Commonwealth Court Judge Renee Cohn Jubelirer dismissed the Pennsylvania Casino Gaming Coalition's case on May 25.

Pennsylvania Casinos’ Long-Running Lawsuit Against State Lottery Dismissed By Commonwealth Court Judge

The Pennsylvania Lottery will be allowed to continue offering the full range of online games it has since 2018. Its instant games have been under legal attack from several of the state’s racetracks and casinos.

However, a Commonwealth Court judge dismissed the case last Tuesday, May 25, as reported by the Associated Press.

The state granted its lottery the right to conduct online ticket sales through a bill lawmakers passed in 2017. One of the stipulations of that law was that the new products could not “simulate casino games.”

Shortly after the new games launched in May 2018, seven casinos banded together to form the Pennsylvania Casino Gaming Coalition (PCGC). Their contention was that the PA online lottery was violating this rule and initiated the lawsuit just a few months later, in August.

Slots and iLottery titles come from the same supplier

PCGC contended that many of the lottery’s titles were intentionally similar in name, theme and visual presentation to slot machines in use at the casinos.

This is presumably in large part because Scientific Games, which supplies the games for the Pennsylvania iLottery, is also a manufacturer of video slots. In many cases, it reuses themes and graphic assets to produce slots and “e-instant” versions of the same title.

The latter are distinguished by the addition of the word “Reveal” to the title. Their virtual scratch cards use some of the same symbols that appear on the reels of the corresponding slot. The mechanics are simpler, however.

Aside from those similarities, PCGC objected to the use of the word “bet,” game elements offering players the illusion of choice, and adjustable stakes. It claims that all of these features are hallmarks of casino gaming, not lottery products. It also objected to these games being available to 18 year olds, when casino gaming is 21+.

SG's Robin Hood products, compared

“Robin Hood: Prince of Tweets” by Scientific Games. The “REVEAL” iLottery game (left) compared to the slots title (right).

Judge declines to split hairs left unsplit by lawmakers

Presiding over the case was Commonwealth Court Judge Renee Cohn Jubelirer. From the start, she showed a disinclination to take the casinos’ side of things.

The case began with the casinos requesting an injunction against the Lottery. They to force it to stop offering the games while the court heard their arguments. Judge Jubelirer denied the injunction in July 2019, just after the state’s first online casinos launched.

At the time, she felt that the law itself was too ambiguous to warrant an injunction. Specifically, she pointed to the lack of a clear delineation between gameplay mechanics that would be exclusive to slots versus those permitted in iLottery products.

The same theme arose in her decision to dismiss the case. Judge Jubelirer found that despite the obvious similarities between the slots and iLottery products, none of the specific features challenged by PCGC constituted something particular to casino slots. Rather, she said the features:

“Relate to technological advances in online gaming; are based on online entertainment and gaming, as well as existing entertainment sources like television […]; or existed in the same or similar fashion in traditional lottery products that were translated into a new online medium.”

Any other decision would have been surprising. After all, there are already many products in other states that bear a surface resemblance to slots, but are considered distinct under the law.

Historical horse racing (HHR) machines and class II bingo machines top the list. These allow racetracks and tribal bingo halls, respectively, to offer machine-based gaming. Like the lottery’s online products, however, the mechanism they use to determine outcomes is different from that of actual slots.

All these products have also been the subject of legal disputes. To date, however, no US court has considered the cosmetic similarities to slots to be legally meaningful.

Gambling expansion makes turf wars inevitable

The nature of gambling and “gambling-like products” (for lack of a better term) in the US makes these turf wars unavoidable.

There are relatively few states where gambling is the sole domain of one party or industry. More often, at least two of the three major players are involved: state lotteries, commercial casinos and/or tribal gaming operators. In many cases, there are also racetracks, offtrack betting operations, card rooms, “skill machines,” or other niche businesses.

Add to this the fact that it’s common to see companies riffing on a single idea even within the casino industry itself. Take, for instance, the popular Buffalo series of slots by Aristocrat Gaming. Ever since those became ubiquitous on casino floors around the world, other companies have launched their own not-dissimilar titles with names like Raging Rhino, American Bison and Thunderhorn.

It would be unreasonable to expect all these alternative, slot-adjacent products not to engage in the same thematic imitation. At the same time, every stakeholder currently enjoying some sort of exclusivity will predictably be aggressive in defending it. That means more cases like these are likely to come up as new states expand their gambling options.

Similar battles in other states could be more complex

Pennsylvania is actually quite a simple state in this regard, with its racetracks on similar footing to its casinos, and the lottery as the only official alternative. The state does have a gray market for skill games, which is experiencing its own legal battles and turf war.

Elsewhere, the problem is likely to be even more complicated. Michigan, for instance, has both commercial and tribal casinos, a long-running iLottery, and a horse racing industry that has pushed for the right to offer HHR machines. So far, everyone has played nicely together. Nonetheless, historical precedent suggests that it’s only a matter of time before someone objects to another party drinking from their well.

In other states, like California, the battles have prevented such a market appearing in the first place. There, the territoriality of the tribal casinos, card rooms and Horsemen’s Association has created impenetrable legislative gridlock. Odds are against a bill passing any time soon there, but if one does, the situation will likely escalate into a major legal battle.

Even in Pennsylvania, the story isn’t quite over yet. PCGC still has the option to appeal to a higher court, and is contemplating its options. In the meantime, Pennsylvanians have roughly 100 instant online lottery games to choose from on the lottery’s website, in addition to all the actual slots offered by Pennsylvania online casinos.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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