April 22, 2015

Op-Ed: Protect PA Consumers By Regulating Online Gaming

By Rep. John Payne, Majority Chair
House Gaming Oversight Committee

Internet gaming is a growing business – right now millions of Americans, including many Pennsylvanians, are playing games of chance online.
But unlike visitors to Pennsylvania’s brick-and-mortar casinos, these players are at risk for fraud and abuse by unlicensed and unregulated offshore gambling sites operating outside the law.
That’s why I’ve introduced legislation to regulate the Internet gaming industry. If enacted, House Bill 649 will provide needed safeguards for consumers and generate new, much-needed revenue for the state at the same time.
Specifically, the measure would allow the state’s 12 existing casinos to expand their operations into online gaming with the purchase of a $5 million license. Operators would also pay a 14 percent tax to the state on proceeds, the same as for casinos.
A recent study released by a Philadelphia-based economic consulting firm estimates the newly expanded industry would generate approximately $120 million for Pennsylvania in the first year. These funds would help offset the state’s projected $2 billion budget deficit without levying new taxes on working Pennsylvanians.
This is a move that has proven successful in other states. Currently Internet gaming is legal in Nevada, New Jersey and Delaware. These states have shown that the technology exists to regulate online games safely and effectively, while generating new tax revenue.
Regulating online gaming in Pennsylvania would require operators to incorporate responsible guidelines for Internet gambling into their overall compulsive and problem gambling plans, enable the Pennsylvania Gaming Control Board to establish consumer protections, such as limits on time played, deposits and losses and prominent links to help lines and other gambling resources on online gaming websites.
It would require state-of-the-art technologies and “Know Your Customer” practices to ensure minors can’t gamble.
If enacted, my proposal would also ban unlicensed operators in the state, and impose hefty fines on illegal sites. In addition to creating a legal, safe Internet gambling alternative, these measures will help drive illegal operators out of the Pennsylvania market.
Enacting my legislation would also help make Pennsylvania casinos more competitive, and prevent the loss of customers over state lines. When Pennsylvania licensed its first casinos in 2004, the only local competition came from Atlantic City. Now there are casinos in most of our neighboring states, including Delaware, Maryland, Ohio, New York and West Virginia.
Expanding the business to the Internet would help to grow Pennsylvania’s gaming industry for the future, as research shows online gaming patrons become new visitors to casinos.
This move would strengthen an industry that’s proven to reap economic benefits for the state.
To date, legalized gambling has created 15,000 new jobs in Pennsylvania, generated significant property tax relief and spurred economic development. This legislation will help ensure the future growth of the industry and cement Pennsylvania’s place as a top competitor in the field.
One of the main reasons I am authoring this legislation is if Internet gaming is legalized, the new law would implement cutting-edge safeguards to bar minors from those sites.
Recent advances in player verification and geolocation technology have enabled states like Nevada, New Jersey and Delaware to successfully exclude underage players online. Under my proposal, only Pennsylvania adults over the age of 21 would be able to access online games offered by the state’s casinos.
Nearly 2,000 years ago, the Roman philosopher Seneca said that luck is what happens when preparation meets opportunity. By enacting effective state policy today, we can help prepare Pennsylvania’s gaming industry for the future, protect consumers and seize the opportunity to safely meet consumer demand and generate new revenue for the Commonwealth.