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May 7, 2014

Potential Jackpot for Pennsylvania: State’s Analysis of iGaming, Sports Betting, and Fantasy Sports

By: Ifrah Law

Today, the Pennsylvania Legislative Budget and Finance Committee released a long anticipated report entitled “The Current Condition and Future Viability of Casino Gaming in Pennsylvania.” Last December, the Pennsylvania State Senate passed a resolution calling for a study, which has been viewed as an important step in expansion of gaming in the state to include online gaming and other potential revenue streams.

There has been an unsuccessful legislative push to legalize online gaming in Pennsylvania in the past year. Last week, the Pennsylvania House Democratic Policy Committee held a hearing exploring the potential impact that internet gaming could have on the state if it were to be legalized and regulated.

The report addresses the potential for new revenue streams for the state’s casino industry and specifically notes the potential for revenue to be generated from legalized sports betting and fantasy sports. New Jersey currently has a petition for review pending before the U.S. Supreme Court challenging the Professional and Amateur Sports Betting Act of 1992 (PASPA), a federal law which prohibits any state from offering sports betting unless that state had a sports betting scheme in place between 1976 and 1990. Pennsylvania had no such betting scheme, but if New Jersey were successful in its efforts to have PASPA overturned that would allow for other states, such as Pennsylvania, to offer sports betting.

The enormous potential for casinos in offering fantasy sports is also explored in the report. Fantasy sports have exploded in popularity in recent years and the report notes that fantasy sports “remain[ ] a potential source of revenue for casinos that is unexploited, as there exists clear potential for synergies between the two industries.” The report notes that in order to allow Pennsylvania casinos to participate in fantasy sports there would need to be a regulatory framework that allows casinos to participate in fantasy sports and separates revenues generated from fantasy sports as non-gambling revenue.

The report also notes that there are important considerations to take into account due to the fantasy sports industry being relatively new and rapidly growing. The reports stresses that fantasy sports companies not be required to operate through partnerships with casinos. It also notes that any licensing or certification procedures required of fantasy sports companies working with casinos not be required of any operators wishing to offer the games outside of casinos.

Last year, New Jersey authorized its state casinos to offer fantasy sports tournaments to its patrons. New Jersey also considers fantasy sports to be games of skill that are non-gambling activities, and therefore, not subject to the state’s gambling taxes. Both states recognize the enormous potential for fantasy sports in cross marketing to individuals who might not otherwise enter the casino.

The Pennsylvania Report highlights the enormous potential revenue for the state in offering online gaming, sports betting, and fantasy sports. We fully support efforts to expand the offerings of the state’s casino industry to provide a boost for the state’s revenue as well as offering patrons more choices.