High Tax Rates Prevent Pennsylvania Casinos From Taking Sports Bets
As each state rushes to legalize sports betting, Pennsylvania is sitting in a very precarious position. Having already passed a sports betting bill in October of 2017, the Keystone State was in a great spot to begin sports betting pending a SCOTUS overturning of PASPA. On May 14th, the Supreme Court did just that. Roughly two weeks after the SCOTUS ruling, Pennsylvania opened the process for casinos to file for sports betting licenses.
As of this writing, none of the state’s commercial casinos have filed for a license. And, the big reason why – Pennsylvania is charging a ridiculous tax rate on sports betting revenue. In fact, of all the states already taking bets or just about finalized with their sports betting regulations, Pennsylvania is charging the highest tax rates in the country.
A Sports Betting Tax Rate Comparison with Other States
Let’s go down the list and compare Pennsylvania’s 36% tax rate to other states:
- New Jersey has a tax rate of 8.5% on in-person sports bets and a 13% tax rate for online sports betting.
- West Virginia has passed a tax rate of 10% on sports betting revenue.
- Nevada chargers Las Vegas casinos a 6.75% tax.
- Kentucky is proposing a 20% tax rate.
- Michigan’s leading sports betting bill, which has yet to be approved, proposes an 8% tax rate.
- Mississippi is still working out the details on their proposed tax rate.
- New York’s two proposed sports betting bills suggest an 8.5% tax rate. And, this is the leading state to give payouts to pro sports leagues.
Keep in mind, this high tax rate is in addition to the $10 million dollar licensing fee that all casinos will have to pay in order to legally take sports bets. Once again, Pennsylvania is charging the highest licensing fees out of any other state. In comparison, states like West Virginia, New Jersey, and Mississippi are all charging $250,000 or less.
What Casinos are Saying about PA’s High Tax Rate
It’s not hard to guess how the casinos feel about PA’s high tax rates and licensing fees. As you can imagine, they’re not happy about it at all, which is evident by none of the casinos rushing out to get a sports betting license. Additionally, these high fees are preventing other gambling and sports betting entities from creating partnerships with Pennsylvania casinos. Case in point, William Hill US, who just partnered with a casino in Atlantic City and is already contracted with Delaware Lottery, refuses to even consider partnering or entering the state of Pennsylvania at this time.
Joe Asher, Chief Executive Officer of William Hill US, made the following comments about Pennsylvania’s absurd tax rate, according to Philly.com:
“Pennsylvania is in a different bucket because of the tax rate. We can’t figure it out. Because of it, we haven’t spent the time or effort in Pennsylvania that we have in New Jersey. The tax rate is such a big challenge.”
A spokesman for the firm of Wojdak Associates, who represents 25% of the casinos in Pennsylvania, made the following comments about the tax rate according to PennLive.com:
“There’s no secret that we believe the tax rate is too high and we would like to see it lowered.”
Where Does Pennsylvania go From Here?
Despite the state already legalizing sports betting, there’s still a lot of work to be done. Most importantly, the state needs to reconsider the high tax rates as it’s preventing casinos from taking any sports bets. Biting the bullet and paying the licensing fee is one thing, but paying 36% tax on betting revenues is insane.
With that said, there is no firm timetable as to when the state will start taking sports bets. The Pennsylvania Gaming Control Board (PGCB) has two board meetings on June 27th and July 18th. It’s assumed that the PGCB will take a look at the current law and discuss new sports betting regulations. Additionally, they will also listen to the concerns and complaints that the casinos have about the current sports betting fees.
Unofficially, the casinos are hoping that if they all sit out the summer and not apply for any licensing, the pressure then will shift back to the state to work with them on a more friendly tax rate. And, this could actually work because football season is right around the corner.
The biggest sports betting time of the year is football season, which begins in September. It’s in the best interest of all parties involved to get this sports betting fiasco figured out as quickly as possible in order to capitalize on the insatiable appetite that sports bettors have with football.
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