With Summer coming to a close and most legislative sessions completed or nearing completion, it appears that zero online poker bills will pass in the United States in 2016.
That doesn't mean online poker expansion is dead - not yet anyway.
According to a report from WGAL News 8 out of Harrisburg, online gambling expansion is still possible for Pennsylvania in 2016 as it could come as part of the state budget.
Payne Feels Comfortable iGaming Will be in Budget
According to the report Rep. John Payne believes that some type of iGaming expansion will be included as part of the Pennsylvania budget. Payne was the sponsor of HB 649, a House bill that would regulate online gambling in the state.
Payne is also the sponsor of HR 140, a resolution that urges Congress to reject the Restoration of America's Wire Act.
Payne has been using iGaming as a bargaining chip on the state budget. If legalized, iGaming could generate up to $70 million in tax revenue for the state in year one. At least $50 million of that would be in licensing fees.
The stalemate over the state budget is nearing three months. A bill was passed by state Republicans in June but was vetoed by Governor Tom Wolf.
Budget Woes Could Bring Positive Result
While some may call this recent report overly optimistic, one has to remember that the budget crisis in Pennsylvania is real and the options for funding are limited.
The budget Gov. Wolf vetoed in June lacked several items he wanted included including property tax relief, an education funding plan and a natural gas severance tax.
Wolf had proposed a budget in March that would raise taxes by a combined 16 percent. He claimed that the money raised from these taxes would wipe out the state's deficit, hire state troopers, restore $640 million in education cuts and pay for economic development programs.
The budget submitted in June by Republicans would not raise taxes but rather would have privatized the state liquor system.
With the Governor looking for funding for his programs and Republicans unwilling to raise taxes on citizens, iGaming expansion may be a way to meet the needs of both.
Current Tax Rate for iGaming Unknown
A key factor that may come into play during negotiations is the tax rate on PA iGaming. The report didn't state any iGaming details but the tax rate could be a sticking point.
One of the iGaming bills in 2015, SB 900, called for an insane tax rate of 54% on PA iGaming. If a 54% tax rate is enacted it could kill the industry before it even gets started.
A much more reasonable rate would be that of New Jersey, currently at 17.5%. Even a tax rate of 20 to 25% would be workable over 54%.
A rate that's a bit higher than NJ but lower than the Delaware and the proposed rate in SB 900 could be a compromise that could push iGaming over the top.
Assuming $127 million in gross revenue in Year 1 for PA iGaming, a 25% rate would net the state $31 million in tax revenue.
Couple that with the estimated $50 million in licensing and iGaming could bring over $80 million in year one. Can PA afford to pass on that type of revenue?