Pennsylvania Online Gambling On Track To Launch In 2018, Says Regulatory Chief

Pennsylvania’s regulated online casino and poker sites are on track to launch before the end of the year, per comments from Pennsylvania Gaming Control Board Executive Director Kevin O’Toole.

O’Toole told lawmakers at a recent House budget hearing that his agency is the process of drafting temporary regulations for online gambling in Pennsylvania, and that he expects the initial application period for licenses to operate online gambling sites to open in April.

How many licenses will sell, and who’s buying?

• PA is taking a unique approach to online gambling licensure.
• PA is issuing one master online gambling license for every land-based slot license currently issued in the state, for a total of 13 licenses.
• But PA is also breaking out licenses for individual product classes: slots, table games, and poker. That means there are effectively 39 total licenses in play.
• Licenses are expensive. Each product license goes for $4mm; a licensee can purchase all three for $10mm.
• Existing land-based license holders have the first crack at the licenses. They can buy any or all of the individual product licenses.
• If any online gambling licenses are available after the window of exclusivity for land-based license holders expires (120 days from when applications open), then entities licensed in other jurisdictions can apply to purchase a license.

Given the cost of licenses and the fact that several operators (Parx, Penn National, and Rivers) operate multiple casinos in the state, there are likely to be some leftover license slots for out-of-state entities.

The question of skins continues to cloud picture

One fundamental question left up to regulators that remains unanswered: How many unique brands can operate under a single license?

In NJ’s online casino market, master licenses are limited to the state’s land-based operators. But each master license holder is allowed to enter into partnerships with several unique brands to operate under that license.

For example, the Golden Nugget’s NJ online casino license is also home to Betfair’s NJ casino site and the SugarHouse online casino.

The lack of clarity on this issue in PA is almost certainly impacting the broader licensure and partnership pictures.

Some smaller casinos in the state might pass on a pricey license without the ability to generate additional revenue from subleasing the license. Some out-of-state entities may be holding out on finalizing deals with land-based casinos until they understand precisely what paths to market they have available.

Partnerships forming, but unknowns remain

One of the more interesting dynamics of the PA online casino market is the relative lack of information regarding alliances between the state’s land-based casinos and technology partners.

Right now, only a handful of partnerships are set in stone.

Further complicating the situation is the incredible amount of ownership turnover the state’s casino industry has experienced in the last few months.

Nearly a quarter of the state’s casinos have changed hands since December, with the sale of Sands Bethlehem to an affiliate of the Poarch Band of Creek Indians of Alabama being the most recent transaction.

Source: onlinepokerreport.com