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The chances for legalizing online gambling in Pennsylvania have never looked better. Last week, the Senate approved HB 271, a bill that would legalize online gambling, daily fantasy sports, and online lottery sales, among other things. Now, the bill must move on to the House. It’s biggest obstacle, according to Rep. George Dunbar, are the substantial tax rates that online casinos would be subjected to.
Lower Tax Rates, Increase Chances for Success
Dunbar has been one of the driving forces behind HB 271, and he realizes that the heavy taxes would put a stop to online gambling even before it started. When the bill goes to the House, it is expected that some amendments will be made - with the high license fee ($5 million) and high tax rate (54 percent) the first issues to be addressed.
The 54 percent tax rate was chosen by the Senate Community, Economic and Recreational Development (CERD) Committee because that is the rate that Pennsylvania’s land-based casinos are taxed. However, all experts in state-regulated online gambling argue that that rate is untenable for online casinos. According to Dunbar, a more reasonable tax rate is 14%, which is what he will be advocating.
Other Issues Included in HB 271
The issue of video gaming terminals (VGTs) is still one that needs to be dealt with (or ignored). There is also the issue of “local share” payments, which are payments that casinos make to their host communities. These payments were ruled unconstitutional, which left the state of Pennsylvania searching for an extra $50,000 to make up for its budget deficit. HB 271 proposes a solution, but the House still needs to approve it.
What Now?
Now that the bill has been sent to the House, the House will make amendments and send the bill right back to the Senate for approval. But if the issue of high tax rates is not resolved, Pennsylvania lawmakers will find themselves right back where they started.
