Skins continue to be a major sticking point in the current creation of regulations governing online gambling in Pennsylvania. Online gambling was approved as a part of a comprehensive gambling expansion package passed by the state in October 2017. Since that time, the Pennsylvania Gaming Control Board (PGCB) has been creating regulations to govern online gambling operations in the state and fine-tuning its licensing process. The first sets of regulations related to online casinos and online poker in PA did not address whether there would be a limit on the number of online gambling websites, otherwise known as skins, licensees can launch under a single license. New Jersey limits the number of skins allowed under a single internet gambling licensee to five. Experts claim this has helped maximize revenue for both operators and the state. However, representatives from PA’s top-grossing Parx Casino, and Hollywood Casino at Penn National Race Course, still asked gaming board officials to limit the number of skins in PA to as little as one. This appeared to be an effort to prevent online gambling from eating away at existing land-based casino revenues. Even though most in the industry believe allowing multiple skins will be good for the casino industry as a whole, helping grow revenues online and off. Addressing the skins issue At the beginning of April, the PGCB’s Executive Director Kevin O’Toole finally updated its temporary regulations to address the skins issue. According to O’Toole, there will be no limitations on the number of skins a licensee may employ. However, branding must make it clear which licensee each skin is operating under. No other state where online gambling has launched has used this stipulation. Plus, even further, never-before-seen limitations are also being placed on PA online gambling licensees when it comes to skins. One of these regulations will limit players to a single account per operating platform. Even if there are multiple skins operating on that platform. It has not been determined how this regulation will be implemented. However, it appears players will only be able to create one account with each license holder in the state, and use it on all skins operating under that licensee. Limitations on skins may equal limitations on revenue This may not be an issue from a player perspective. However, industry analyst Steve Ruddock claims this and other regulations on skins will only hurt the local online gambling business. Ruddock says much like high tax rates and a prohibition of online gambling at land-based casinos, how PA is handling the skins issue seems to be turning into a form of self-sabotage. He claims that limits and limitations on skins only serve to:
Make PA a less desirable market for those interested in launching a skin
Prevent the industry from reaching its revenue potential
Lead to higher operating costs
Present fewer choices for consumers
Lead to less money spent on marketing
Prevent competition and innovation
Cost the state millions in licensing fees On the other side of the coin, Ed Andrewes, head of Resorts Casino’s online operations in New Jersey, says New Jersey proves multiple skins are necessary to create a competitive marketplace. One that also provides an incentive for operators to spend money on marketing. He also says operators who think limiting skins will save them money on marketing costs must understand that a less money spent on marketing only leads to less growth in the market as a whole. PGCB is still in the process of defining online gambling regulations for the state. However, PA casinos started applying for online gambling licenses beginning April 16.

A Pittsburgh-area conservative think-tank is beginning to wonder if Pennsylvania’s gambling expansion will help fill state coffers, or if ongoing trends will ensure just the status quo is maintained. The Allegheny Institute for Public Policy released a new policy briefing last week. It was penned by the institute’s president, Jake Haulk, and Senior Research Associate Frank Gamrat. In the briefing, Haulk and Gamrat outline how 2017 gaming revenues were up only slightly over 2016 numbers. Plus, the increase actually led to a decrease in state tax collected. The increase in overall gaming revenues was led by an increase in table game revenues. This offset a small decline in slot machine revenues. However, it all led to a drop in state tax receipts from casino gaming. Pennsylvania Gaming Control Board figures show table game revenues in the state rose 4.4 percent over 2016, from $853.2 million to $890.6 million. They also show a one percent drop in slot machine revenues, from $2.36 billion in 2016 to $2.33 billion last year, a decrease of almost $24 million. Revenues up, taxes down Table game revenues are taxed at a 16 percent rate in PA Slots at 54 percent. As a result, the increase in overall gaming revenue still meant a decrease for the state’s end. In fact, the $24 million drop in slot machine revenues meant the state collected $13 million less in taxes. Of course, the rise in table game revenues brought the state $6 million more in taxes than it had collected in 2016. However, it still left state tax receipts from casino gaming $7 million short of 2016 figures. Haulk and Gamrat say the numbers can be deceiving: Table games up, slots down Plus, Haulk and Gamrat say the situation is getting worse every year. The pair point out that the number of slot machines operating in PA is down 2.2 percent since 2012. Additionally, gross revenue per machine has fallen from a high of $7,753 in 2012 to $7,497 last year. That’s $256 per machine, representing a 3.3-percent dip. In the meantime, the number of table games available is climbing. In 2013, the average monthly number of table games hit 1,058. Last year it was 1,243. Plus, the revenue per table has stayed relatively flat. It went from $59,610 in 2015 to $59,737 in 2017. In October 2017, the state legislature passed new gaming laws. This included several expansion initiatives, including internet gambling and the authorization of up to 10 satellite casinos. Each can operate from 300 to 750 machines and up to 40 table games. Two licenses have already been won through the bidding process, including one from Hollywood Casino owner and operator Penn National Gaming. Should all 10 satellite casinos open, it could add another 7,500 slots and 400 table games to the state’s total. Will gambling expansion help? However, Haulk and Gamrat wonder if the increased number of games will actually boost tax revenues from gaming, considering recent trends. Haulk and Gamrat conclude saying that economic reliance on gaming can be very risky. Particularly with all the competition surrounding the state. They say the majority of casino gaming revenue is money Pennsylvanians would otherwise be spending on other recreational pursuits, luxuries or even necessities. Plus, while casinos create jobs, they claim they cannot replace manufacturing and gas industry jobs in terms of total boost for the local economy. Finally, Haulk and Gamrat suggest gambling expansion is a poor economic stimulus substitute for creating a friendlier business climate that attracts manufacturing firms or encourages companies already operating in the state to expand.

There’s a war brewing in Philadelphia. Earlier this week, Stadium Casino LLC obtained the permit they need to begin demo on a lot in South Philadelphia’s sports district that is currently home to a Holiday Inn hotel. According to Philly.com, the development will clear the land and build a casino, making it the second casino within the city limits. SugarHouse is and was none too pleased about the plans. The existing Pennsylvania casino even launching an appeal to block the permit from being awarded to their new competitors. “The permit was issued a little more than two months after the operator of a rival venue, SugarHouse Casino, dropped an appeal of the gaming license granted to Cordish and Greenwood’s group following the enactment of a new state law that undercut the challenge,” Philly.com reported. New casino will be name Live! Hotel & Casino Cordish Cos and Greenwood Gaming & Entertainment are the two firms which comprise Stadium Casino LLC. Earlier this week, Cordish released details about the project. The statement revealed both specifics on the property as well as conceptual drawings of the casino. According to the company’s project page for the property, Live! is a $600 million development that will include:
A hotel
Gaming floor
Up to five restaurants and nightclubs. “The project will create the first comprehensive gaming, resort, entertainment and sports destination in the United States, making it a true regional destination,” the site said. The plans for Live! have been listed on the site for several months, but it wasn’t until they obtained the permit that the project went from concept to concrete. Barring any setbacks over funding or permits, the project should be ready to open in 2020. SugarHouse’s reign over Philly coming to an end Philadelphia has been SugarHouse territory since casinos were first allowed in the state in 2006. In 2017, Sugarhouse held a solid third place in Pennsylvania’s table games revenue. It was middle-of-the-pack in slots revenue. In both of those categories together, SugarHouse brought in more than $296 million in gross revenue. All this to say that SugarHouse is one of the state’s major players. It is certainly the reigning king of Philly. Exactly how much of that revenue will walk into the competing casino is yet to be seen. After all, predictions are tenuous, at best, but there’s a good chance their numbers will drop. Hence, the appeal to block the license. As far as revenue predictions go, the state’s 12 casinos will be competing for the biggest portion from the dinner table. While Sands and Parx are the state’s biggest revenue-earners and SugarHouse has formidable numbers, the launch of a new flagship casino as well as the possibility of up to 10 satellite casinos could do some damage to their yearly gross revenue. That possibility became more of a reality when Stadium Gaming was the highest bidder for a satellite casino they’ll build just 40 miles away from Pittsburgh in Westmoreland County. It remains to be seen if and when SugarHouse will make a move for one of the eight remaining satellite licenses.

At long last, the game is afoot for legalized sports betting. But when that game tips off in Pennsylvania is still up in the air. In a landmark decision handed down Monday in Murphy vs. NCAA, the US Supreme Court lifted the Professional and Amateur Sports Protection Act (PASPA) of 1992. The majority of the nine-member court ruled that PASPA, which federally prohibited sports wagering, was unconstitutional. The high court ruled that individual states should be allowed to legalize and regulate sports betting at their own discretion. With legislation already in place, Pennsylvania is on the verge of doing just that. Opinion of SCOTUS The case in question dated back nearly seven years. New Jersey spent more than $8 million in legal fees throughout that time. Additionally, it passed several bills to legalize sports betting. Yet each step of the way professional sports leagues and the NCAA filed legal challenges. That is, until 2016, when New Jersey appealed to SCOTUS. The court heard oral arguments in December 2017. And on Monday, the high court announced its decision. The idea behind PASPA was that a ban on sports betting would alleviate concerns that those involved in sporting events could be bribed to influence single-game results. In his 31-page opinion, however, Justice Samuel Alito, writing for the majority, noted that “Congress lacks the power to order a state legislature not to enact a law authorizing sports gambling, it may not order a state legislature to refrain from enacting a law licensing sports gambling.” The US Constitution, Alito wrote, does not empower Congress to issue orders to state governments. The result was a striking down of PASPA. Now sports betting can be legalized on a state-by-state basis. What it means for Pennsylvania Six states are at the forefront of being the first to legalize sports betting. New Jersey will likely be first. Pennsylvania could be next in line. One research firm estimated that 32 states could be offering sports betting within five years. Pennsylvania got ahead of the game late in 2017 as the state legalized sports betting as part of its comprehensive gaming expansion. Monday’s SCOTUS ruling activates that part of the law. Now Pennsylvanians can wager on professional and collegiate events in person, online, or on a mobile device. But first the state needs to greenlight a regulatory framework. The Pennsylvania Gaming Control Board (PGCB) will oversee sports betting. The group is already reviewing the SCOTUS opinion. According to spokesman Doug Harbach, however “we cannot provide a timetable on the completion and approval of these regulations or the launch of sports wagering in Pennsylvania.” As a reference, though, consider that when table games were approved to be implemented within the state’s slots-only casinos in 2010, it took six months for the games to be rolled out. Many casinos in the state have expressed a desire to get the industry rolling as soon as possible. Impact on Pennsylvania Harbach also said that the state legislature perceived sports betting as a “key element of overall gaming expansion.” Pennsylvania lawmakers leaped at the opportunity to legalize sports betting. And it could certainly boost the state’s economy. “We have been eagerly anticipating and preparing for this decision,” said Greg Carlin, CEO of Rush Street Gaming, which owns the both Rivers Casino and SugarHouse Casino. Previously, Nevada monopolized single-game sports betting. Last year, sports betting revenue in the state was a record $248.8 million out of $4.87 billion wagered. Once regulations are finalized, the PGCB can begin accepting applications for operators. The initial applicants will be the 13 existing Pennsylvania casino licensees. Those who want a license will pay $10 million up front to provide sports betting. Then it will pay a state tax rate of 34 percent of revenue. Additionally, casinos will pay a .25 percent fee on handle and a two percent tax that serves as a local revenue share. So, in the near future, expect to be able to place bets at Rivers Casino near Pittsburgh, or at SugarHouse, Parx, and Harrah’s in Philadelphia. But for now, patience is key for sports bettors as a regulatory framework is developed.

Pennsylvania sports fans, year-round action is on its way. Inspired Entertainment Inc. announced in a press release this past week that the company is partnering with the Pennsylvania Lottery. The company will provide virtual sports games that will launch sometime in the near future. Inspired Entertainment Executive Chairman Lorne Weil expressed enthusiasm in a quote featured in the release. According to the release, Inspired’s various virtual sports contests will be branded as “Xpress Sports“. The offering will operate through the Lottery’s central gaming system. Football, stock car races will be rolled out first The release noted that two games will be available at launch: Rush Stock Car Racing and 1st Down Virtual Football. These virtual competitions will take place at restaurants, bars, and taverns and will be transmitted through a pair of television monitors. The contests are entirely fictional and computer-generated. Bettors can place their money on which team they think will win and who will win or finish first-second-third in the stock car race. The random nature of the contests makes them similar to draw games. You choose a sequence of numbers — or in this case, a driver or team. Then all you can do is hope that your picks match the outcome. A promotional video from Inspired gives bettors a sense of what the Pennsylvania game could look like. In this particular example, there are 12 cars in the race. Each car is designated by a car number and a driver’s last name. Bets are cut off a certain amount of time before the race starts. When the green flag falls, the cars leap off the line and complete two laps around the track. A fictional announcer adds staccato commentary about which cars are in the lead at each turn. While existing videos of Inspired’s virtual football game are limited, what has been revealed shows crisp graphics, stats, and play-by-play action. Keno first to launch in PA Over the past few months, exactly which games would be offered by the PA Lottery was a mystery. That uncertainty cleared up quickly when, on May 1, Keno launched at lottery terminals in restaurants and bars. The terminals provide new games every four minutes. Players can put down $1-$20 per game, choose up to 10 numbers from one to 80 and then sit back as the game selects 20 random numbers. According to the PA Lottery’s website, matching all 10 numbers will earn you a $100,000 prize, but the chances of hitting all 10 numbers are one in 8,911,711.

The Pennsylvania Lottery was just as excited about the recent Pennsylvania gambling expansion bill as any casino. The new legislation pushed the state’s lottery system into another echelon of gambling accessibility when it allowed gamblers to play the lottery online. A lottery spokesperson spoke with TribLive earlier this month, noting that the PA lottery plans on launching at least some of its online games this spring In an interview with TribLive.com, Pennsylvania newsstand owner Al Lydic said he believes his lottery sales will skyrocket. How the new laws will affect the current setup For the past 45 years, Pennsylvania’s lottery has offered, at one time or another a variety of games. The current lineup includes:
Keno
Instant win
Draw games
Virtual sports The thought of these games going live on mobile devices and on monitors is tantalizing but, unfortunately, TribLIve’s source didn’t say which games would be available for purchase when the platform launches. However, there’s a good chance that they’ll offer a full slate of games. The more revenue for the state, the better. And you can certainly bet on the fact they want to boost their revenue last year after seeing a dip in 2017 after seven-straight years of growth. How Pennsylvania online lottery would compare to other states There are currently four states who have functional online lotteries operating in their state:
Michigan
Illinois
Georgia
Kentucky Of those four, Michigan is the most similar to Pennsylvania because they’re running draw, instant win, and keno. In the second quarter of 2017, the state pulled in $20 million from online lottery sales. Michigan is well known for the vigor with which they push their online lottery sales, and there’s nothing that would lead us to believe that Pennsylvania would be any different. The state is trying to overcome a considerable deficit, which is part of the reason the gambling bill went through. Tens of millions of dollars will flow into the state via taxes and licensing fees. While the state lottery doesn’t pour its money into the same state coffers that casinos do, the state’s senior citizens benefit from lottery donations to rent rebates and prescription drug subsidies, among other benefits. Lottery will also oversee virtual sports, too While online gambling is the state lottery’s biggest win, don’t forget that it also won the right to oversee virtual sports betting. Virtual sports are fictional sporting events — football games, horse races, etc. — upon which gamblers bet on the outcome. This type of sports gambling doesn’t offer quite the same thrill of live competitions but they’ve proven in other states to scratch the itch of those looking for action during downtime in the U.S. professional sports calendar.

Video gaming terminals (VGTs) were on the ropes several times over the past two years of failed legislation among Pennsylvania lawmakers. VGT’s, however, roared back from many legislative deaths and found its own nook among the state’s gambling expansion bill. The legislation allows the terminals to operate in truck stops that meet certain sales and size requirements. And, this past week, the Pennsylvania Gaming Control Board (PGCB) announced that applications are available for download on the PGCB site. According to a press release, applicants will have to fill out the necessary paperwork, provide fingerprints, and fix any errors. From there, the PGCB will conduct a background check. Applications will be accepted starting May 7. VGT history and current regulations VGT’s have long been the bane of casinos because these gaming terminals represent a competitor that can show up in just about any truck stop that meets the requirements the PGCB lists:
Has diesel islands for commercial vehicles
Sells 50K gallons of diesel or biodiesel fuel in past 12 months or is projected to do so in the next 12 months
At least 20 parking spots for big rigs
Has a convenience store that sells PA lottery games
Property is at least 3 acres In other words, the state wants VGT’s to appear in legitimate trucks stops with steady sales, trucker traffic, and an existing relationship with the PA Lottery. The new law was not intended to put VGT’s in 7-11’s and mom-and-pop gas stations across the state. What is perhaps most interesting about the new legislation is that it allows for up to five terminals to be placed in a truck stop. There was no explanation from lawmakers as to why such a small number of terminals will be allowed. Possible theories include an anticipation that hundreds of truck stops would participate and thus five terminals per station was enough or that five terminals are all anti-VGT lawmakers would accept. All 10 opt-out counties have casinos The law also gave counties an opt-out clause, which means they can decide if they want VGT’s within their borders. The deadline for those opt-outs was Dec. 29. The PGCB’s most recent list shows that 10 counties opted out, all 10 of which are home to casinos:
Bucks County: Parx Casino
Dauphin County: Penn National
Delaware County: Harrah’s
Erie County: Presque Isle
Luzerne County: Mohegan Sun
Monroe County: Mount Airy
Montgomery County: Valley Forge
Northampton County: Sands
Philadelphia City/County: SugarHouse
Washington County: The Meadows Additional VGT facts, trucker reactions As for the actual VGT terminals, what we know so far is that they will be cash-only. Credit and debit cards can’t be used. Max bets on these machines will be $5 and the max payouts will be $1,000. According to the PGCB’s FAQ sheet about VGT’s, payout percentages will be around 85 percent, just like they are in the state’s brick-and-mortar casinos. Reactions from truckers about VGT’s has been mixed. Some have said they welcome the machines because it gives them something interesting to do during their mandated rest periods. Others, however, say that the terminals pose a safety risk because they will keep truckers awake when they should be sleeping.

The group behind a second Philadelphia casino set to open in 2020 is now making plans to build not one, but two new casino properties. Stadium Casino, LLC‘s $40 million bid to build a satellite casino in Westmoreland County in the Pittsburgh Metropolitan Statistical Area was the highest of four received by the Pennsylvania Gaming Control Board this week. The bid was a part of the second in a series of satellite casino project auctions. As a result, it won the auction. Stadium now has two business days to pay the $40,100,005 it bid. Additionally, it has another six months to submit an application for a Category 4 satellite casino slot machine license. Category 4 slot machine licenses permit the operation of between 300 and 750 slot machines. License holders can also apply for permission to operate up to 30 table games for an additional fee of $2.5 million. Additionally, after the first year of operation, ten more table games can be added. Penn National Gaming vs. Pennsylvania In the state’s first auction held on Jan. 10, a subsidiary of Penn National Gaming that operates Hollywood Casino at Penn National Race Course was the high bidder. It’s $50 million bid is for a satellite casino in York County. York County is just south of the capital city of Harrisburg and north of the Mason-Dixon line. However, Penn National Gaming is also suing the state to have the buffer zones around existing casinos where satellite casinos cannot be built changed to better protect its Hollywood Casino. Stadium Casino, LLC is a joint venture between the Cordish Companies and Greenwood Gaming & Entertainment. Greenwood currently operates Parx Casino just outside Philadelphia. Additionally, Cordish Companies’ US casino projects include two Seminole Hard Rock Hotel & Casinos in Hollywood and Tampa, Florida and the Maryland Live! Hotel & Casino in Hanover, Maryland. Philadelphia’s second casino The joint venture already holds a Category 2 license for a major casino project in Philadelphia. Plans were to open in the first quarter of 2018. However, a legal battle and question regarding casino ownership laws in the state forced delays. Questions arose regarding whether Greenwood principal Watche “Bob” Manoukian’s ownership interest in Parx and the new Philadelphia casino project represented a breach of casino ownership laws in the state. However, the state eventually gave Manoukian the thumbs up. Additionally, Philadelphia’s only other casino, SugarHouse Casino, dropped an appeal of the project’s gaming license after the new gambling law changed ownership standards. Ultimately, the company received the gaming license granted to it by the state and a building permit. Construction on the $600 million casino and entertainment complex will begin sometime this year. It will go up at the former Packer Avenue Holiday Inn property located in South Philadelphia’s sports stadium district. The complex will include a 200-plus room hotel, five restaurants, nightclubs, and a parking garage. Its casino will feature 2,000 slot machines and 125 table games. It will open in 2020. Opening beside the city’s sports stadiums should make it a true destination for fans of gambling and sports. Owners claim it will be the first comprehensive gaming, resort, entertainment, and sports destination in the US. The Pittsburgh-area gaming market Satduims’s satellite casino will obviously be much smaller in scale and scope. However, it does represent a move into the Pittsburgh-area gaming market. Pittsburgh is Pennsylvania’s second-largest city. SugarHouse Casino owners Rush Street Gaming already have a stronghold on the intersection of sports and gambling there. In fact, its Rivers Casino Pittsburgh is in the city’s North Shore neighborhood, just a short walk from Heinz Field. The 68,400-seat Heinz Field stadium is home to the Pittsburgh Steelers National Football League franchise. Photo by Joshua Haviv / Shutterstock.com

Churchill Downs is about to make a big splash in the legal and regulated online gambling and sports betting markets in both Pennsylvania and New Jersey. The Louisville, Kentucky racing and gaming giant, best known as owner and operator of The Kentucky Derby, announced its entry into the markets this week through a pair of partnership agreements. First, Churchill Downs inked a strategic partnership agreement with SBTech to use SBTech’s integrated technology platform for both its online gambling and sports betting operations. According to a press release from Churchill Downs, SBTech will provide the company with an online gaming and sports betting software platform. This includes a website, mobile apps, and back-office systems. Churchill Downs says the partnership is initially intended to enable it to enter online gambling and sports betting markets in both Pennsylvania and New Jersey. Both states have already approved online gambling and sports betting. Pennsylvania is in the middle of setting up the regulatory framework for both markets. New Jersey has had legal and regulated online gambling since 2013. It is currently setting up regulations for its sports betting market. New Jersey is expected to be the first new state to accept legal sports bets. This following the US Supreme Court decision this week repealing a federal ban on sports betting. Of course, Churchill Downs is already in the online gambling sphere. However, it’s TwinSpires.com online horse race wagering site will continue to run separately from its new SBTech sites. Churchill Downs in PA Churchill Downs announced in March it planned to purchase Presque Isle Downs & Casino in Erie with an eye on the burgeoning PA online gambling market. In fact, Churchill Downs CEO Bill Carstanjen said the reason it acquired Presque Isle was to get a foothold in Pennsylvania where online gambling legislation just passed. Presque Isle Downs & Casino features:
1,600 slots
32 table games
A poker room
Thoroughbred racing on 100 dates annually Currently, only the 13 PA casino license holders can apply for online gambling licenses in the state. Licenses are being made available in three categories including online slots, online table games, and online poker. Churchill Downs and Golden Nugget Atlantic City In New Jersey, Churchill Downs has also inked an agreement with Golden Nugget Atlantic City. It plans to enter into the NJ online gambling and sports betting markets under Golden Nugget’s license. Churchill Downs is awaiting new sports betting legislation and online gambling license approval in the state first. However, it is planning to launch both operations in the first quarter of 2019. Carstanjen said Churchill Downs is eagerly anticipating entry into both NJ markets: Online gambling has already been a huge success for Golden Nugget Atlantic City. It’s own online casino site has the largest selection of games in the market. Plus, the Betfair and PlaySugarHouse NJ online casino sites run under its license. Together, the Golden Nugget site are the runaway revenue leader in NJ online gambling. In fact, they are pulling in more than $7 million a month. Golden Nugget’s Senior Vice President and General Manager of Online Gaming Thomas Winter welcomed Churchill Downs aboard: