How iPoker will help with Pennsylvania’s $2.3b Deficit

Pennsylvania has become increasingly concerned with their state deficit in recent years. And there’s good reason for this too because the figure has ballooned to almost $2.3 billion. That said, the Keystone State is eyeing online gaming as a way to generate additional tax revenue and cut down their $1.9b deficit. And the good news is that the Pennsylvania Gaming Oversight Committee has already passed Bill HB 649, meaning legal iPoker is one step closer. Assuming the House and Senate also pass the legislation, here are some big ways that the state will benefit financially.

  1. Each License will bring $8m to the State

If HB 649 passes, companies can start filing license applications 90 days after the legislation passes. Each licensee will pay $8 million while “significant vendors” (platform providers, managers etc.) will pay $2 million to be part of the Pennsylvania iGaming market. There are 12 casinos in the state, and even if only half of these apply and are accepted, that would add up to $48 million in licensing fees. Plus, there could be an additional $10-$20 million in significant vendor fees. Of course, there might be even more casinos involved, and the only one we can be sure of that won’t be participating is Sheldon Adelson’s Sands Bethlehem.

  1. Online Gaming should generate $20m or more in Taxes

Early estimates suggest that the Pennsylvania iGaming market would make anywhere from $160-$170 million in annual revenue. These are very realistic estimates when compared to what New Jersey has done so far. But what’s nice is that, based on recent developments, PA online poker and casino sites should do even better than this.

That’s because PokerStars and PayPal are now in the American online gaming market. The latter is key since PayPal will reduce the number of rejected deposits — something that really weighed down the New Jersey market in the early going. Long story short, PA iGaming revenue could hit $190-$200m (about $45m from iPoker), which, based on the 14% tax rate, would mean around $26.5m-$28m in tax revenue.

  1. Tax Revenue will only grow in Future Years

The above calculations are based on the first year alone. And as we’ve seen with New Jersey, this amount should increase as the years go by due to several factors. First off, online poker will continue rolling out new products and accumulating a larger player base. The latter could be greatly aided by an interstate pact with New Jersey, Delaware and Nevada, which would increase the market’s total reach to over 25 million people.

Casino operators would also increase their brand by improving promotions, offering bigger progressive jackpots and holding larger tournaments. If everything comes together in five years or so, we could be looking at an iPoker market worth $60 million and an online casino market worth $200 million ($260m total). Furthermore, this would mean $36.4 million in tax money for Pennsylvania.