After announcing sports betting operations in Mississippi and West Virginia, Penn National Gaming has decided to pursue a sports book in its home state of Pennsylvania.
The Berks County-based casino operator on Friday submitted a petition to the Pennsylvania Gaming Control Board, the first to do so in Pennsylvania, to operate a sports book at Hollywood Casino at Penn National Race Course in East Hanover Township.
The upfront cost — a $10 million licensing fee — plus a 36 percent state and local tax rate on sports books in Pennsylvania had kept casino operators on the sidelines.
Indeed, Penn National was among the most critical of Pennsylvania’s cost structure following passage of legalized sports betting last year.
The tax rate here is about five times the rate in Nevada. Add in the federal tax and the effective tax rate in Pennsylvania is about 41 percent of gross gaming revenue.
Because of the higher fee structure, Pennsylvania operators like Penn National could end up offering less attractive betting odds to recover their costs, making their products less attractive than those offered by black-market competitors.
“While we continue to have concerns about the tax rate, we ultimately decided to try to make a go of it, while continuing to educate the legislature on the importance of a competitive tax rate,” Penn National spokesman Eric Schippers said. “We felt the best way to do that is to share our firsthand experience with them.”
A spokesman for the gaming board said it is unlikely that state regulators will consider the petition before October.
Until then, Penn National is moving forward with sports betting operations at five Mississippi casinos. And on Friday, the company said it would start sports betting in West Virginia on Sept. 1
Penn National has hired sports-betting operator William Hill US to manage its sports books in other states. Penn National also plans to work with William Hill in Pennsylvania.