As you may have noticed, we’ve been writing quite a bit about sports betting around here. Part of the reason is because Philly, specifically, will serve as almost ground zero for the new legal sports betting wave that will eventually change sports consumption as you know. With New Jersey, Delaware, and now Pennsylvania being among the first three states to offer it – with New Jersey and Pennsylvania now being among the only states to have online sports betting – we are essentially the test market for how this all goes down, how it impacts the viewing experience, and what it means for team and in-stadium partnerships. The Sixers – along with the Devils – just announced a partnership with Caesars, while the major professional basketball and hockey leagues have announced licensing, content and data deals with MGM.
Now we have some dates for PA sports betting.
Yesterday, the PA Gaming Control Board approved three more licenses for SugarHouse Casino, Harrah’s Chester and River Casino in Pittsburgh. They’ll join Parx Casino in Bensalmen and Hollywood Casino in Grantville as the five licensed operators, so far, that can offer sports betting.
Where and when for PA sports betting?
Parx has said that it plans to open sometime in November. Keep in mind, there’s a Chickie’s and Pete’s inside the casino, and this summer I spotted Pete Ciarrocchi at the East Coast Gaming Congress in Atlantic City… so putting a physical sportsbook somewhere in the general vicinity of the restaurant seems to make sense.
SugarHouse plans to open its location by December 1, according to Philly.com. They’ve outlined their plans in a proposal to the state. Here’s the rendering of a planned permanent sportsbook which they anticipate opening next spring:
An 1,800 square-foot temporary facility could be ready to go next month.
Harrah’s says it will build a 4,322 square foot facility where there is now a concert venue:
The physical sportsbooks are great and all, but the growth area for PA sports betting is, by far, online betting.
Online sports betting in PA
SugarHouse is particularly interesting because they already participate in online sports betting in New Jersey through their PlaySugarHouse.com app, which offers an online casino and sportsbook. Their parent company, Rush Street Interactive, uses the Golden Nugget gaming license to offer betting under their SugarHouse brand. Make sense? Probably not. But just stay with me. SugarHouse’s online sportsbook, of whom we’re a happy partner, is actually third in revenue in New Jersey behind DraftKings Sportsbook and FanDuel Sportsbook (they actually offer the same lines as DraftKings by virtue of using Kambi to run its book). As such, they may wind up being first out of the gate to offer online sports betting in PA, which is still a few months away and likely won’t go live until January.
Of the online sportsbooks in New Jersey, SugarHouse and Harrah’s are the two now have PA licenses (Harrah’s is owned by Caesars). Parx and Hollywood Casino have plans to offer online sports betting as well, with Greenwood Gaming and Entertainment, the parent company of Parx, partnering with GAN to run theirs. All of these will have to undergo further age verification and geo-comply testing before going live, but it seems SugarHouse should be first since they are already doing this successfully.
What about DraftKings, FanDuel and others?
DraftKings will need to partner with a PA operator before they launch in the state. That hasn’t happened yet. FanDuel has partnered with Valley Forge Casino Resort, but they haven’t applied for a sports betting license, though they have been approved for an Internet Gaming license. Stay with me. The point is, the two legal sports betting leaders appear to be behind local companies like SugarHouse and Parx when it comes to online betting.
Will you keep me updated?
You bet! I have continually been asked about where and how you’ll be able to bet on sports in PA from readers who have seen our coverage. We intend to partner with as many sportsbooks as possible to offer you exclusive signup bonuses, unique odds and other promos for sports betting in PA. We’ll keep writing about it here on the site, but the best way to stay updated is to sign up for our email list (we won’t spam you).
We have big plans for a more betting-related content (think, studio) and job postings for those positions so you’ll want to follow us.
PA sports betting background
The push for mobile sports betting
There were two themes at the East Coast Gaming Congress, and the biggest one was the importance of online betting. Something like 70% of the market in Europe is mobile or real-time betting, also called live betting. Many of these are prop bets. This is the growth area, no doubt about it.
Consider this stat: There is $150 billion wagered on sports in the US each year. Only $3 billion of that is in Nevada. The other $147 billion is either through illegal bookies or non-regulated offshore sites.
The gaming industry wants a piece of that market.
They will compel states to adopt favorable regulations in order to offer competitive mobile betting products. This centers around real-time or “in-play” betting.
This takes many forms.
The most obvious example is a second half betting line that may be available during a basketball or football game. But the ubiquity of mobile devices creates many more possibilities. You can bet on the next series, drive or play. It’s the second screen experience for sports– everything from “who hits the next three-pointer” to new moneyline odds being offered throughout the game. This type of betting is arguably more fun (and addictive) and is the growth area for the industry.
How to compete with offshore sites
The industry is well aware that anyone can go online and place a bet today.
How do they beat the offshore sites?
The main message was that aggressive tax rates would pass along costs to the customer, presumably in the form of poorer odds. They showed studies indicating that a 10%-15% tax rate is the range which guarantees the greatest output for the state before significant customer losses. Again, Pennsylvania is currently at 36, which means PA sports betting sites will have to deal with significant more costs, limiting the amount operators may want to focus their efforts. We have spoken to several books that have no plans to even enter the PA market. This is doubly a problem when you consider that PA casinos will have to brand their apps with their own names, thus not allowing for DraftKings or FanDuel to have their own apps in the state (they’ll have to settle for “powered by” or something similar). This gives SugarHouse, and maybe BetStars, an opportunity to gain market share since they won’t be competing as hard with the big brands.
Further, the offshore market excels in online betting. Some states, like Mississippi, will legalize sports betting but not allow it online. That is a mistake. It misses the entire point of this movement (for states), which is to maximize tax revenue. Not allowing online sports betting leaves a lot of money on the table… or perhaps just sends it to Costa Rica, where many of the offshore sites are located.
One way the regulated space could have an edge over offshore sites is in partnering with the leagues, both in terms of branding (expect sponsorships) and data.
Think about real-time betting, perhaps a wager on pitch speed (will someone throw 100 mph this game?). Who verifies the data? Unlike scores and basic stats, which can be easily checked against an official box score, data required for prop bets may need a trusted partner. This can both provide a competitive advantage over the black market and create revenue opportunities for the leagues, which can license the data to sportsbooks.
To be clear, the gaming industry wants to partner with the leagues– they just don’t want states to mandate a 1% integrity free, something which thus far has been met with resistance from the states anyway. The league will profit regardless through increased interest and viewership, but it seems the way to get money directly from the operators is through direct business relationships.
Thankfully, the legalization of online gaming for poker and such in New Jersey and Delaware has paved the way for sports in Pennsylvania. Credit card processing was an early hurdle in those verticals because banks were worried about fraud. Once the gaming industry proved that it could effectively police itself, Visa, MasterCard and others became more amenable to handling the transactions.
The gaming industry knows it needs to make depositing (and withdrawing!) money a painless experience if PA sports betting is to gain traction. This creates a literal instant advantage over the corner bookie, and having a regulated operator take your action is a safer experience than playing with offshore sites.
Anna Sainsbury, the CEO of GeoComply USA, a company that provides geo-fencing services for iGaming products, talked about ways to effectively ensure players are in-state. That part is relatively simple. But consider the PA commuter who works in New Jersey or Delaware. What if they can’t place a bet from work? With these states being linked, there was some discussion about allowing wagering across states lines. That’s an area that has yet to be fully worked out, though the industry is aware that creating a consumer-friendly solution is important.
Geoff Freeman, the outgoing CEO of the American Gaming Association, said there was essentially no chance of federal regulation for sports betting. It sounds like it will remain a state issue.
Which states are next?
This is taken directly from an AGA slide on which states they feel will move to legalize sports betting next:
This goes without saying, but as more states come online, gambling sponsorships will begin to pervade sports. Almost every major soccer team in the Premier League has a gambling partner. Expect much the same in Pennsylvania.
This FAQ was put together by Mike Lyon. He is an attorney in Montgomery County, PA specializing in litigation and gaming law. He tracks all developments in sports gambling in the United States, with a particular interest in Pennsylvania, New Jersey, and Delaware. The information provided in this post is not intended to be and should not be construed as legal advice. You should not act or rely upon information contained in this post without specifically seeking professional legal advice.
The legal aspects of PA sports betting
When the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in Murphy v. NCAA, et al. in May of this year, a day that many sports fans had dreamed of became reality. With PASPA nullified, legalized sports betting had finally become a possibility outside of Nevada.
All the attention being paid to the legalization of sports gambling in New Jersey and Delaware has left many fans in Pennsylvania wondering when it will come to the Keystone State. As of press time, while PA sports betting is, technically, legal, regulated sports betting has not yet begun. While the exact date that betting will begin in Pennsylvania is still very much unknown, potential bettors should rest assured that it should begin very soon.
In October of last year, Governor Wolf signed into law a massive expansion of gambling in Pennsylvania. That legislation allowed sports gambling to be legalized if the existing federal ban in PASPA was first repealed, which thereafter occurred when the Supreme Court nullified PASPA in Murphy.
The gaming law restricted the possibility of hosting sports gambling to Pennsylvania’s 12 casinos, any of whom could apply for a “sports wagering certificate” with Pennsylvania’s Gaming Control Board (GCB). Holders of a sports wagering certificate would be permitted to take in-person wagers in a designated sportsbook or area within the casino. Online betting was also legitimized by the statute, and certificate holders would be permitted to take wagers through a mobile app or Internet site.
The law provided a 120-day window for the GCB to accept applications for sports wagering certificates, which it began to do on May 31, 2018. Given how popular legalized betting was thought to become, and the national attention paid to Murphy, it was thought that applications would come quickly. Many surmised that sports wagering would be operational in Pennsylvania long before the start of the NFL season in early September.
But the fees to be paid by potential applicants for sports betting certificates likely caused (and may still be causing) significant hesitation. The gaming expansion statute required any sports wagering certificate applicant to pay a $10 million initial fee to the GCB following approval of the application. It further requires a renewal fee of $250,000 to be paid to the GCB every five years thereafter. Those entry fees dwarf the comparable fees in New Jersey, which required casinos to pay just $1.2 million in licensing fees (which also include the fee required to carry an internet gaming platform, which is not yet operational in Pennsylvania and not a part of the $10 million initial fee).
In addition, the taxes payable on PA sports betting proceeds are substantial. The gaming expansion law provided a whopping 34% tax rate on gross sports gaming revenue to be paid to the state, plus an additional 2% to be remitted to local or municipal taxing authorities. That makes for an effective 36% tax rate on all betting proceeds. This dwarfs the 8.5% rate for in-person bets or 13% rate for online bets over the bridge. The taxes and fees make for a good reason to be cautious about beginning sports betting operations in Pennsylvania.
Legalized betting in Pennsylvania is inching closer. Whenever the first bet is placed, Pennsylvania certainly appears to be ready to reap substantial financial benefits from what should be a very popular endeavor for fans across the Commonwealth.
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