Internet gaming, daily fantasy sports on Pennsylvania agenda

Posted: Jan. 5, 2017

A Pennsylvania senator said he plans to introduce broad legislation that would amend the Pennsylvania Race Horse Development and Gaming Act to legalize Internet gaming and daily fantasy sports.

The 2004 law authorized casino gambling at racetracks and non-racing facilities in part to bolster the state’s horse racing and breeding industry. A Jan. 2 memorandum from Sen. Jay Costa, who plans to introduce the bill, doesn’t indicate a share of any new gambling revenue would go to racing.

Costa, who is looking for co-sponsors, said the bill’s objective is to “allow the commonwealth’s gaming industry to continue to evolve and remain competitive in a responsible manner” and generate about $137 million in revenue for the state’s fiscal 2016-17 budget. His bill incorporates a House of Representatives measure to authorize Internet gaming; it passed the House in 2016 but stalled.

Pennsylvania currently has 12 casinos—six of them at racetracks—that would be eligible for an Internet gambling license for a fee of $10 million under Costa’s bill. Vendors that contract with casinos to host a gaming platform would pay $5 million; all license fee revenue would be deposited in the state’s general fund.

The tax rate would be 25%, with 15% reserved for property tax relief and 10% for economic development projects under the Commonwealth Financing Authority. Of the 10%, half would be set aside for projects in counties contiguous to a county that has a casino.

Internet gambling would be prohibited on casino property. In addition, the international airports in Philadelphia and Pittsburgh, as part of a pilot program, could offer “tablet gaming” for a $2.5 million license fee; the tax rate would be 25% as well.

As for daily fantasy sports, platforms would be charged a $2.5 million license fee and pay a tax of 25%, revenue from which would go toward Pennsylvania Lottery programs. The measure also calls for the state to offer “iLottery” to generate additional revenue.

The Pennsylvania Gaming Control Board Jan. 5 released statistics that showed total gross revenue from casino slot machines in 2016 was $2.36 billion, down 0.23% from 2015. Of the six racetracks, only two had an increase in slots revenue: Parx Casino (2.84% to $389 million) and The Meadows Racetrack & Casino (0.63% to $221 million).

The gaming law of 2004 set the amount of slots revenue that goes to the Pennsylvania Race Horse Development Fund from racetrack casinos at 12%. That is now about 10.2%, according to the latest revenue statistics from the PGCB.

The state legislature has over the years dipped into the PRHDF for money to support programs other than horse racing. In 2015 the fund earned $246 million for Thoroughbred and Standardbred racing and breeding, down from $271 million in 2010.

Racing industry representatives have expressed concern that an expansion of gaming outside of licensed casinos coupled with racing not getting a share threatens to dent the PRHDF. The issue was briefly addressed at the December meeting of the Pennsylvania Horse Racing Commission.

Horsemen and breeders said uncertainty brought about by such legislative action has made it difficult to convince people to invest in the Pennsylvania Thoroughbred breeding program.

“All of that discussion going on about not giving horsemen a share of (revenue) hurts us,” said Pennsylvania Thoroughbred Horsemen’s Association President Sal DeBunda, a member of the PHRC. “That’s the message that’s going out, and it’s not a good message.”

Agriculture Secretary Russell Redding, who presided over the racing commission meeting, indicated the industry should tread lightly.

“I caution all of you to not look unappreciative,” Redding said. “If we look at the total amount of money generated, it is significant. We appreciate (breeding and racing) here, and we can qualify Pennsylvania by previous actions that support the industry.”

“We understand what you are saying,” Pennsylvania Horse Breeders Association Executive Secretary Brian Sanfratello told Redding, “but we want to let you know what kind of response you will get (from breeders and owners).”