New Governor of Pennsylvania Could Slow Online Gambling Expansion

PA seal

State Seal of Pennsylvania

Pennsylvania is widely regarded as one of the frontrunners for online gambling expansion in 2015, but as they say, “Elections matter,” and the results of last Tuesday’s midterm elections may have serious implications for online gambling in the Keystone State.

Pennsylvania bucked the national trend (which saw Republicans pick up a majority in the US Senate as well as several governorships) when Democrat Tom Wolf ousted the incumbent Republican Governor Tom Corbett.

Unfortunately, when it comes to online gambling Democrats are no more likely than Republicans to be for legalization, and so I the case in Pennsylvania, where the change in the Governor’s office is seen as a setback for iGaming efforts, but not an insurmountable one.

Corbett’s stance was slightly better

Pennsylvania’s outgoing Governor had a very blasé opinion of online gambling expansion, as Governor Corbett was seen as being not particularly for or against online gambling.

On the other hand, incoming Governor Tom Wolf has gone on the record as being against online gambling expansion and/or casino expansion.

However, it should be noted that Wolf’s response was to a straightforward yes or no question, with an option to expand on their answer. Prior to the election the candidates were asked if they were for legalizing online gambling by a local newspaper, and while some elaborated, Wolf did not expand on his answer.

Unfortunately, without seeing his full views on the issue it’s hard to consider this a set in stone policy position.

Wolf’s “no” answer could signify nothing more than his hope to solve Pennsylvania’s budgetary issues without expanding gambling in the state.

How he would react to a piece of legislation allowing online gambling in Pennsylvania is unclear – Requests to the Wolf campaign for a more detailed response have not been answered.

Still, Wolf’s answer does indicate that he will not be a cheerleader for iGaming expansion, and could possibly be diametrically opposed to it. We simply don’t know yet.

Property taxes, gaming and education all tied together

One of the key issues that caused the gubernatorial change in Pennsylvania has a clear connection to the state’s thriving casino industry.

When former Governor Ed Rendell and the PA legislature approved casinos back in 2004 one of the selling points was to slow Pennsylvania’s rising property taxes and increase education funding… which it did, but not to the levels that were initially projected. Rendell also increased income taxes as part of his plan.

Casinos didn’t solve the problem, but they certainly helped.

Unfortunately, under Republican Governor Tom Corbett the state’s non-gaming contribution to education funding was slashed which forced local municipalities to increase property taxes to make up for the loss of funding – essentially undoing what progress had been made under Rendell.

Furthermore, the ability to raise property taxes locally was effectively shut down under Corbett’s regime as well. A 2011 law heavily restricted local school boards from raising property taxes, and pundits have indicated that it was this slashing of education funding that sealed Corbett’s fate as a one-term governor.

So now Wolf comes into office with Pennsylvania facing the same problems it did a decade ago when Rendell took office; ever-increasing property taxes and a lack of education funding. The difference is Pennsylvania already has casinos in 2014. That option is off the table, which is why online gambling has become the soup du jour in the legislature.

Wolf’s plan does not include gaming expansion

Wolf served in the Rendell administration, as the state’s Secretary of Revenue, so he is quite familiar with the budgetary issues facing PA.

Wolf’s plan is to have the state shoulder 50% of the cost of public schools; the state currently accounts for about 1/3 the cost, with property taxes currently accounting for some 40% of education funding. This is essentially Rendell’s plan, which sought to increase state funding for public schools from 34% to 50% back in 2003 – Rendell did manage to increase state funding to 40% before he left office in 2010.

Wolf stated he is against raising the sales tax in the state, instead looking to accomplish his aims by overhauling the income tax code in PA. Wolf also wants to impose new taxes on the natural gas industry that is booming in the state.

But will tax changes be enough?

Eventually Wolf will have to look elsewhere (as Rendell did before him) and it is becoming apparent that the Pennsylvania legislature thinks “elsewhere” should mean gambling expansion, be it land-based or online.

There is currently a study sitting in the PA legislature by Econsult Solutions which shows online gambling expansion could add up to $110 million per annum to Pennsylvania’s coffers, an amount that could help Wolf get state funding of education past the desired 50% mark.

 

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