Pennsylvania is set to become the sixth US state to roll out legal sports betting after its gaming regulators hold their monthly meeting next week. State law permits sports wagering, but operators have been reluctant to apply for licences due to the eye-watering $10 million upfront fee and 36% revenue tax that Pennsylvania is demanding. Yet Penn National Gaming and Greenwood Gaming have decided to take the plunge and request approval for sports wagering, and that could spark a domino effect. It has clearly jolted Harrah’s Philadelphia into action, as it became the third operator to apply for a licence this week.
There are 13 licences up for grabs in Pennsylvania – one for each of the state’s 12 casinos and another that can be built in Philadelphia’s stadium district. That would earn the state $130 million in upfront licensing fees and a steady stream of income from the 36% tax on revenues. Pennsylvania is the fifth largest US state in terms of population, and it could go on to eclipse the five existing states already offering regulated sports wagering – Nevada, Delaware, New Jersey, Mississippi and West Virginia – in terms of handle. If three licences are granted next week, the remaining operators in the state are likely to be compelled to apply too.
Only California, Texas, Florida and New York have more residents than Pennsylvania, so a regulated sports betting industry in the Keystone State could be huge. The Philadelphia Eagles, the most popular team in the state, won the Super Bowl last season and they are among the favourites to defend their crown this year, so NFL betting would be huge. The operators have missed the start of the football season, but there is still plenty of action left. Residents have been heading over to New Jersey to place their wagers, and the likes of Penn National and Greenwood are keen to put an end to that trend.
Greenwood Gaming
Greenwood Gaming, which owns Parx Casino in Bensalem, has already obtained an online gaming licence, and a sports betting permit would be the next step to rounding its offering. It is hoping offer sports betting at the casino and in its South Philadelphia Turf Club, located slap bang in the middle of the city’s four stadiums.
Greenwood, run by former William Hill executives Bob Green and Bill Hogwood, bought Philadelphia Park Racetrack in Bensalem in the 1990s. It then opened up Turf Clubs across the city in order to allow on-site wagering on horse races from across the US. They featured bars, restaurants and multiple cashiers taking bets, and they were designated off-track betting facilities under state law. Those Turf Clubs dwindled in importance once Greenwood was successful in applying to run slot machines and table games on the site of Philadelphia Park. Casinos had previously been outlawed in the state, but it helped convince Harrisburg to change the law, built Parx Casino on the site of Philadelphia Park Racetrack and channelled most of its energies into turning it into Pennsylvania’s best performing casino, ahead of Sands and Rivers. Most of the Turf Clubs have since been closed down, but Greenwood still holds onto some prime real estate.
When it obtains a sports wagering licence, it should be able to offer sports betting at its off-track betting facilities too. The Turf Club in South Philadelphia could well be turned into the best performing sportsbook in Pennsylvania. Early data shows that the FanDuel Sportsbook at Meadowlands, next door to the home of the New York Giants and Jets, is the clear market leader in New Jersey’s sports betting market. Greenwood could enjoy a similar status in Pennsylvania as its Turf Club is in the middle of the stadiums where the Eagles, 76ers, Phillies and Flyers play.
It has partnered with UK-based gaming firm GAN to run both online and brick-and-mortar sportsbooks in Pennsylvania. It may well take a market-leading position in the land-based industry, but it will face stiff competition in the digital sphere. Online sports wagering is well underway in New Jersey, and all the biggest betting operators in the world have piled in, from MGM and Caesars to William Hill and 888, with DraftKings and FanDuel also in the mix. A similar picture would surely develop in Pennsylvania, as the market there could be extremely lucrative.
FanDuel Leading the Way for US Sportsbooks
FanDuel is now owned by gaming giant Paddy Power Betfair and it is expected to be one of the leading lights in the US sports betting industry. It is a brand that millions of Americans already know and trust, as daily fantasy sports grew extremely popular before sports betting began to be rolled out, and it has the backing of the world’s largest online sports betting group. Yet FanDuel, like all regulated operators, has a tough job as it bids to essentially steal market share from the unregulated, offshore sportsbooks that thrived for years before the US Supreme Court struck down a federal ban on sports wagering in May.
These operators do not pay state taxes, they offer competitive odds and they have built up years of goodwill with their customers. The likes of Heritage, 5Dimes, Intertops, Pinnacle, Bookmaker and BetDSI are titans of the industry, and they will pull out all the stops to retain their customers. But FanDuel has gone on the offensive, warning affiliate sites not to promote offshore or unlicensed sportsbooks.
“FanDuel considers the promotion of offshore gambling websites as promotion of illegal activities,” it said in an email this week. “As such, FanDuel will take steps to monitor your site to ensure it complies with FanDuel’s terms and conditions, and will take appropriate actions including, but not limited to, terminating your participation in the FanDuel Affiliate Program if you fail to comply with the terms and conditions.” FanDuel, now backed by the marketing might of Paddy Power Betfair, has pledged to invest heavily in content, and affiliates may not want to risk its wrath by promoting offshore rivals.
There are several kinks to be worked out in the regulated industry and for now the offshore firms look set to continue flourishing. But legal sports wagering is becoming much more widespread across the US, and increasing numbers of sports fans will be converted to the regulated operators. Mississippi has just reported soaring gaming revenues after introducing sports wagering, and New Jersey is flying. Rhode Island is also poised to introduce regulated sportsbooks before the end of 2018, while a shake up in Illinois politics could soon pave the way for it to join the party. There is never a dull moment in this rapidly growing industry and it will be intriguing to see who the biggest winners are in the weeks, months and years ahead.
Author: Kristian
Kristian heads up the content and SEO team at Digital Fuel having worked in digital marketing for ten years. He's as passionate about creative content as he is about Brighton & Hove Albion FC and when he's not following football he's writing about Brighton's bustling pub scene