Monday July 6,2015 : EXECUTIVES CAUTION AGAINST EXCESSIVE TAX IN PENNSYLVANIAN ONLINE GAMBLING
All American Poker Network and Poker Players Alliance concerned that excessive tax rates could prejudice a legalised online poker environment.
The lively debate on internet gambling legalization in Pennsylvania, and the legislative proposals currently on the table in that state, received the attention of two experienced industry executives over the weekend when Poker Players Alliance executive director John Pappas, and the CEO of the All American Poker Network, David Licht, spoke out in the publication TribLIVE.
Both are confident that the state has the potential to become a leader in online gambling given a large population and a well-established culture of gambling, but voiced concerns over high tax rate proposals that could stifle the industry before it could gain traction.
“People won't invest proper marketing dollars to drive revenue if the tax rate's too high,” Licht said. He speaks from experience; his company operates in the legalised market in New Jersey and currently has a partnership with the Mt. Airy Casino in the event of legalization in Pennsylvania.
Pappas agreed, pointing out that to survive, operators would have to pass on at least some of the over-taxing to consumers, diluting their promotional offers.
Current legislative proposals range from a reasonable 14 percent to as much as 54 percent.
Both executives say that Pennsylvania's large population of 12.8 million, and a well-established tradition for gambling, will make the state an important addition to the industry.
“I think it's an enormous opportunity both for the government to raise money and the operators to operate in a profitable fashion,” Licht observed, estimating that a tax rate of 15 percent, allied to a $5 million licensing fee, could generate state revenues of around $100 million in the first year.
Americans across the States are already gambling online, Licht pointed out, claiming that effective regulation by an experienced regulator like the Pennsylvania Gaming Control Board will better protect consumers, and that the three states that have already legalised have had no instances of minors or of people outside the state being able to gamble online.
“When you legalize, you have better safeguards against minors, you have safeguards against fraud, you have tax revenue that's being generated,” he said. “It's a very safe way for the government to try to balance their budget.”
Licht also raised the issue of online registration of players, which could become a problem if proposals to make the opening of online gambling accounts at land-based casinos compulsory are accepted.
Tried and tested online registration systems and technology are available and effective, he said, and should be deployed for the convenience of internet consumers.
The principal driver of the online gambling legalization initiative in Pennsylvania, and its chairman of the state Gaming Oversight Committee, Representative John Payne, told TribLIVE that he has concerns that a 15 percent tax rate may be too low, but a 54 percent rate could be too high.
However, he says that online gambling has a good chance of achieving legalization, and has the potential to bring $120 million annually to state coffers, while the full package of proposed casino law changes – 24-hour liquor licenses, secondary slot parlors, airport slot machines and skill-based gambling games – could increase that to $700 million.