A pair of Pennsylvania casino operators blink first, buy costly sports gambling licenses in high-tax state

When Pennsylvania lawmakers approved sports gambling legislation in October 2017 forcing operators to pay $10 million upfront and face a sky-high 36 percent tax rate on profits, it was a bet the fifth-most populous state was too ripe a market for gambling interests to stay sidelined.

That roll of the dice may be paying off. A pair of Keystone State casinos have applied to open the state's first sportsbooks, the Pennsylvania Gaming Control Board confirmed this week. Board spokesman Doug Harbach said the casinos -- Parx Casino in suburban Philadelphia and Hollywood Casino in Harrisburg -- will likely be approved by the board during a pair of October public meetings. 

The gaming board's action will clear the decks for the casinos to move forward with setting up sportsbooks immediately. 

“They will be able to launch sports wagering shortly thereafter, provided they check off all of the boxes to be open to the public,” said Harbach. He expects more precise timelines from the casinos during public presentations they'll make in October. All of the sportsbooks who are approved can offer online sports betting options including in-game prop betting, under the legislation. 

Why did Pennsylvania lawmakers move so early to legalize?

In 2017, Pennsylvania lawmakers were staring at a massive budget hole and decided to fix it by approving a massive expansion of gambling -- including sports betting, providing the U.S. Supreme Court allowed it. But Pennsylvania's 36 percent tax on gross profits from sports betting, far out of line with West Virginia (10 percent), New Jersey (9.25) and Nevada (6.5), cooled off casino operators, who said it was among the highest in the world.

“There was certainly some trepidation about the fees and the tax rate,” said Harbach. “But we’ve had two apply so far, and we do expect others to come on board. The gaming interests may likely be working on the legislature to try and get those rates lowered.”

Among the dozen Pennsylvania casinos are one in Erie and a pair in the Pittsburgh-area that could attract Ohio gamblers. Harbach said he expected the Pittsburgh-area casinos would eventually apply for sports betting licenses, but was less certain about Presque Isle Downs & Casino in Erie, where ownership recently changed hands.

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