The issue of the number of brands or “skins” in the pending Pennsylvania online gambling industry remains a key sticking point before a likely launch later this year.
According to reporting from GamblingCompliance (paywall), some operators are calling for a limit on the number of skins that licensed iGaming operators can deploy. It’s an issue that the PA Gaming Control Board (PGCB) must figure out before it can issue final regulations overseeing the online casino and poker industry in the state.
What we learned on skins in PA
GamblingCompliance unearthed a letter from Parx Casino to the PGCB. In it, it detailed its preferences on how online gambling regulations should be written, including its stance on skins.
Parx’s stance means at least two of the 12 current operational casinos in the state support limiting the number of skins that licensees can have. Penn National has previously made clear that also favors the limiting of skins.
In its letter regarding its desires for temporary online gambling regulations, Parx includes two points on skins. The first is to limit the number of skins to one for each licensee:
The Board should establish a limitation on the number of interactive gaming skins an Interactive Gaming Certificate Holder (“Certificate Holder”) may operate, and that limitation should be one skin per Certificate Holder, 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).
The second has to do with the nature of that one skin.
The Board should require that any branding associated with a skin match, or be predominantly the same, as the brand of the Certificate Holder as noted on the Interactive Gaming Certificate.
Basically, Parx is saying its online casino and/or poker site should should have Parx in the name. The same would apply to other casinos in the state.
Online gambling regulations had been on the PGCB agenda for a public meeting on Thursday morning, but the issue did not come up. The board released applications for providers on the technical end this week, with the PGCB accepting them starting April 2.
Why does Parx want this?
Parx was an opponent of online gambling legalization to start with, testifying against it last year when PA was working on its gaming expansion package. It’s also tried to get other rules put in place that would hamper the industry, like requiring in-person registration for an online casino account.
And while Parx may have been an unwilling participant in online gambling, rest assured it will be involved.
Parx is currently the top brick-and-mortar casino operator in the state, alongside Sands Bethlehem. It likely believes the limitation of skins will help it keep its stranglehold atop the market once online gambling goes live.
Bad idea for PA?
The request from Parx is of course very different from the market for NJ online casinos, where most of the licensees can and do deploy multiple skins, often with many different names unrelated to the licensee.
It’s doubtful that the NJ online casino industry would have grown to the heights it has since launch five years ago without skins. It now generates nearly $250 million in revenue annually.
A trade group representing sectors of the online gambling industry — the iDevelopment and Economic Association (iDEA) — penned its own letter in support of no limitation on the number of skins, or adopting the NJ model of five skins per licensee.
Why? More from iDEA:
Experience has shown that online gaming operators will self-regulate to an efficient market size that maximizes operator and state revenue. To do so, however, requires licensees to have the flexibility to partner with other game providers and to operate under multiple skins. …
Limiting skins would effectively pick winners and losers in the Pennsylvania market and hand the market to the state’s largest land-based casino operators (that are willing to enter the market).
You can read the full letter here.
Revenue vs. lobbying on skins
The last point should be of particular interest to Pennsylvania, as it wants to maximize revenue from both the purchase of licenses and from future tax revenue. If the state limits number of skins, there’s a bigger chance that some of the 13 available online casino licenses and 13 available online poker licenses go unclaimed. (The planned casino in Philadelphia means more iGaming licenses will be in play.) And that’s from the starting point that the latter is almost certainly not going to max out in the state, no matter what regulators do on skins.
Full licenses to offer casinos, table games and poker run at $10 million each. Casinos can also go “a la carte” and buy a casino or a poker license for $4 million. If PA wants to maximize its revenue from that, limiting skins won’t be the way to do it.