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Will you be able to get a Pennsylvania sports betting license if you’re not one of the casinos in the state?
It’s one of many lingering questions looming over the prospective industry in the state. And one that doesn’t have a clear answer.
Pennsylvania Gaming Control Board spokesman Doug Harbach confirmed Tuesday that the state remains in wait for its first applicant.
That comes as little surprise, given the landscape established by Pennsylvania legislators in approving legal sports betting. The 13 potential licensees — 12 existing casinos and the one planned in Philadelphia — face a steep path to profitability in contrast to other states.
To add sports betting, any operator must post a $10 million fee and pay an effective 36 percent tax on revenue. That includes 34 percent to the state and two percent to local jurisdictions.
Of course, it’s unlikely to stay that way: Some casinos will take a stab at sports betting, certainly. But there’s a very good chance that not all 13 sports betting licenses in the state are snapped up.
Only those 13 licenses are available. Casino operators who do not already possess a license in the state cannot apply for Pennsylvania sports betting, it would appear from the law as written.
The stagnation begs a thorny question: what if there are leftover sports betting licenses? The closer we get to legal sports betting, the more plausible it begins to look that Pennsylvania could end up with less than 13 sports betting licensees.
That could present a problem for Pennsylvania legislators who slotted $100 million into the state budget from anticipated sports betting and online gambling licenses. While $100 million represents a small piece of a state budget, legislators clearly are counting on some of that money coming from Pennsylvania sports betting.
The unrealized revenue from sports betting stands in stark contrast to daily fantasy sports in Pennsylvania. The state recently began licensing and regulating DFS with a $50,000 license fee and 15 percent tax rate. Nearly $200,000 in tax revenue arrived in May under the new setup.
Pennsylvania would face an interesting dilemma if current licensees do not enter into the sports betting space: allow the sports betting licenses to sit unused or allow new operators to apply.
Current law likely would require a new operator to first acquire a Category 4 slot license. That could, in theory, make that operator eligible to apply for a sports betting license.
But even that could limit who could apply. Is it possible regulators open up the licenses to gaming entities outside of Pennsylvania, eventually, or could they? While the state’s online gambling law has provisions for licensing of out-of-state entities, there is no such provision in the sports betting law.
In any event, it’s easy to think European sports betting companies (think Paddy Power Betfair orBet365) or US casinos (Atlantic City, casinos in New York or Maryland, etc.) would want to try to get into the market directly, if possible. But we don’t know if or how that could happen.
For now, the waiting game appears to be the only being played in Pennsylvania sports betting.
This could be early in a long game for Pennsylvania, though. Once (and if) applications do start to arrive, PGCB still has to review them.
In other words, while multiple states target football season for launch, Pennsylvania does not appear to be in a huge hurry.