One Small Step for US Online Gambling Legalization?

The Republican-led Pennsylvania House may have shone a glimmer of light in the direction of the legalization of online gambling for US players. Although it's far too early to drum up too much enthusiasm, the gambling expansion attached to the House's budget plan gives some insight into the possible directions that legislators are exploring to balance the books.

Desperation meets a new revenue stream

A long-held trope is that online gambling legislation is inevitable, given the tax revenues this would provide. However, the gambling world long since stopped holding its breath over when the US government would reach for this solution. By adding a gambling extension to its budget draft, the Pennsylvania House is giving itself the option to derive revenue from unspecified forms of gambling.

It's the "unspecified" part that leaves such room for speculation, of course, and some commentators have suggested that, should the budget be passed, Pennsylvania might look to online gambling legalization to solve its desperate financial problems. At the time of presenting its draft, Pennsylvania state coffers were virtually empty, with over $850-million in bills coming due that very week. Should funds run try, it will be the first time this has happened in the history of the state. To add further pressure, a comprehensive, approved revenue package is urgently required to prevent the state's credit rating, which is already shaky, from being further deleteriously affected.

Of course, the gambling expansion is also seen as a way for the state to generate more revenue without raising any current taxes, with one eye on the next state elections.

Hope for online gambling?

Several correspondents have noted that the only type of gambling that is being mentioned as part of the deal is online gambling, even though there is strong advocacy for video gaming terminals, themselves a bone of contention. The Pennsylvania House estimates that online gambling can generate around $200-million annually for the state coffers, although no one is coming out and saying anything outright about the type of gambling that they are aiming to legalize, should the budget plan, and thus the gambling expansion be passed by the House. Getting it passed, however, is still seen as a bit of a long shot.

A second bite at the cherry

This is the second time that the Republican Pennsylvania House has attempted to include a gambling extension in its budget plan. In 2016 it passed a gambling extension package to allow video gaming terminals in a wide variety of places, including restaurants and airport terminals. The package also legalized online gambling, online fantasy game betting and online lotteries.

The reason why this isn't currently all legal in Pennsylvania, in case you're wondering, is that the Senate squashed the extension.

Strong opposition

Getting the budget plan passed, however, is going to be far from smooth sailing, and it's not just over the gambling expansion. Pennsylvania's Democrat Governor, Tom Wolf, has joined House Democrats in roundly criticizing the draft budget plan. The main criticism, as Wolf pithily put it, is that more than a little of the money budgeted for in the plan simply doesn't exist.

The Senate, on the other hand, passed a very similar budget plan a few months back, which included a gambling expansion to the value of $200-million. If the budget plan passes the house, this will mean unilateral support for a gambling extension across the state legislature, which many believe can only go in the direction of some sort of legalization of online gambling.

This is perhaps simply because the only other taxable gambling alternative being suggested in the halls of state government is video gaming terminals in places of entertainment, like bars and restaurants, which are not a very popular option among lawmakers. This puts online gambling in the position of favorite, as things stand.

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A separate vote likely

What's most likely to happen is that, given the urgency of getting a budget plan in place, the House will attempt to reach general agreement on it, with the gambling expansion subject to a separate House vote.

In this scenario, the video gaming terminals will be the biggest point of contention, as so many legislators do not support legislation that will encourage their spread. One option is for the expansion to be made more specific than simply covering general gambling, so as to exclude video gaming terminals.

The implications are very interesting. What we might effectively see in the Pennsylvania House is a showdown over the legalization of online gambling, which could be a ray of hope for the industry in the USA – and of course the millions of Americans who want to gamble online. Placing the issue firmly on yet another agenda can only be a positive development making progress towards untying the Gordian knot that is online gambling legalization in the country.