Pennsylvania Casinos Near Starting Line For Benefits Of Online Gambling

Pennsylvania is on deck for legal online gambling, and the state is certainly hoping it can follow New Jersey’s lead in at least one respect.

The state’s gaming expansion enacted in the fall of 2017 is about to kick into high gear, with online casinos promising to riase the floor for gaming revenue in the state. That will mean more money for both gaming interests in the form of additional revenue, and the state in the form of tax receipts.

Casino revenue in Pennsylvania

March was a particularly good month for casinos in Pennsylvania, as gaming revenue eclipsed $300 million for the first time in the history of the state.

But still, the days of revenue growing in a meaningful way on a regular basis — without the introduction of the changes from 2017 — ended quite a while ago. As you can see below, gaming revenue has been pretty much flat since 2011:

March was a welcome upward blip, especially after slot revenue has been mostly stagnant in the preceding year. But the blips may evolve into an upward trend soon.

Things are about to change in PA…

The bottom line for PA casinos likely to change in the near future, as the equation is being changed in many ways:

• Mini casinos are on the way.
• A 13th casino will be built in the stadium district in Philadelphia.
• Sports betting could be on the way in the future.

But the most proximate way for revenue to increase in the short term will be the introduction of online casino and poker to the state. The PA Gaming Control Board had previously intimated that existing casino licensees could start applying for the ability to conduct online gambling last week. Platform providers can start turning in applications starting in June.

All of that means we’re still on a timeline of an online gambling launch sometime later this year, or perhaps early 2019 in a worst-case scenario.

But when it does, PA will hope to get the NJ effect.

Lessons from NJ online casinos

There are two key ways PA casinos should benefit once online casinos arrive:

• Direct revenue: New Jersey’s online casino industry has continued to mature over its five years of existence, to the point it shattered its revenue record last month. The land-based casino industry struggled at times in recent months because of winter storms keeping visitors away, but the presence of online casino revenue has mitigated the impact.
• A new marketing tool: NJ online casino operators all agree that their online offerings help attract new or lapsed customers. PA casinos should find this to be an effective way to market to people they might not reach otherwise.

There will be growing pains

Pennsylvania is a different market than NJ for online gambling, and there are lots of differences.

• No. 1 is a really high tax rate for slot machine revenue in excess of 50 percent that will make it more challenging to do business.
• The NJ model also doesn’t port to PA in an exact fashion.
• There will also be a lot of competition among 12 different potential casinos licensees, even more than exist in NJ.
• There are a handful of new companies in charge of PA’s casinos, as several have changed hands in recent months.

How it will all shake out in PA is still to be determined. But the bottom line should be a positive one for PA gaming interests, and the state.

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