Pennsylvania Gambling Regulation

Gambling Regulation Pennsylvania is one of the thirteen colonies that originally came together to form the United States of America during the War of Independence. It is monumental to American history as it also became the second territory to ratify the US Constitution in 1787. The rectangular-shaped state sits in the northeast part of the country, bordering Maryland, West Virginia, Delaware, Ohio, New Jersey, New York, Lake Erie, and the Canadian province of Ontario.

The Keystone State, as Pennsylvania is also known, is the fifth most populous US state, with 13.1 million inhabitants as of 2021. The same year it accounted for approximately 3.7% of the national economy, with a nominal gross domestic product of $832 million. Tourism, manufacturing, mining, and agriculture are among the state’s key industries.

Pennsylvania also has a well-developed gambling industry, with locals having legal access to various landbased and online betting activities, including casino gaming, sports wagering, lotteries, bingo, fantasy sports, and poker. As of the 2020/2021 fiscal year, the Keystone State is home to 14 retail casinos and 19 licensed online gambling sites.

Legal sports betting has also ramped up in recent years. Pennsylvanians can presently punt at 15 retail locations and have access to over a dozen authorized online sports betting sites. According to the local regulator the Pennsylvania Gaming Control Board (PGCB), the industry has gone from strength to strength over the past couple of years, with the online segment being a major growth driver.

The PGCB revealed in a report the overall revenue from licensed gaming operations hit an all-time high during the 2020/2021 fiscal year, driving the tax revenue for the past three years to a total of $1.7 billion. Expectations are that the local industry will witness further expansion as new licensed gambling sites emerge in the following years. Of course, all of this would have been impossible without the solid legislative and regulatory foundation Pennsylvania has.

Pennsylvania Landbased Gambling Laws

Section 5513 of Pennsylvania’s Crimes Code stipulates that all gambling activities are illegal unless they have been specifically authorized and licensed under the state’s legislation. Pennsylvania has several legal forms of gambling, all of which require the authorization of the state authorities.

Despite the fact landbased casinos have been legal for less than two decades, the Keystone State comes second to Nevada in terms of revenues from commercial casino gaming. Let’s have a look at some of the key laws that govern and regulate landbased gambling in Pennsylvania.

Race Horse Development and Gaming Act of 2004
Slot Machines at Racecourses
Stand-Alone Landbased Casinos
Major Casino-Hotel Resorts

Other Laws on Landbased Gambling

Other legal forms of gambling in Pennsylvania, like lotteries and bingo games, are governed by separate pieces of legislation. We discuss them in more detail below.

The State Lottery Law of 1971
The Pennsylvania Bingo Law
The Local Option Small Games of Chance Act

Pennsylvania Online Gambling Regulations

October 26, 2017 was an important date in Pennsylvania’s history as it saw the General Assembly vote in favor of House Bill № 271, paving the way for the further expansion of the local gambling industry. Several days later Governor Tom Wolf signed the bill into law, but it was not until 2018 that the Expanded Gaming Act (as the legislation is also known) fully came into effect.

Legal Forms of Online Gambling
Satellite Casinos Became Legal

License Types and Gambling Taxes in Pennsylvania

1Pennsylvania Gaming Control Board

The Pennsylvania Gaming Control Board (PGCB) issues several types of licenses, depending on the type of activity applicants are looking to offer. Respectively, the licensing requirements and fees vary based on what type of permit an operator obtains. The Bureau of Licensing is the division that deals with all matters related to license application and issuance.

2Sports Betting Licenses

Under the local legislation, Pennsylvania racetracks and landbased casinos have the option to apply for sports betting certificates. The same goes for authorized slot machine operators. If approved, they can legally accept sports wagers at their own facilities, at off-track facilities run by racinos (casinos at racetracks), online, or via mobile applications.

The time required to examine and process an application is case-specific. Each applicant must submit detailed information about its corporate structure and its other gambling permits (if any). Upon submitting their documents, the companies must pay a non-refundable application fee of $5,000.

The license fees imposed on approved applicants amount to $10 million. Sports betting licenses have a five-year validity, after which time they are subject to renewal at a cost of $250,000. Licensed sports betting operators are taxed at 36% of their revenue, while those who offer daily fantasy sports must comply with 15% tax rates.

3Licenses for Casinos and Slot Machines

As we previously wrote, Pennsylvanian legislation makes a distinction between four types of slot machine and casino licenses. The type of permit required depends on the number of slot machines one is looking to operate and where. Category 1 permits are intended for racetracks looking to offer slot machines. Category 2 licenses are available for stand-alone casino operators with up to 5,000 machines.

Category 3 licenses are issued to casino-hotel resorts with a maximum of 500 machines in the gaming area. And finally, there are the category 4 permits intended for the so-called satellite or mini-casinos that can offer 300 to 750 slots, along with up to thirty gaming tables on their premises. The licensing process for the satellite casinos is based on auctions, the first round of which occurred in 2018, when four companies received permits.

The maximum possible number of satellite licenses in Pennsylvania is ten. There is no limit on the maximum allowed applications for category 1 through 3 licenses. The 63-page application form contains detailed instructions, along with information about the associated costs. Applicants must provide their business name, principal address, contact details, financial disclosures, and more.

Successful applicants must pay the following licensing fees upon approval – $50 million for categories 1 and 2, and $5 million for category 3. All three types have a validity of three years, with renewal costs of $150,000 for category 3 and $1.5 million for the other two categories. Category 4 permits are available via auctions only, with a minimum licensing fee of $7.5 million. During the first round of auctions, the propositions reached $50.1 million and $40.1 million.

4Truck-Stop VGT and Airport Tablet Gaming Licenses

The PGCB has so far issued over thirty permits for video gaming terminals (VGTs) at truck stops. The supplier of the terminal, its operator, and the truck stop itself all require authorization to offer such gaming machines. No more than five can be available at any single authorized truck stop. The licensing fees for the terminals are $10,000 for suppliers and terminal operators, and $250 (per terminal) for truck stops. The applicable tax rate stands at 52%.

Publicly listed commercial airline companies can apply for licenses to offer interactive gambling activities. They also have to establish a partnership with a landbased casino that holds an existing license. The cost of the permits varies based on the exact airport. For example, the cost for the Pittsburgh International Airport is $1.25 million, while for the Philadelphia International Airport it is $2.5 million.

5Online Gambling Licenses

The Expanded Gaming Act authorized the PGCB to issue 39 online gambling licenses in total and divide them evenly between different verticals like slots, poker, and table games. During the first licensing round, operators that already held slot machine certificates were granted ninety days to petition for combined permits, allowing them to offer all of the above-listed activities at the cost of $10 million.

Between ninety and 120 days after the start of the application process, current landbased license holders had the chance to apply for individual activity permits. At the end of this window, any other operators that met the PGCB criteria could apply for the remaining online permits. SugarHouse, Harrah’s, Rivers, and Mount Airy were among the landbased casinos to lodge applications before the deadline in July 2018. The following tax rates are levied on remote gambling businesses in the Keystone State: 54% for online slots and 14% for table games and poker.


Social Responsibility and Advertising Policies in Pennsylvania

Licensed gambling operators in Pennsylvania can only provide their services to customers who are old enough to gamble legally, which means they must be 21 years of age. The minimum age for participation in authorized lotteries and pari-mutuel betting is 18 years old. In the interest of social responsibility, landbased venues must prominently display placards with information about addiction and the relevant organizations that assist problem gamblers.

Self-Exclusion and Individual Limits
Gambling Advertising Policies and Restrictions
Taxes on Winnings

Regulatory Bodies in Pennsylvania

The Pennsylvania Gaming Control Board has the mandate to regulate, supervise, and license most authorized gambling activities in the Keystone State. This governmental agency came to be in 2004 and consists of seven board members, a chairperson and six commissioners. It also has three ex-officio (non-voting) members – the Secretary of Revenue, the Secretary of Agriculture, and the State Treasurer.

Fourteen divisions within the PGCB deal with various day-to-day issues. Among those are the licensing, sports wagering operations, gaming operations, and casino compliance divisions. Dealing with patron disputes and complaints is another responsibility of the Gaming Control Board.

Lottery Regulator
Harness and Pari-Mutuel Races Regulator

Conclusion

Conclusion Pennsylvania had an underdeveloped, not to say almost non-existent, gambling industry until the 2004 legislation gave the green light to legal racetracks, casinos, and slot halls. However, it was not until 2017 that the sector really took off thanks to the introduction of legal interactive gaming and sports betting.

Locals currently get to enjoy a decent enough range of legal gambling opportunities, including over a dozen brick-and-mortar casinos and around 19 interactive betting sites. Licensed sportsbooks in the state generated a betting handle of $760 million in November 2021 alone, so it is fair to say the future of the local industry is looking more than bright.