FEATURED IMAGE: Pennsylvania Governor Tom Wolf

Keystone state becomes fourth United States jurisdiction to regulate online poker.

Pennsylvania Governor Tom Wolf signed PA House Bill 271 into law Monday to authorize real money online poker, DFS and casino games for individuals located within the state’s borders.

Pennsylvania House Bill 271 underwent several amendments Wednesday before it passed a Senate vote and was subsequently sent to the PA House of Representatives and approved late Thursday morning, October 26th.

House Bill 271 Highlights

The legislation paves the way for a number of changes to current Pennsylvania state regulations, namely the sale of licenses for online poker, internet table games and slot machines at a cost of $4 million USD each.

Qualified applicants will have the option of purchasing the licenses separately from the state or opting for all three at once for $10 million total.

The online gambling package also provides for the use of Video Gaming Terminals (VGTs) at select truck stops with the stipulation that each locale much have 20 parking spots dedicated to customers along with annual diesel fuel sales of 50,000 gallons.

The 900-plus page bill also includes provisions to regulate Daily Fantasy Sports (DFS) in Pennsylvania along with sports wagering — in the case federal lawmakers decide to allow sports betting in the future.

Elevated Online Slots Tax Rate Under Fire

Despite the positive news for regulated online poker in the United States, House Bill 271 will tax Internet slot machines available within the state’s borders at a whopping 54 percent (the same rate at which brick & mortar slots in Pennsylvania are taxed). This has caused concerns among proponents who believe the rate will dissuade a large number of operators from pursuing a license for online slot games in PA.

Online poker and online tables games on the other hand are scheduled to be taxed at 16% of Gross Gaming Revenue (GGR), which will in theory allow operators who obtain such a license more flexibility in offering player promotions and focusing on customer retention.

Will Pennsylvania Join New Jersey Compact?

The regulated online poker industry has experienced its highest level of movement recently since 2013, when the states of Nevada, New Jersey, and Delaware pioneered legalized online poker in the U.S.

Earlier this month, Gov. Chris Christie of New Jersey announced a deal with colleagues in Nevada and Delaware that would combine liquidity in those three states and allow players to compete against each other in the peer-to-peer format — provided operators possess licenses to operate in all three states. WSOP-888 would stand to gain the most by the agreement (which could take over a year to become reality) since WSOP is already authorized to offer real money online poker games in NJ/NV/DE.

With Pennsylvania now becoming the fourth state to regulate online poker, one would assume that PA will seek to join the three-state coalition once it has established online poker games within Pennsylvania’s borders.

For in-depth analysis on which New Jersey online gaming sites will likely be available in Pennsylvania, read this October 30th article by NJOnlineGambling contributor Adam Small.

Pennsylvania is Largest U.S. State to Regulate Online Poker

The move by PA lawmakers comes at a time when the state is facing severe budget deficits and is actively pursuing methods to earmark funds for its public coffers to cover spending.

The state’s population of roughly 13 million is approximately equal to the combined total of New Jersey (9 million), Nevada (3 million) and Delaware (1 million), according to the United States Census Bureau.

What About PokerStars?

The world’s largest poker site — PokerStars — will be able to apply for online gambling licenses in the Keystone State since there is no “bad actor” language preventing them from doing so in Pennsylvania.

However, that is NOT the case in Nevada, where law stipulates that “covered assets” for certain operations that offered real money games in Nevada subsequent to December 31st, 2006 are blocked in relative perpetuity. Although PokerStars is unlikely to benefit for the three-state shared liquidity deal agreed upon by NJ/NV/DE, it would in theory be able to combine its future Pennsylvania player pool with customers from neighboring New Jersey.

Improved Regulated Outlook Still A Far Cry from Pre-Black Friday

The news has sparked a wave of optimism among regulated online poker proponents in the United States, but even the best case deal-making scenario will leave the country far short of the combined player pools it enjoyed before Black Friday — April 15th, 2011.

Regulation on the statewide level forces operators to lobby on numerous fronts at once while spending millions in licensing fees to offer their games in piece-mealed markets compared to the nationwide availability that was once enjoyed by poker and casino sites.

While online poker legalization in the United States is generally viewed as extremely positive for the future market, players in the U.S. continue to have a severely limited amount of options to compete in regulated real money games — poker, casino or otherwise. However, the Gov. Wolf’s signature of PA House Bill 271 could pave the way for more U.S. states to come on board in 2017 and 2018.