PA Online Gambling Set To Start Competing With NJ Online Casinos This Summer

Posted By Martin Derbyshire on March 1, 2019

The battle for Northeast online casino supremacy will heat up this summer when the neighboring state of Pennsylvania finally gets around to launching its first online gambling sites.

Pennsylvania Gaming Control Board (PGCB) director Kevin O’Toole told a state committee this week “it could be as early as June, but in all likelihood, it will be July” when PA online casinos go live.

Wire Act opinion causes PA online launch delay

The PGCB had originally targeted early 2019 for the launch of PA’s first online casinos. However, the US Department Of Justice‘s latest opinion on the more-than-50-year-old Wire Act has caused a delay.

Earlier this year, the DOJ released its new stance on the act. It essentially reverses the 2011 opinion that the 1961 Wire Act applies only to sports betting.

That 2011 opinion is what led several states, including New Jersey and eventually Pennsylvania, to believe online gambling could be legalized.

Now, pundits are interpreting the new opinion in a number of different ways. The DOJ is set to extend the compliance window by 60 days.

However, the new Wire Act opinion does make it clear the transmission of online gambling data across state lines runs afoul of the law. This fact has the online gambling industry, and the states where it’s legal, rethinking how it does business.

A couple NJ online casino operators moving into the PA market (Golden Nugget and MGM) had been planning to use existing servers in the Garden State to run PA operations.

O’Toole told the PA committee that is no longer an option, which is causing the delay:

“It became quite obvious everything had to be on an intrastate basis.”

That has the PGCB forcing PA online casino operators to relocate their servers to inside the state. Plus, those servers won’t get up and running until the PGCB has tested, approved, and certified the equipment.

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Can PA online casinos compete with NJ online casinos?

How effectively Pennsylvania’s first online casinos can compete with the already established and successful NJ online gambling industry remains to be seen.

NJ online casino sites generated close to $300 million in online gambling revenue in 2018. Plus, NJ online casinos set another record, posting $33.6 million in monthly revenue in January.

Pennsylvania certainly has a larger population and potential player pool. Plus, the number of people traveling from PA to NJ to play online is sure to decrease somewhat.

However, PA’s effective tax rate is at 54 percent for online slots and 16 percent for table games and poker. NJ has it at 17.5 percent across the board.

PA online casinos will ultimately pass that cost onto players.

That might make it difficult for PA online casinos to both attract and retain customers. Plus, NJ online casinos will have had an almost six-year head start in doing just that.

The question is, just how many PA players will choose convenience over cost? Plus, exactly how much of an impact will that have on the NJ online gambling industry’s bottom line?

We’ll have to wait until summer to start getting some idea.

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Martin Derbyshire

Martin Derbyshire has more than 10 years of experience reporting on the online poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.

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