After the introduction of the so-called mini-casinos late last year, the state of Pennsylvania is already seeing increased revenues, with $200 million expected to come in this fiscal year. The state gambling regulator has informed Pennsylvania lawmakers that the latest expansion is so far meeting its initial task of plugging the budget hole and boosting the regional economic development across the Keystone State.
Amidst the last annual budget hearings, Pennsylvania legislators are reviewing the largest expansion of the gambling industry since it was legalized more than a decade ago in the state. It included the introduction of the so-called mini-casinos in an interesting satellite casino structure that allowed gambling operators to develop new facilities in different regions across the state. The novel scheme, authorized by Governor Tom Wolf on October 30 last year, was designed to tackle state budget deficit of $2.3 billion by increasing the revenue influx of license fees.
According to figures released by the Pennsylvania Gaming Control Board, the legislative change has already met expectations – $200 million is estimated to come in this fiscal year, while another $100 million is expected for next year. Licensing fees for new mini-casinos contribute the most to this increased revenue and only four of the eight planned license auctions earned $124 million. The first mini-casino permit was awarded in early January when Penn National Gaming won the first round of semi-weekly auctions with its bid of a little over $50 million.
Some lawmakers, however, are expressing their concerns regarding the sustainability of this revenue. Senate GOP Appropriations Chair Pat Browne warned that the financial effect from the gambling expansion may not last as long as expected and Control Board Executive Director Kevin O’Toole added that nothing can be certain and that no conclusions should be drawn in such an early stage of the expansion plan. Moreover, board members are not certain whether there will be enough demand for the remaining permits.
What the New Expansion Legislation Means for Pennsylvania
The legislation, House Bill 271, involves several concepts, one of which is the introduction of up to ten satellite casinos. These mini-casinos, as they are known, will be developed within 30 miles of existing casino properties, but will be allowed across the state territory. Unlike neighboring New Jersey where all casinos are within the boundaries of Atlantic City, Pennsylvania allows gambling venues to be spread over a larger territory and to open in less developed regions and communities. This, according to the plan, would not only generate revenue for the state from licensing fees and taxation but would also contribute to the regional economic growth.
Along with the satellite casinos which are available only to Pennsylvania’s existing 11 casino license holders, the new legislation allows video gaming terminals to be opened at truck stops and airports. Fantasy sports are also regulated with operators paying a $50,000 license fee and a 15 per cent tax based on in-state participation. More importantly, the bill legalizes online gambling – both gaming and lottery tickets can now be offered online, while sports betting may be permitted in case the federal ban is revoked by the U.S. Supreme Court this in the following months.
The latest legislative changes made Pennsylvania the fourth state to allow Internet gambling – the other three are New Jersey, Delaware and Nevada. It is also the second commercial casino state in the United States after Nevada.