Pennsylvania Sports Betting: Legal Online Betting Apps

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Pennsylvania

Legislative and Regulatory Developments

Pennsylvania legalized sports betting in advance of the Supreme Court’s decision in Murphy vs. National Collegiate Athletic Association, which struck down the federal law banning sports betting as unconstitutional. The Pennsylvania legislation undertook a large expansion of legalized gambling in the state, also allowing online casinos. Online sports operators must partner with an existing land-based casino in Pennsylvania in order to offer sports betting.

Implementation of the legislation has fallen to the Pennsylvania Gaming Control Board. The PGCB issued temporary regulations in July for sports wagering. These regulations do not become effective permanently until 2019, but in the interim, have been very controversial. Operators have complained about the number of partnerships available. Penn National wants partnerships banned entirely, while other operators want the ability to enter into more than one partnership. One thing that everyone can agree on is that the licensing fees and tax rates are astronomically high.

Given the large population of Pennsylvania, the estimates for the size of the online wagering market is extremely high. Still whether this market actually materializes depends on whether casino operators decide to take the plunge into a heavily taxed market. The high fees and taxes may curtail sportsbook operators’ ability to compete with both the black market and offshore betting entities. There is speculation that the legislature may be forced to revise the tax rates and licensing fees to attract operators.

Another factor that impacts the Pennsylvania market is the stiff competition from neighboring states. New Jersey, Delaware and West Virginia have all moved forward with physical sportsbooks and Pennsylvania players have the ability to visit those locations to wager. If casinos in those states have higher operating margins, they may be better able to offer promotions to lure Pennsylvania customers. We’ve seen this work with the Pennsylvania Lottery. After seeing the increase in Michigan state revenue brought in by the online MI lottery website, the PA lottery opened it’s online doors. To jump start new sign ups, PA Lottery offers a Pennsylvania Lottery bonus code that provides new users with free money incentives to use when playing the lottery online.

What’s the Outlook for Pennsylvania Online Sportsbooks?

Operator Online Sports Betting Partnerships/Acquisitions Address
FanDuel Sportsbook Summer 2019 Valley Forge 1160 1st Ave King of Prussia, PA 19406
Hollywood Casino at Penn National Summer 2019 William Hill 777 Hollywood Blvd. Grantville, PA 17028
Parx Casino Sportsbook Summer 2019 GAN 2999 Street Road Bensalem, PA 19020
South Philadelphia Turf Club Summer 2019 GAN 700 Packer Ave Philadelphia, PA 19148
Rivers Casino Summer 2019 N/A 777 Casino Dr. Pittsburgh, PA 15212
SugarHouse Casino May 2019 RSI 1001 N Delaware Ave Philadelphia, PA 19125
Harrah's Philadelphia Summer 2019 888, SG 777 Harrah’s Blvd. Chester, PA 19013
Valley Forge Casino Summer 2019 FanDuel, IGT 600 Cresson Avenue Oaks Corporate Center
Churchill Downs Summer 2019 SB Tech 4067 National Pike, Farmington, PA 15437

Pennsylvanians are primed for the expansion of betting opportunities in the state. The state actually made sports betting legal prior to the US Supreme Court decision that lifted the federal ban. July’s regulations legislated by the Pennsylvania Gaming Control Board will begin to take effect in early 2019.

Portions of this legislation are already creating disagreements. Pennsylvania does indeed appreciate the wealth of revenue that is coming from legal sports betting. The licensing fees and current tax structure are bold examples of this fact. The state has made a wider door for partnerships than many sportsbook providers are comfortable with. At this point, every potential sportsbook must link with a brick and mortar casino in the state. They must also pony-up the licensing fee of $10 million. Some feel this healthy requirement just to ante-up, plus a 36% tax rate, will add buoyancy to keeping the black market and offshore bookmakers afloat.

Penn National was the first to apply for a license. They are also a voice of discontent concerning the number of partnerships proposed and how they are established. This idea of linking to a physical casino is also problematic for Pennsylvania lawmakers. If Pennsylvania places too much a financial burden on casinos, these costs will drive up operating costs.

States like New Jersey, who is already open for sports betting business, plus West Virginia and Delaware, are all close enough for a short road trip. Once inside these borders, bettors can take advantage of prime bonuses and promotions offered by these more financially affluent sportsbook venues.

Right now, both FanDuel Sportsbook and DraftKings Sportsbook are working on launching online in Pennsylvania. They will likely start with a mobile betting app to rollout their product. Penn National has already forked over the licensing fee, and Parx Online Sportsbook operating entity, Greenwood Gaming added their name to the list. It remains to be seen whether Monkey Knife Fight will enter the Pennsylvania arena. Licensing fees are a real consideration for some of the smaller operations.

Churchill Downs Incorporated is on board in New Jersey and added their name to the list in Pennsylvania as well. Penn National’s fees are already in the bank, and SugarHouse, a Sportsbook & Casino that already calls Pennsylvania home, is operating in New Jersey. Sugarhouse launched a pilot run in May, offering a Sugarhouse promo code that gives new users $250 in free money. The idea is to generate the capital necessary to add their name to the list of available sportsbooks in their home state.

This is an overview of how things are shaping up for Pennsylvania sports fans who are looking forward to being able to bet legally in their state. While you as a fan are rightfully excited, the accountants for the state’s budget committees are equally ecstatic.

Conservative estimates assess the value of license fees alone to generate over $100 million in revenue for The Commonwealth. As the financial windfall of sports betting begins to sink in, look for the opportunities for sportsbooks to explode.

Potential Operators and Partnerships

Much of the discussion of the Pennsylvania online sports betting market is theoretical at this point since operators have been taking their time to apply for licenses. Companies are still lining up partnerships. The high fees for license applications along with the steep tax rate may serve to restrict participation in the Pennsylvania online sports gambling market to the largest casinos with the deepest pockets. In fact, it took three months after the application process was opened for Pennsylvania sportsbooks for a casino to apply for a license. This was in contrast to neighboring New Jersey which saw immediate entry and competition.

In contrast to New Jersey, which permits three partners, casinos in Pennsylvania are allowed to partner with one entity to establish a sportsbook. The fee to submit a licensing application is very steep at $10 million per application. This equates to potentially several years of revenue up front if all of the Pennsylvania casinos apply for licenses. In addition, the tax rate for sportsbooks is 36 percent which is three to four times the tax rate for sportsbooks in neighboring New Jersey.

Still, Pennsylvania offers a large amount of opportunity for those casino operators who have the required deep pockets to enter the market. Pennsylvania has the highest population of any state that has thus far legalized sports gambling and that fact alone creates large profit potential, notwithstanding the high tax rates. There are still questions as to how many operators will submit applications for licenses. Another obstacle has been virtual sports betting that is offered in the state, which potential operators disfavor as competition.

Accordingly, Pennsylvania casinos have taken a wait-and-see approach towards getting into the sports wagering marketplace. It is expected that casino operators will eventually offered mobile betting. After three months, on August 20, Penn National applied for a sportsbook license to offer both physical and online sports wagering, becoming the first to do so in the state. Penn National intends to partner with European giant William Hill. The partnership intends to begin operations in the late fall pending approval from the PGCB.

In addition, Parx Casino intends to follow through with previously announced plans to seek a license. Parx will partner with technology company GAN to offer both in-person betting and online wagering. Customers will be able to use a shared wallet between Parx’s sportsbooks and other casino operations.

Other casinos are expected to follow suit, but the high fees and taxes are placing a damper on operations. SugarHouse, a Pennsylvania-based casino, recently opened operations in New Jersey. If this venture is successful, it may provide the impetus for the company to initiate sports wagering in its home state.

Eligibility

Anyone age 21 or over may wager on sports in Pennsylvania. In order to use an online sportsbook, one has to be physically located in Pennsylvania at the time of placing the wager. In other words, one cannot wager on a Pennsylvania mobile betting app when they are outside of state lines. As with other gambling apps, the sites are equipped with locating software that can discern from where a player’s entry originates.

Impact on Pennsylvania

In the event that sports wagering eventually succeeds in Pennsylvania, it will have a large impact on the state’s finances because of the high taxes and licensing fees. If all casinos ultimately apply for licenses, it will mean a $100 million plus boost for Pennsylvania’s bottom line at the outset. In addition, it will enable Pennsylvania’s gaming industry to keep pace with its neighboring states, nearly all of whom have acted to expand their gambling offerings. If casinos do not fully act to offer online betting, Pennsylvanians’ gambling dollars will migrate to New Jersey, Delaware and West Virginia.

Another benefit of sports betting in Pennsylvania is that it may bring activity into the open that is currently occuring in the shadows. Legalized online sportsbooks in the state will make the activity subject to taxation and will enable the state to receive its share of the betting pie that otherwise occurs outside of its reach. With all of the options that are currently available to sports bettors, they will be wagering, and it is better to legalize what can be taxed.

PA Sports Betting Report 6/26: News, Sugarhouse Odds & Promos
Parx Casino Online Sportsbook Becomes Second to Launch in PA, BetRivers Third
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PA Sports Betting Report 6/21: News, Sugarhouse Odds & Promos
PA Sports Betting Report 6/20: News, Sugarhouse Odds & Promos
PA Sports Betting Report 6/19: News, Sugarhouse Odds & Promos

Pennsylvania Gambling History

Gambling and betting in the state of Pennsylvania has modest roots. That is quickly changing as a new generation of Pennsylvanians are changing the political and cultural landscape of the state. Pennsylvania has had several failed attempts at having gambling in some type of form passed within the state. In 1993 there was a push for legalizing gambling in state waterways via riverboats. The strongest opposition was based on the belief that it would result in negative effects on families, increased traffic congestion, and ultimately lead to increased crime in the state. There was another failed attempt at passing legislation to enable slot machines at the state’s four racetracks, authorize riverboats to offer betting, and allow video poker at taverns. This legislation never even reached a vote and ultimately died. Outside of these failed attempts, the history of gambling in the state of Pennsylvania can be primarily summarized by two pieces of legislation: Act 91 of 1971 and Act 71 of 2004. Both acts were focused on different areas of gambling that have laid the groundwork for further advancement and implementation of casino and sportsbook gaming within the state.

Act 91 of 1971

Pennsylvania first legalized gambling through a state lottery on August 26, 1971. The first lottery drawing took place on March 7, 1972. The Pennsylvania Lottery sold 50 cent tickets for the weekly drawings featuring $1 million prizes. The unique aspect of the lottery in Pennsylvania is that the proceeds from selling lottery tickets initially went towards benefiting the elderly within the state. While proceeds do still go to provide property tax relief for seniors, Pennsylvania has extended the benefits to rent rebates, reduced public transit costs, lower prescription drugs, long-term living services, and full and part-time senior centers. The Pennsylvania lottery is the only state lottery that designates all proceeds to benefit older residents. Pennsylvania along with 43 other states currently have a state lottery. Alabama, Alaska, Hawaii, Mississippi, Nevada, and Utah are the only state that do not offer a state lottery.

Act 71 of 2004

Perhaps the most important piece of legislation regarding Pennsylvania gambling was Act 71 of 2004. On July 4, 2004, the governor at that time, Ed Rendell stood in the Winner’s Circle at Philadelphia Park, now known as Parx Casino and Racing, and signed Act 71 into law. Act 71 was also known as the Pennsylvania Horse Race Development and Gaming Act, that brought slot machines and casino gambling to the state. Additionally, the Act did three major things that laid the groundwork for gambling within the state: established the Pennsylvania Gaming Control Board, legalized casinos, and legalized racetracks. The act offered three types of licenses:

  • Category 1: Facetracks
  • Category 2: Stand alone casinos
  • Category 3: Resort casinos

While gambling did become legal with the passing of this act, gambling was not the primary objective of the Act. The Act was primarily focused on protecting the public through the regulation of activities involving gaming and gambling. It also laid out regulations to generate new revenue to support tax relief, wage tax reduction, and other sources of economic development including increased tourism to Pennsylvania for those seeking the thrill of gaming.

Who is Allowed to Gamble in Pennsylvania?

Not surprising is that the legal gambling age is 21 years old. Gambling is offered to the citizens of Pennsylvania and to any visitors within the state. The same applies to those that are looking to gamble online. You must be physically present in the state of Pennsylvania and be of appropriate age in order to place bets or wagers through any Pennsylvania casino.

What Types of Gaming will be Offered?

Pennsylvania offers several types of games within their casinos. The initial thought behind offering gaming in casinos was focused on slot machines. But since then, table games have been the games that have been surging over the last few years. Now, anything from horse racing to blackjack you can find in Pennsylvania. Some of the more popular games that are available are:

  • Slot Machines: responsible for $2.36 billion of revenue in PA gambling in 2017, the casinos offer your classic slot machine games including other table game type of slot machines
  • Table Games: tables games were responsible for $890 million worth of revenue in PA gambling in 2017. While still considerably less than the revenue of slot machines, table games have surged and been increasing every year whereas slot machines has flat lined during that same time. This is due to the increasing variety of games that are being offered.

All casinos in Pennsylvania offer the following games:

  • Slots
  • Video poker
  • Craps
  • Blackjack
  • Roulette
  • Three card poker
  • Mini Baccarat
  • Paigow Poker

Some casinos offer the following games:

  • Baccarat
  • Poker
  • Ultimate Texas Hold ‘Em
  • Texas Hold ‘Em Bonus
  • Let it Ride
  • Pai Gow
  • Big 6 Wheel
  • Spanish 21
  • Fourcard poker
  • SicBo
  • Mississippi Stud
  • Casino War

Can I Play These Casino Games Online?

Online gambling still has not launched yet in Pennsylvania as it is still going through approval and review of the online internet service providers and other security details surrounding the offering of casino games online. However, the online gambling platforms should be available in the Winter of 2018 at the earliest.

The licenses that the casinos apply for cover the following online games:

  • Non-peer-to-peer interactive slot machine games
  • Non-peer-to-peer simulated table games
  • Peer-to-peer poker

Which Casinos Will Offer Online Gaming?

As of August 15th, Pennsylvania has awarded the first online gaming licenses for three of the state’s casinos: Harrah’s Casino Philadelphia, Parx Casino, and Mount Airy Resort Casino. Although the licenses have been awarded, the Pennsylvania Gaming Control Board still have to approved the online service providers before the casinos can begin testing their online applications.

There are still seven other licenses that have not yet been issued but have been applied for by:

  • Presque Isle Downs Casino
  • Mohegan Sun
  • Hollywood Casino
  • Sands Casino Resort Bethlehem
  • The Rivers Casino
  • SugarHouse Casino
  • The Valley Forge Casino Resort
  • Stadium Casino (not yet built but is currently under construction)

This leaves Meadows Racetrack & Casino and Lady Lucky Casino as the only two other Pennsylvania casinos that have yet to apply for an online gaming license.

Can I Bet On Sports Games In Pennsylvania?

Pennsylvania has been slower than other states to offer sports betting after the landmark Supreme Court ruling in Murphy vs. NCAA. However, many experts believe that the Pennsylvania sports betting market will take off soon and will see large revenue from bets within the state considering the avid and loyal fan bases of the Philadelphia Eagles, Flyers, 76ers, and Phillies. Pennsylvania will begin seeing increased revenue and, most likely, become one of the largest sports betting services in the country once the casinos do develop their online sports applications and websites and begin offering sports betting.

Bettors will be able to bet on:

  • Single-game outcome
  • Parlays
  • Over-Under lines
  • Money line
  • Pools

Will The Same Casinos Also Be Offering Online Sports Betting?

Not all casinos that plan on operating online gambling sites will offer sports betting. A lot goes into sports betting compared to your typical tables games and slot machines. Several casinos are backed by larger national corporations that may have a legup on the ability to set up sportsbooks that are backed by metrics and advanced artificial intelligence to offer advanced lines on sporting events.

The following casinos do have concrete place to begin offering betting on sporting events soon:

  • Parx Casino
  • Hollywood Casino
  • Mount Airy Casino
  • South Philadelphia Sports Club
  • SugarHouse Casino
  • Harrah’s Philadelphia
  • Stadium Casino

Out of these casinos that plan to offer sports betting, Parx has partnered with GAN, who is an award winning developer and supplier of enterprise level B2B Internet gaming software, services and online gaming content in the United States. Because of this partnership, you could expect Parx to be the premiere leader in online sports betting in the state.

What Are The Next Steps In Online Gaming Within Pennsylvania?

As it currently stands, the majority of casinos in Pennsylvania have applied for and are in the process of having online gaming licenses approved. While the twelve land based casinos do have the first chances to apply for these licenses, the fact that Meadows Racetrack & Casino and Lady Lucky Casino have still not applied for licenses leaves the opportunity open to other smaller casinos, waterway based casinos, or other national brands to come into Pennsylvania and apply for and obtain sports betting licenses. There could be a wide variety of companies and casinos that will be offering online sports betting. Either way, Pennsylvania stands to benefit greatly from the increased revenue that online gambling will bring to the state. With 12 million citizens of the state located outside of Pittsburgh and Philadelphia, the online sports gambling arena will give those millions of citizens and direct and immediate avenue to gambling. In addition to the online gaming and slot machines, the Supreme Court decision has opened up the opportunity to legalizing sports betting within the state. This will allow Pennsylvania to legitimize legal gambling on tap into the estimated $75-150 million illegal sports betting market bringing an immediate revenue injection to the state.

Legislation Has Passed!

PennsylvaniaIn 2017, Pennsylvania passed a large-scale legalization of online gambling. This allowed online poker, online casinos and sportsbooks. Currently, Pennsylvanians are poised to have a variety of new options for wagering in addition to the physical casino locations where they can currently bet. Although operators have been slow to enter the market, there have been recent developments that signify that the online gambling market may be robust in Pennsylvania.

The First Approved Entrants

Recently, three casino operators have received regulatory approval to begin online operations in Pennsylvania. The casinos are expected to commence operations within the coming months, by next spring at the latest. Nine total operators had applied for licenses and four additional operators are expected to apply for some form of a license shortly.

Surprisingly, Mt. Airy Casino seems like it may be one of the most viable players in the Pennsylvania online gambling marketplace. Mt. Airy is a smaller casino located in the Poconos region of Pennsylvania, but its partnerships and plans indicate that it intends to be a strong competitor in the marketplace. Mt. Airy usually ranks in the lower half of casinos in the state in terms of total revenues, yet its online presence is expected to be robust. Mt. Airy was one of the first three casinos to gain approval to commence online operations. Mt. Airy has signed partnerships with 888 and PokerStars. For Mt. Airy, online gambling is a way to catch up to other Pennsylvania casinos in terms of revenues by broadening its customer base. Its locations in the Pocono Mountains otherwise prevents it from growing foot traffic and its revenues fell 13 percent in July.

At the other end of the spectrum, the largest Pennsylvania casino was also one of the first three operators to receive online licenses. Parx Casino, which has long been established on the outskirts of Philadelphia, far outpaces nearly all of the other casinos in the state except for Sands in terms of revenues. Parx had been the first operator to take the risk of submitting a license application, notwithstanding the $10 million application fee. Parx had lobbied to prevent the legalization of online gambling in an attempt to protect its profitable land-based operations. Parx intends to offer a fully integrated betting platform, having submitted an application in August 2017 for a sports wagering license. For Parx, online gaming is an attempt to grow its revenues, which have been flat in recent months.

The third operator to receive approval was Harrah’s Philadelphia. Like Mt. Airy, Harrah would be relying on online gambling to turn around its sagging fortunes after experiencing a nine percent revenue drop in July. Harrah’s intends to offer online poker, table games and slots. Harrah’s figures to be a leading operator in the online poker space with a partnership with WSOP. Although the poker room must bear Harrah’s branding, WSOP is a big name that has the potential to place Harrah’s at the top of the market. Harrah’s primary casino partner will be Caesar’s, and the partnership has indicated that it will promote online table games over slot machines.

Online Lottery Controversy

Recently, plans for online lottery contests have sparked controversy and litigation on the part of casino operators. The Pennsylvania Lottery began offering iLottery games in June 2018, and immediately they were a large success. In the first month of operation, iLottery signed up 45,000 customers and recouped close to $3 million in revenue. It is possible that the iLottery can sell in excess of $1 billion annually in sales.

The gambling pie, while not finite, is hardly unlimited. A popular new stream of gambling revenue may have an impact on the casinos’ revenues and may impact their online gambling plans. With that in mind, in June 2018, the casinos requested that the Pennsylvania governor shut down the online lottery, a request that was not granted. The casinos’ primary complaint is that certain iLottery games are close approximations of online casino games and represent competition for them. The casinos claim that certain iLottery games are precluded by language in the bill that legalized online gambling that defines the extent of online games that the Pennsylvania Lottery can offer. In August 2018, the casinos filed suit against the Pennsylvania Lottery, seeking an injunction to shut down simulated casino games. One of the areas of complaint is that the Pennsylvania Lottery is open to players aged 18 years or older, while the traditional casino games offered online may not be played by those under 21 years of age. The casinos believe that the steep licensing fees that they have paid entitle them to not be required to compete in the market with the state that requires large licensing fees.

Other Regulatory Controversies

In addition to issues surrounding the iLottery and high taxes, casino operators have other issues with the new Pennsylvania gambling laws. One major issue that operators have raised is the ban on online gambling that physically occurs at land-based casinos. Players are prohibited from signing up for online accounts and making deposits while physically present at land-based casinos. The rationale for the ban is that the state feels that is it necessary to prevent competition with land-based casinos. According to the casinos, this is an unreasonable precaution. In their view, land-based casinos provide an entry in gambling and customers may want to sign up for accounts with that specific casino as opposed to with another casino.

Additionally, online casino operators are unhappy with the requirement that players only have one account per each operating platform. This requirement persists even if there are multiple skins for the same platform. This may serve to raise operating costs. This is part of Pennsylvania’s regulatory preference for limiting skins. According to the casinos, this may suppress marketing and innovation and makes Pennsylvania a less friendly jurisdiction in which to do business. Nevertheless, due to the high population in the state, casino operators have all made the decision to enter the market notwithstanding the regulatory challenges to doing business there.

  
Sam Shefrin is the founder of Lineups.com, Inc. Before Lineups, he started Daily Fantasy Cafe, Inc. in 2014. Armed with a passion for sports and every Atlanta team, his journey continues with the goal of making Lineups a premier sports analytics destination. He has been quoted on Forbes.com for industry insight and his websites featured on NBATV, Yahoo! Sports, Fantasy Pros, Bleacher Report and SB Nation.