• Gambling Taxes By State

10) What about taxes? Must they be paid on the gambling winnings I earn from these online sportsbooks? Taxes are, unfortunately, one of the only unavoidable things in life. Yes, you will have to pay taxes on the gambling winnings you earn from these online sportsbooks. You can itemize them or report them as income, depending on how much you earn.

Pennsylvania lawmakers deserve some credit for putting their state on the leading edge of this trend toward sports betting.

The legislature passed an enabling law last year, even before the US Supreme Court considered overturning the federal ban known as PASPA. That prohibition is no longer on the books, and Pennsylvania sports betting is legal pending final regulations.

Casino operators aren’t exactly lining up at the license office in anticipation, though. The specifics of the PA law leave a lot to be desired, clipping the industry’s wings before it even tries to fly.

Here’s how Brett Collson put it on the most recent episode of TheLines podcast:

“Pennsylvania is kind of a wild card this year. The regulations for sports betting currently in place are… concerning.”

What’s wrong with them? We’ll explain.

PA gets aggro with gambling taxes

As the saying goes, two things in life are certain: Death and high gambling taxes in PA.

The state’s expansion into these new formats will be taxed at a rate that raises serious questions about sustainability. As the law is written, sportsbooks will have to pay 36 percent of their revenue back to state and local coffers. That is a ridiculous number.

Compare that to Nevada, which has been refining its industry for almost 70 years. Nevada sportsbooks return 6.75 percent of their revenue to the state, and things work just great. Operators make a little profit, the state collects tens of millions of dollars, and bettors get to do what they do in a regulated environment.

Gambling Taxes By State

PA operators will pay more than five times the tax rate in Nevada, a serious disincentive for some operators.

Spokesman Eric Schippers says Hollywood Casino isn’t even sure it wants sports betting under those terms. “We haven’t made a final determination on whether to pursue what is the highest rate on the planet for sports betting,” he told Penn Live.

A couple states (like Delaware and Rhode Island) will offer sports betting through more lopsided revenue-sharing agreements with their lotteries. Those are exceptions to the rule, though. Most states are proposing something between 7-15 percent.

It’s also worth mentioning that the oppressive taxation won’t be limited to sports betting. PA will tax online slot revenue at 54 percent, more than twice the rate at which operators say they feel comfortable. Slot play accounts for around three-quarters of total online gambling revenue in existing markets.

By way of another comparison, New Jersey taxes online slot revenue at 17.5 percent.

A high bar to entry for casinos too

The recurring costs are unfriendly, but some operators might not even be able to squeeze in the door. Obtaining a PA sports betting license requires operators to overcome the tallest hurdle in any US market, existing or proposed.

Like tax rates, there is no state standard for licensing fees. As an example, Indiana recently considered a bill with a proposed fee of just $5,000. There are some big ones, too, including the $5 million suggested in one Illinois bill. In broad terms, a couple hundred thousand dollars seems to be within the range across most states.

PA sports betting licenses will cost $10 million apiece, though, larger than any other proposal. The tax rate makes the market unappealing from the start, and the up-front fee will be a dealbreaker for some properties.

As the smallest PA casino, Lady Luck Nemacolin is a good example. The property generated around $20 million in total revenue last year, so there’s almost no way it would front the money for a license. Its only real path to sports betting would involve a partnership with an existing operator.

It’s not just the little guys, though. Hollywood Casino tallied more than $100 million in revenue last year, and it seems to have a good foothold on its market. Still, giving away $10 million is not a high priority. Schippers said that if Hollywood does offer sports betting, it would try to do so on the cheap. “The state has strangled the goose on this one,” he said.

There’s also some disparity between the licensure for sports betting and other forms of online gambling. Casinos will pay $4 million for a license in each of these game types:

• Slot machines
• Table games
• Poker

While each of these separately cost $4 million, for $10 million, a property can purchase all three. So, casinos can spend the same amount of money to offer sports betting as they would to offer every form of iGaming.

So what? The state needs money

Yes, it certainly does. The fact that Pennsylvania has been operating under a budget shortfall is the only reason we even have a sports betting law to pick on.

This is the issue, though. Rather than viewing expanded gambling as an amenity for casinos, the state took it as an opportunity to plug its own leaks. Tax revenue is arguably the worst reason to allow expanded gambling, and that’s especially true for sports betting.

As any bookmaker (or bettor) will tell you, sports gambling has some of the tightest margins in the industry. Although bettors plunked down almost $5 billion last year in Nevada, sportsbooks earned less than $250 million, holding around five percent of the total “handle.”

In simple terms, operators earn about a nickel on every dollar bet. And Pennsylvania will take back almost two cents of that in taxes. That take will be counterproductive to what should have been the primary reason for legalization.

Sports betting is unique in that operators aren’t competing against each other as much as they are competing against offshore sites. There’s something like $150 billion wagered in the US each year, and almost all of it is done through black/gray channels. In order to provide a tempting alternative, the regulated industry must provide similar convenience and competitive lines.

Convenience won’t be a problem as long as there is mobile wagering, but competitive lines might be. If bookmakers want to be profitable in PA, they’ll almost certainly have to pad their lines. And if PA lines aren’t competitive, those in the know will just keep betting with “their guy.”

By writing their greed and shortsightedness into law, PA lawmakers are actually doing the unregulated industry a bit of a favor.

Is online gambling legal in PA?

On Oct. 26, 2017. Gov. Tom Wolf signed H 271 into law, enacting widespread gambling expansion that extends beyond just PA online casinos.

Here is a look at exactly what the law authorizes:

• Online poker
• Online casino games (table games and slots)
• Sports betting, both retail and online
• Online lottery
• Daily fantasy sports
• Tablet gaming in certain areas at authorized airports
• Video gambling terminals (VGTs) at qualified truck stops
• Mini-casinos

The law allowed the state to regulate and legalize these activities, but the law does not mean that every online casino site or sports betting app is suddenly legal in Pennsylvania. Only sites vetted, approved, and overseen by the Pennsylvania Gaming Control Board (PGCB) are legal.

All of the legal real-money gambling sites are very clearly tied to a land-based casino in the state. For example, FanDuel Sportsbook works in tandem with Valley Forge and BetRivers is the brand of the two Rivers Casinos in the state.

Online casinos in Pennsylvania

Legal online casinos in Pennsylvania launched in July 2019. After starting with three sites, the industry is starting to grow at a slightly faster clip. The state awarded 10 casinos interactive gaming licenses. Additionally, the PGCB is currently considering allowing MGM Resorts and Golden Nugget NJ to operate in PA.

This is the latest info on all of these online casino projects:

PA sports bettings sites

Football season is underway, which means sportsbook operators are pushing to launch during sports bettings most lucrative season. Every casino in Pennsylvania, save for Lady Luck Nemacolin, has applied for a $10 million sports betting license.

Here is a look at where each operator is in the process:

Real-money gambling apps in PA

There are currently eight online sportsbooks, five online casinos, and one online poker option in Pennsylvania. Here is a look at when each of them launched:

• 05/28/2019
• 06/24/2019
• 06/25/2019
• 07/15/2019
• 07/15/2019
• 07/17/2019
• 07/25/2019
• 09/04/2019
• 11/04/2019
• 11/04/2019
• 11/12/2019
• 12/20/2019

• 5/28/2019: PlaySugarHouse.com Sportsbook

  On Tuesday, May 28, PlaySugarHouse Pennsylvaniabegan testing on the first-ever PA online sportsbook. At launch, the site kicked off with several of the same elements present on its New Jersey site, including Jackpot Parlays, in-game betting, cash-out betting, and the same deposit bonus offer. The only thing missing? Access for iPhone users.

• 6/24/2019: Parx Online Sportsbook

  SugarHouse had the market to itself for nearly a month, but Parx eventually doubled the number of online sportsbooks on June 24 when it began testing. The final product bore a strong resemblance to the Bet Builder function introduced at retail launch, making for a seamless transition for players going from brick and mortar to online. That is unless they had an iPhone.

• 6/25/2019: BetRivers Online Sportsbook

  Just one day after Parx launched its online sportsbook, Rivers Casino Pittsburgh followed suit with testing on BetRivers. The two ended up receiving final approval at the same time, as BetRivers only needed two days of testing given its sister casino’s successful PlaySugarHouse launch.

• 7/15/2019: HollywoodCasino.com

  After being the first casino to launch a retail sportsbook, Hollywood Casino got to notch a second “first” in its belt. On July 15, the Penn National and IGT product HollywoodCasino.comofficially began testing, bringing slots and table games to desktop and Android users.

• 7/15/2019: Parx Online Casino

  Just hours after HollywoodCasino.com started taking customers, Parx Online Casino followed suit. The GAN-powered online casino product was the first site and, up to now, the only site with a blackjack game for players. Additionally, the site offered slots, roulette, and video poker.

• 7/17/2019: PlaySugarHouse Casino…and an Apple Solution

  You would think being third to launch would be a big disadvantage. However, PlaySugarHouse online casino perhaps made the biggest splash of the three casinos because it brought both a new casino site and an answer for iPhone owners. In tandem with GeoComply’sGeoGuard app, SugarHouse offered iPhone users a chance to both bet on sports and play online casino games via their phone’s browser.

• 7/22/2019: FanDuel Sportsbook PA

  The fourth PA online sportsbook totally changed the paradigm for what to expect from a PA betting app. When FanDuel Sportsbook PAlaunched, it brought with it the first integrated wallet with New Jersey, meaning you could seamlessly travel between the two states with the same app, same account, and same sports betting bankroll. Moreover? They brought with launch the first iPhone app option for PA bettors.

• 9/4/2019: FOX Bet PA

  The launch of FOX Bet Sportsbook in PA brought with it the artillery that comes with a major media company. In addition to Android and iPhone apps and sign-up deals, the site also brought a massive marketing campaign with promos centering on FOX Sport’s biggest personalities like Colin Cowherd and Cris Carter.

• 11/4/2019: PokerStars PA

  Online poker players impatiently awaited the arrival of the state’s first online poker site for months. When it launched, it was only a day or two before the PokerStars PA site surpassed the traffic of the PokerStars NJ site. But it wasn’t just poker, it came with the PokerStars Casino product and integrated in FOX Bet as well.

• 11/4/2019: DraftKings Sportsbook

  It looked like DraftKings might not find a way into Pennsylvania, but once it partnered with The Meadows Casino, it was only a couple of months before its app debuted in PA as the state’s sixth online sportsbook.

• 11/12/2019: Unibet Sportsbook and Casino

  Unibet debuted with a double feature of both an online sportsbook and an online casino. The site partnered with Mohegan Sun Pocono to offer online gambling. iIt launched with an Android app and iPhone access via the GeoGuard app.

• 12/16/2019: BetAmerica Sportsbook

  BetAmerica and Presque Isle Downs caught people by surprise with the sneakily quiet launch of BetAmerica Sportsbook shortly before the end of the year. It launched, but did so without an app and only GeoGuard browser access.

There are still more apps to come in 2020. Several major players in the state, like Harrah’s Philadelphia, still have not gone online.

What online casino options are in PA?

Pennsylvania online casinos rolled out on July 15, 2019.

Initially, the thought was that everyone would launch on or around this day, only two, Parx Casino and Hollywood Casino, were ready. SugarHouse Casino rolled out PlaySugarHouse.com two days later.

Months later, PokerStars Casino debuted alongside PokerStars PA online poker site. Unibet Casino followed a couple of weeks later.

Each of these online casinos offer relatively small libraries of games. Things that are commonplace in New Jersey, like live dealer games, are still a ways off in Pennsylvania.

Why such slow goings in Pennsylvania?

The short answer is the Wire Act. Ever since the Department of Justice released a new, much stricter, interpretation of the Wire Act in January 2019, Pennsylvania regulators have taken an extremely conservative approach to online gambling. Part of that approach includes having every operator and every casino game provider stand up separate servers in Pennsylvania. Both operators and game providers planned on sharing New Jersey servers with their PA products. The change in regulations threw a wrench in their plans…and their timeline.

Where this change is hurting PA online casino customers is not just that casino sites are launching very quickly. The other big issue is, that with few operators successfully jumping through the hoops required to offer games in Pennsylvania, there are just not a lot of game options for players. Ideally, the number of providers will grow in 2020, but history suggests we should expect continued slow rollouts on the online casino front.

What PA sports betting sites are live and legal?

Online sportsbooks, on the other hand, are operating at a faster clip. Currently, there are eight betting apps to choose from.

After initial slim pickings for iPhone users seeking to sports bet in Pennsylvania, they now have a glut of options to choose from. Parx is currently the only sportsbook without an iPhone option.

Unibet, BetRivers, and PlaySugarHouse do not have an iOS app for sportsbook users, but all three offer browser-based betting in -tandem with the GeoGuard app, a geolocation app from GeoComply that allows for browser gaming.

The launch of FanDuel Sportsbook was when the market for Pennsylvania sports betting really started to open up. The sportsbook combined the PA and New Jersey app into a single venture for both Android and iOS, with the site geolocating you to determine what you can bet on. DraftKings Sportsbook similarly offers a single app that works in all states where DraftKings accepts regulated sports bets.

FOX Bet also launched with both iOS and Android options when it went live in September 2019, but it segregates apps based on states and offers a separate PA and NJ version for users.

The big perk of this for users is the shared wallet across states. If you go back and forth between Pennsylvania and New Jersey, no more worrying about whether or not the right account is properly funded.

Online poker in PA

The vertical of online gambling that is the slowest-going of all is Pennsylvania online poker. The first PA poker site, PokerStars PA, did not even go live until November 2019, over two years after the law legalizing and regulating it passed.

The state expects other online poker sites to launch. Given the slow start though, it may be a while before new sites launch. In theory, these seven casinos are all supposed to offer online poker, but Mount Airy, through PokerStars is the only one to launch so far:

• SugarHouse
• Harrah’s
• Hollywood Casino
• Mount Airy
• Parx
• Valley Forge
• Wind Creek

The next most likely candidate to launch appears to be WSOP.com, which has offered a couple of hints to suggest it might be up in running in Pennsylvania in time for the 2020 WSOP, which begins in late May. The other contender to get going in the Keystone State next is partypoker, which is partnered with Valley Forge Casino. Both of these sites are operational in New Jersey. WSOP.com is also available in Nevada and Delaware.

Before you get too excited about the prospect of playing online poker with players in New Jersey, Delaware, and Nevada, which share a compacting agreement, be advised that the PGCB’s conservative approach to the Wire Act means compacting may take some time.

Compacting with other states is possible in the law and PGCB regulations, but uncertainty about which interpretation of the Wire Act will prevail means it is unlikely the PGCB will greenlight shared player pools until pending court action around the DOJ and the 2019 Wire Act is complete.

With so much uncertainty around online poker, keep an eye on the latest news and developments on the subject here at PlayPennsylvania.