State opens applications for sports betting providers, but casinos remain on sidelines

Pennsylvania opened the door this week for companies that support sports betting operations to apply for licenses, as the commonwealth, like several other states, jumps into legalized sports betting.

The Pennsylvania Gaming Control Board said sports wagering system operators, device or equipment manufacturers, and related service providers can now apply for licenses to operate in Pennsylvania. The 59-page application is available on the board’s s website.

But as that application process opens, Pennsylvania is still waiting for casinos to apply for a sports betting license.

The board confirmed Thursday that it has yet to receive any petitions from state casino operators that would like to start offering sports wagering.

The upfront cost — a $10 million licensing fee — and 36 percent state and local tax rate that sportsbooks would have to pay in Pennsylvania is likely keeping casino operators on the sidelines, according to industry analysts. The tax rate here is about five times what sportsbooks in Nevada pay.

Add in the federal tax and the effective tax rate in Pennsylvania is about 41 percent of gross gaming revenue.

“The framework has rightfully given casino owners pause, as they contemplate if it is even possible to turn a profit under the system,” said Adam Small, president and chief analyst at PennBets.com, a site that tracks and analyzes the gambling and casino industry in Pennsylvania.

Still, he he expects many of the larger casinos will eventually pony up the fees to expand gambling operations in Pennsylvania. 

Indeed, Churchill Downs has already indicated plans to open a sportsbook with a partner as part of its planned purchase of Presque Isle Downs & Casino in Erie. Other casino operators could slowly follow.

Eric Schippers, a spokesman for Penn National Gaming, owner of Hollywood Casino at Penn National Race Course in East Hanover Township, said the company has not yet made any final decisions about pursuing sports betting in Pennsylvania.

For now, casino operators can keep an eye on sports betting trends in other states.

In June, New Jersey bettors wagered $16.4 million in 17 days of legal sports betting. That helped New Jersey’s sportsbooks generate $3.5 million in gross revenue, according to official reporting released Thursday.

During the first month of operations, New Jersey had three legal sportsbooks. Two opened in mid-June and a third opened at the end of the month.

“It’s exciting to see the first sports betting numbers out of New Jersey, but we have to remember it’s still limited in where and how it is offered,” said Dustin Gouker, lead sports betting analyst for PlayNJ.com. “Total amount wagered and revenue will increase exponentially as more casinos and racetracks begin to offer wagering, and as online betting kicks off later this summer and into the fall.”

New operators, including the FanDuel Sportsbook at the Meadowlands Racetrack, are expected to open this month.

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