Pennsylvania Budget Woes Continue as iGaming Shelved for 2017

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Monday, September 11th, 2017 | Written by Stephen Smith

Pennsylvania, like many states, is suffering from a lack of funding, with the state legislature in Pennsylvania finding it especially difficult settling on a good budget. This is due to partisan politics, with the divide so problematic now that the state legislature has reached an impasse in its attempts to agree an acceptable funding deal for state agencies, programs, schools and other institutions.

While the situation has deteriorated so much that Governor Tom Wolf (photo) is currently considering freezing state spending, there is a slight possibility of positive developments ahead after members of the state legislature return to their duties next week, having been on a summer break since July 22.

$2.2 Billion Deficit

The budget being considered will cost Pennsylvania around $32 billion, but that also means that there is a $2.2 billion deficit that still needs to be addressed. Some of the suggestions floated about for tackling this problem includes a tax hike, a natural gas drilling tax, borrowing the money, or resorting to an expansion of gambling in the state.

Gambling Expansion

The gambling expansion solution proposal, including gaming online, has been agreed upon by a number of legislators in both parties, as well as in the Senate and the House. In fact, thus far, this idea has been able to progress through both of the legislative houses, and did so earlier this year, with many of the lawmakers able to agree on the basics of a bill. On of the main issues creating a barrier between them, however, is the level of licensing fees and tax rates to set.

Another hurdle is the fact a few lawmakers in the House also want to add ‘Video Gaming Terminals’ (VGT) to the equation, which is a form of gambling that in the past has been seen as controversial in Pennsylvania, with the issue therefore manifesting a divide between the two parties, especially when talked about with business owners, citizens and legislators.

Video Gaming Terminals

The House and Senate of Pennsylvania have each passed their own version of an expansion bill, but with House members wanting to include video game terminals in their bill, and the Senate not prepared to support the expansion of video game terminals, the result has been for the pieces of legislation to get firmly stuck where they sit.

Having these VGTs included in a gambling bill would mean letting establishments that hold liquor licenses to install these machines in their properties, with the list including such businesses as restaurants, bars, and private clubs. A lot of these businesses support the idea and think that they would bring in more customers, while their opponents think that it spreads gambling out in too broad a manner around the state, and jeopardizes land-based casinos at the same time.

Challenges Ahead

The final draft of the Pennsylvania budget shows that there is several billion dollars in outstanding deficit, and that the money has to come from somewhere. Having online gambling in the mix seems to be part of the fix for this issue, but the unbalanced budget is posing quite the problem for Pennsylvania, which seems to currently be stuck in a stalemate situation.

Unfortunately, online gamblers hoping for some positive news on the issue starting next week after lawmakers return to work are likely to be disappointed as apparently iGaming has now been removed from consideration for the remainder of 2017. Meanwhile, resolving the budgetary problem has become increasingly more pressing for Pennsylvania, with Gov. Wolf warning that he may have to begin implementing a spending freeze on September 15, potentially impacting daily life for state residents across a number of areas, including schools, road repairs, fire protection, and emergency services.

$250 Million Target

Last year, Pennsylvania’s casino market generated $3.2 billion in revenue, with the state having made almost $26 billion since the industry’s legislation back in 2006, and $13.3 billion in gambling taxes that were subsequently funneled into state coffers. According to forecasts, the Keystone State with a population of 12.7 million people stands to earn an extra $250 to $300 million if it ever embraced an online gambling expansion. This estimate, which includes money raised from upfront licensee fees and renewals, as well as revenue taxes, would result in a steady stream of tens of millions of dollars each year for Pennsylvania. Furthermore, this amount would be significantly higher if regulation eventually led to a player sharing compact with neighboring New Jersey.