Pennsylvania is drawing ever closer to becoming the fourth state to offer legal online gambling, with a launch expected towards the tail-end of 2018. Along the way, the state has made a number inexplicable decisions that will handicap operators and tamp down revenues.
Bad decisions have been made early and often in Pennsylvania, under the guise of protecting land-based casino revenue.
Legislators were cajoled into crafting a less than perfect law that included:
But the bad news for operators didn’t end there.
Like the legislators, regulators have been coaxed into handicapping the industry through inefficacious regulations on skins. Skins are online gambling websites that run on the same software but have a different branding.
At the urging of a minority of the state’s casino operators, the Pennsylvania Gaming Control Board issued two temporary regulations governing skins that will cause significant harm to the Pennsylvania online gambling market.
The first proposed regulation is a requirement that would tie skins to the land-based license holder in a way not seen before in online gambling.
Based on the current interpretation of the regulation, a skin has to visibly identify the land-based casino (or interactive gaming certificate holder) they are affiliated with. Their websites must also be accessed via the main license holder’s website through a sub-domain or sub-folder.
“All interactive gaming skins must, at all times, clearly identify the interactive gaming certificate holder or an entity within the interactive gaming certificate holder’s organizational structure, on the display screen visible to players.
“Interactive gaming operator licensees are not permitted to offer interactive games in this Commonwealth independent from an interactive gaming certificate holder and the interactive gaming certificate holder’s webpage or the webpage of an entity within the interactive gaming certificate holder’s organizational structure.”
The second regulation limits players to a single account per operating platform, even if multiple skins operate on that platform.
Again, precisely how this regulation will be implemented is still being discussed. But from the sound of it, players will create a master account with the main license holder. That can then be used to access skins on that platform.
“A player shall have only one interactive gaming account for each interactive gaming certificate holder or interactive gaming operator licensee. Each interactive gaming account shall be non-transferable; unique to the player who establishes the account; and distinct from any other account number that the player may have established with the interactive gaming certificate holder or interactive gaming operator licensee for non-interactive gaming activity.”
Parx Casino and Penn National (now the owner of two casinos in the state) may think they’re protecting their land-based casino revenue and stifling competition. But if New Jersey is any indication, they’re only hurting themselves.
“The New Jersey market has proved that multiple skins are necessary to create a vibrant and competitive marketplace and to provide an incentive for operators to market their services,” said Ed Andrewes, who heads up Resorts Casino’s online operation in New Jersey.
“The current incumbents may feel that by limiting the skins it saves on marketing expense, but experience from other jurisdictions shows that a lack of marketing initiative and effort does not grow the market at all.”
None of the proposed regulations protect land-based casino revenue, all they serve to do is:
Fewer skins will lead to:
Getting an online gambling bill passed was no small feat. Pennsylvania should be applauded for doing something only three other states have accomplished. However, the state needs to wake up and realize the importance of its current decisions.
Like the onerous tax rate and prohibition of online gambling at land-based casinos, the handling of skins is turning into a form of self-sabotage.