Worth Another Look – Gaming Expansion

The legislature recently passed H.B. 271 (Ortitay, R-Allegheny), one of, if not the largest, gaming expansion bills seen across the country. It’s estimated that nearly $238 million in application and license fees will be deposited into the General Fund and $10 million will be generated for the Lottery Fund through iLottery in 2017-2018.

Although “satellite casinos” and video gaming terminals (VGTs) received most of the headlines, there are numerous other provisions in the bill that will have an effect on the gambling industry throughout the state for years to come. Here are some of the highlights:

Pennsylvania Race Horse Development Fund

  • Converts the Race Horse Development Fund into a trust fund.
  • Specifies that assessments received are not Commonwealth funds.
  • Does not apply to certain statutory deductions.
  • Clawback provision requiring repayment of diverted funds since 2009.


  • Allows licensed racing entities and secondary pari-mutuel organizations to accept wagers from persons located within a licensed racing entity’s primary market area (35 miles).
  • Eliminates the requirement that an electronic wagering licensee enter into an agreement with each licensed racing facility regarding payment of host fees and other fees.
  • Reduces the fee for an electronic wagering license from $500,000 to $50,000 and the renewal fee from $100,000 to $10,000.

Casino Simulcasting

  • Authorizes Category 2, 3 and 4 casinos to contract with Category 1 casinos to simulcast horseracing.
  • No authorization fee is required.
  • The tax rate applies to amounts wagered via simulcasting. (1.5% of amount wagered on win/place/show, and 2.5% on exotic wagers)

Category 4 Casinos

  • Up to 10 locations authorized; licenses awarded via bid auction open to Category 1 and 2 licensees.
  • A Category 4 facility may not be located within 25 miles of another casino, but may be within 25 miles of the winning bidder’s licensed facility.
  • A Category 4 license will not be issued for a location in a county which hosts a Category 3 facility (Fayette and Montgomery counties), or in a sixth class county next to a county which hosts a Category 2 facility (Carbon, Pike, and Wayne counties).
  • Municipalities have until December 31, 2017 to exercise option to prohibit location of a Category 4 facility in the municipality.
  • Each location may operate between 300 and 750 slot machines (from their existing complement), and 30 table games, with the ability after 1 year to petition to add 10 more table games. A Category 3 casino that wishes to operate more slots than their existing complement may petition the board and pay $10,000 per additional machine.

Video Gaming Terminals (VGTs)

  • May be operated only at truck stops.
  • Limit of 5 VGTs per truck stop.
  • Counties hosting a Category 1, 2, or 3 facility have 60 days to opt out and no VGTs may be placed in that county.

Airport Gaming Tablets

  • Authorizes interactive gaming by eligible passengers at publicly owned commercial airports.

Slot Machine License Operation Fee

  • All Category 1 and 2 casinos, including those in Philadelphia, pay an annual slot machine operations fee of $10 million, which is distributed to the host municipality through the municipal LSA formula.
  • The fee is retroactive to January 1, 2017. The board shall determine the schedule of payment.

Fantasy Contests

  • Requires a license to be obtained before offering fantasy contests.
  • Provides that casinos may operate fantasy contest terminals.


  • Authorizes casinos to offer interactive gaming, and games are broken into three categories:
    • Peer-to-peer interactive games (poker).
    • Nonpeer-to-peer interactive games which simulate table games.
    • Nonpeer-to-peer interactive games which simulate slots.


  • Authorizes online sales of existing products as well as Internet instant games.
  • Excludes games resembling casino-style games.
  • Allows sales agents to earn a commission on sale of iLottery game cards.

Category 3 Casinos

  • Authorizes a waiver of the amenities requirement for a $1 million fee.
  • Permits casinos to add 250 additional slot machines for a $2.5 million fee.
  • Permits casinos to add 15 additional nonbanking (poker) tables for a $1 million fee and the ability to hold table game tournaments.
  • Eliminates the remaining Category 3 license.

Sports Wagering

  • Authorizes the board to issue certificates to allow casinos to offer sports betting only after there is a change in federal law or a federal court ruling.
  • Sports wagering may occur within a casino, at a non-primary location or online.

Local Share Assessment (Slot Machines)

  • Every Category 1 and 2 casino, except a casino in Philadelphia, pays 2% to the host county. Slot operation fee goes through municipal LSA.
  • Category 3 casinos stay at 2% to the host county and 2% to the host municipality.

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