Copyright Mechanicsburg Patriot News
The online sports betting industry has rapidly mobilized to quash any possibility of tax increases for internet wagering, as Pennsylvania’s 19-week-long budget ordeal appears to be approaching its end-game. The House is set to return for a voting session on Wednesday — several days earlier than otherwise scheduled — which means a budget could be in place by the end of the week, assuming a deal holds with the Senate and Gov. Josh Shapiro. An avalanche of opposition: Late last week, sports betting trade publications began posting articles warning of impending tax hikes in Pennsylvania. Major sportsbook sites began running ads against a still-nebulous sounding tax increase, and conservative tax policy groups began writing op-eds in opposition. The abrupt outpouring of concern came after the industry caught wind that a tax increase on online gaming and wagering had been brought up in recent budget discussions. How serious the idea was – or is – remains unclear. But the industry’s response accelerated rapidly, with one group of sportsbook operators claiming they would put at least $10 million into a political action committee to oppose any lawmaker who might support the idea. In Pennsylvania, online casino gaming and sports-betting sites have to operate through the license of a physical establishment, with the commonwealth’s largest casinos having already partnered with FanDuel, BetMGM, DraftKings, and other similar online platforms. The tax rates charged are variable. Online slot machines are subject to a 54% total rate, while online table games are charged 14%, and sports wagering 36%. Industry groups said they feared the state would crank up the latter two. Online table games generated $597 million of revenue last fiscal year, and online sports wagering $459 million, according to the Pennsylvania Gaming Control Board’s annual numbers. Why it matters: In the nearly nine months since Shapiro first rolled out his 2025-26 budget request, the core problem hasn’t changed much. Republicans – particularly those in the GOP-majority state Senate – are critical of the deficit baked into Shapiro’s framework, which would require spending down the roughly $11 billion the state has in surplus and reserves. Republicans fear this would necessitate broad tax hikes in the next two to three years once the cushion is depleted. Democrats, who control the House, say the state shouldn’t be hoarding funds when many state programs need money, and that the deficit could be closed if Republicans agree to any number of revenue-boosting ideas that Shapiro is agreeable to. These include legalizing and taxing recreational marijuana, reforming corporate taxes, and regulating and taxing the “skill games” that fall entirely outside of the state’s casino law (court cases on this status are pending). Those proposals haven’t gone far in the Senate, with Republican leaders pointing to a lack of consensus with House Democrats as well as disagreements within the GOP. The biggest push was for a skill games deal, but even that item still remains in doubt. As lawmakers reach for new ideas to boost revenues and close the deficit, the backlash to each possibility grows stronger, as seen by the vicious reaction to the suggestion of a higher sports wagering tax. With the 2026 election cycle getting into swing, legislators may also become increasingly reluctant to take votes that would alienate key constituents and campaign donors. If no new revenue sources make it into the final budget deal, lawmakers will likely be left with a fiscal plan featuring more of a deficit than the GOP would like and less social spending than Democrats would prefer. How far either end of the political spectrum is willing to bend remains to be seen.
