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Are Pennsylvania's High Online Gambling Taxes Cause For Concern?Published November 17, 2017 by Elana K
High tax rates on online slots, poker, and table games threaten to disrupt Pennsylvania online gambling before it gets off the ground.
The online gambling community is still astir with the recent news of Pennsylvania's legalization of online gambling. However, there are some concerns among online gambling supporters that Pennsylvania’s high tax rates will end up hurting the industry before it even gets off the ground.
The bill that Governor Tom Wolf signed into law includes a $10 million licensing fee, a 16% tax on poker and table game revenue, and a 54% tax on slots revenue.
While the 16% tax is fairly standard for poker and table games, the 54% tax on slots is destructively high, critics say. Compare this to New Jersey and Nevada, both of which charge a flat tax rate of 17.5% and whose online gambling operations are considered quite successful. Even Nevada's tax rate on slot games, which is considered high at 43%, is still lower than that of Pennsylvania's.
If Pennsylvania’s taxes are high enough to prevent casinos from actually seeing profits, they won’t want to continue with the endeavor (or even start it, since it means paying a $10 million licensing fee). And if the casinos don’t continue, the state of Pennsylvania will suffer; the hundreds of millions of dollars experts projected in revenue will disappear, making it easier for the state fall deeper and deeper into its budget deficit.
Since Governor Tom Wolf approved the online gambling bill, Valley Forge Casino paid the state $1 million in order to open its casino to the public. So Pennsylvania has already seen some profits from its new law, albeit small. It now remains to be seen which land-based casinos will jump in and pay the $10 million licensing fee and get started on offering online poker and casino games. It could be that once one casino makes the move, the others will follow suit.