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A Taxing Situation for Pennsylvania’s Online Slot Machines

Written by:
Guest
Published on:
Jun/06/2018

The main reason and possibly the only reason why so many states have pushed forward legislation for real money gambling over the past several years is the tax revenue it generates for its coffers.

Raising taxes on individual state residents is never a popular way to fill the gaps in yearly budget, but raising taxes on large, profitable casinos is an easy way out. In a recent report by PlaySlots4RealMoney.com, he examines Pennsylvania’s plans to squeeze even more tax revenue out of online casino operators. The general plan is to set the tax rate on online slot machines to 54 percent. This is all part of a comprehensive gambling expansion bill that was passed into law in October of 2017. Governor Tom Wolf signed the bill that paved the way forreal money gambling online in the form of slot machines and poker games.

These online casinos are still in the planning stage as far as issuing licenses, but they are set to join the existing brick-and-mortar Pennsylvania casinos that were approved across the state over a decade ago. This latest real money gambling expansion bill makes the Keystone State one of the most casino-friendly locations in the country. The effects from such a high tax rate combined with steep entrance fees into PA’s online casino industry will make it extremely difficult for any online casino operator in the state to turn a profit in the short term according to PlaySlots4RealMoney. His actual quote in this report stated that even with an increased potential for significant online slot revenue in Pennsylvania “doesn’t change the fact that the hefty upfront fee and the tax rate of 54 percent on slots makes it virtually impossible for any operator offering all three verticals (slots, table games and poker) to realize a profit in its first five years.”
 

There have been efforts to lobby state legislators to take a second look at the situation with a lower tax burden on the online slot machine revenue. With the window rapidly closing on the ongoing application process for an operator’s license through a statewide auction process, it appears that the state is more than reluctant to change its stance.  Additional tax revenue is beneficial to filling holes in state and local budgets, but it could also be a detriment to a healthy online gambling industry in PA. The added financial burden on the companies that are generating this tax revenue may become too hard to sustain.

 

This report goes on to speculate that the 54 percent tax rate could make the PA online slot machine industry less competitive and less profitable as the whole online real money gambling industry continues to expand. The short-term gains could end up causing far more issues for both online casino operators and state residents over the long run. You can rest assured that the US online gambling industry is closing monitoring the situation in the Keystone State. The overall conclusion from this report is that the 54 percent tax rate is “unsustainable in a future nationwide online gambling market”.

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