The Pennsylvania Gaming Control Board has released an online gambling FAQ document designed to help people better understand the forthcoming online gaming industry.
There’s nothing new or groundbreaking in the two-page document, but one aspect of the law that has been underreported is a prohibition on online casino and online poker at any of the 12 land-based casinos in Pennsylvania.
The reason for this ban is protectionist. A false narrative was pushed during the gaming debate in the state that led to not only this strange prohibition, but also the exorbitant tax rate on online slots.
The fear was that if online gambling has any advantage over land-based gaming, casinos would try to push all of their customers to online games.
Parx Casino CEO Anthony Ricci was one of the people making this claim. During a March 2017 hearing Ricci said:
“I find it impossible to assume that a brick-and-mortar casino paying 59 percent in taxes will not lose significant business to an online operator paying 15 percent in an open, unprotected market.”
Sens. Robert Tomlinson and Lisa Boscola echoed his concerns.
We’ve debunked this myth many times, and if you’re interested here’s why those concerns don’t hold water.
Even though the state acquiesced and matched its online casino tax rates to the land-based rates, the protectionism never went away. That was evidenced by the state imposing an online gambling prohibition at land-based casinos.
Unfortunately, just like the high online slot tax rate, prohibiting online gaming at Pennsylvania’s casinos isn’t protecting them from online cannibalization, it’s an overreaction to a problem that doesn’t exist.
This flawed thinking will almost certainly have a negative real-world impact on the state’s forthcoming online industry, and by extension, its land-based casinos.
First, the premise that a land-based casino would fire most of its workforce and replace its slot machines and table games with tablets and computer screens because the tax rate is lower is absurd. People gamble at casinos and online for entirely different reasons, and you can’t force people to do one or the other. If that were true, then every casino would only offer its most profitable game.
Second, since online gambling is additive to a casino’s bottom line, registering players is imperative. One of the best times to register a player is during an on-property visit, where:
Casinos don’t market online games to land-based customers in the hopes they will forego playing slot machines and table games for online games. They register players so that when they go home, after they’ve gambled and enjoyed the property, they can continue playing.
On-site play, has been an advantage in the current legal markets.
The beauty of online gambling is it people can play in short bursts.
Resorts Casino in Atlantic City has taken on-property online gambling to a new level with its “iGaming Lounge.”
Launched in April 2015, the iGaming Lounge has been an extremely effective tool for Resorts.
In November 2016, Ed Andrewes, who heads Resorts online gambling, explained that in addition to being a meeting and hangout spot, the iGaming Lounge registers dozens of players every day.
“The Resorts iGaming Lounge has acted as an excellent training ground for inexperienced online players and has provided almost 25,000 registrations for the online service,” Andrewes recently told OPR.
The iGaming Lounge isn’t a huge revenue generator. It’s an acquisition and marketing tool that raises online gambling awareness and gives tentative customers their first taste of an online casino.
Even if they play for only 15 minutes, or not at all, every player that registers is another player Resorts can engage with, online and land-based.
Further, that 15-minute introduction to online gambling could be enough to make someone switch from playing Candy Crush to Resorts online casino when they’re waiting at the doctor’s office.
As Andrewes explained, it’s not about getting them to gamble online instead of at the casino. It’s about having them register so they can take the casino with them when they leave.