As Pennsylvania braces for a flood of online gambling license applications, one local casino operator wants licensees to be limited to a single online gambling ‘skin.’
This week, the Pennsylvania Gaming Control Board (PGCB) posted the application forms for would-be Interactive Gaming Manufacturers, Suppliers and Interactive Gaming Service providers. Applications will be accepted as of April 2, while a date for accepting applications for Interactive Gaming Platform Providers will be posted at “a future time.”
Pennsylvania became only the fourth US state to approve intrastate online gambling last fall, and hopes are that the lessons learned from online-friendly states like New Jersey will allow Pennsylvania to accelerate its online market launch timeline.
However, as the crafting of online regulations continues, gaming stakeholders continue to lobby hard for certain rules to be adopted. In the case of the state’s market-leading land-based Parx Casino, the issue of how many branded ‘skins’ each online licensee will be permitted to offer is front and center.
Pennsylvania’s legislation allows for 12 licenses for each online category – slots, casino table games and poker – one for each of the state’s land-based casino licensees (although this number has since grown to 13).
On January 30, attorneys from Parx owner Greenwood Gaming & Entertainment wrote a letter to the PGCB, urging it to limit online gambling licensees to a single branded ‘skin.’ The state’s online legislation puts no explicit limitation on the number of skins but the attorneys argue that this poses regulatory challenges that the PGCB may not have envisioned.
Specifically, the attorneys want the PGCB to limit Interactive Gaming Certificate Holders to one skin each, “with the different categories of interactive games the Certificate Holder is authorized to offer on that single skin limited to the different categories of interactive games approved in its Interactive Gaming Certificate(s).”
Allowing a licensee to partner with any number of third-party providers and permitting skins to operate under these third-parties’ brands “creates a sublicensing regime that essentially transfers licensing authority from the PGCB to the Certificate Holder.”
The attorneys argue that the legislation stipulates that Internet Gaming Operators – which pay $1m license fees rather than the $3m-4m per license paid by Certificate Holders – can only operate interactive games or systems “on behalf of” Certificate Holders.
Allowing IGOs to launch their own branded operations “would improperly evade the statutory maximum of certificates” and allow these third-parties “to participate fully in the market for a fraction of the certificate licensing fee.”
The Parx attorneys also want the PGCB to force a skin’s branding to “match, or be predominantly the same, as the brand of the Certificate Holder.”
The attorneys note that New Jersey’s online legislation allowed each licensee to have up to five branded skins. However, New Jersey limited its licensees to Atlantic City casinos, whereas Pennsylvania’s legislation allows for IGOs and “qualified gaming entities” to apply for Internet Gaming Certificates – assuming they’re not all snatched up by the state’s casinos in the initial round of applications – and therefore “replicating New Jersey’s multi-skin regime is unnecessary.”
To soften the blow, Parx’s attorneys suggest allowing certificate holders to enter into revenue-sharing arrangements with third-party suppliers, provided this doesn’t allow suppliers to slip through the back door into becoming fully-fledged certificate holders.
Not yet finished, the attorneys also seek to require key interactive gaming employees and their associated equipment to be “located within Pennsylvania.”
Parx’s view on limiting the number of iGaming skins is shared by another of the state’s land-based operators, Penn National Gaming. Nonetheless, both operators appear eager to participate in the state’s online market, as Parx has a prospective real-money technology deal with suppliers GAN, while Penn has its own in-house Penn Interactive Ventures subsidiary.