: Representative Jeffrey P. Pyle
To: All House members
Subject: Legislation to prohibit a casino or iGaming company licensed in a jurisdiction outside of PA from receiving an iGaming certificate from the Pennsylvania Gaming Control Board
 
In the near future, I will be introducing legislation amending Title 4 (Amusements) to protect the Commonwealth’s casinos. Specifically, my legislation will prohibit a casino or iGaming company licensed in a jurisdiction outside of PA from receiving an iGaming certificate from the PGCB.

As you may recall, Act 42 of 2017 authorized several new forms of gaming in the Commonwealth, including iGaming. Under this Act, every PA casino may apply for up to 3 different types of iGaming certificates that authorize the holder to offer 3 different categories of iGames within the state. If a PA casino applies for all 3 certificates within 90 days of the start of the application period (April 16, 2018), the casino may purchase all 3 of their certificates for $10 million. After 90 days from the start of the application period, a casino may purchase their certificates individually for $4 million each. After 120 days from the start of the application period, a licensed gaming entity in any jurisdiction may apply for an iGaming certificate that remains unapplied for.

Under my legislation, awarding iGaming certificates to gaming entities from other jurisdictions would be prohibited. The existing fee discount structure for iGaming certificate applications submitted before or after 90 days would remain intact solely for existing PA casinos, which I believe is adequate for encouraging our casinos to purchase the majority of available iGaming certificates.

The impetus for awarding iGaming certificates to gaming entities from other jurisdictions was to encourage every PA casino to apply for all available iGaming certificates. However, it is likely that some iGaming certificates will be unapplied for after the 120-day period; a business cannot be coerced into purchasing and offering a product that is not profitable to them. If one or more iGaming certificates are successfully awarded to a licensed gaming entity not affiliated with a PA casino, the effects could be potentially disastrous for PA Casinos, their employees, the Property Tax Relief Fund, the General Fund and local share for the following reasons:.
  • A gaming entity without a physical presence in PA has no incentive to drive patrons to a land-based casino within PA.
  • If a land-based casino in a neighboring state obtains an iGaming certificate, they can use their iGaming platform to drive PA customers to their out-of-state property. It is important to note that gaming tax rates in some neighboring states are lower, which enables them to provide more free-play in their land-based casinos as compared to PA casinos.
  • A gaming entity with no physical presence in PA could partner with other major online brands to bring in an unlimited amount of third parties (well-known brands) into PA, which could place PA casinos at a competitive disadvantage within our own state’s iGaming industry.
  • As the 120 day deadline approaches, iGaming companies may forego partnering with a PA casino if iGaming certificates are available; operating under their own iGaming certificate without a partnership could be more lucrative.
For the aforementioned reasons, I hope you will join me in cosponsoring this needed legislation. If you have any questions, please email Erica Godsey at egodsey@pahousegop.com.

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