Judge Upholds iLottery Games In Rejecting Suit Against Them Filed By Pennsylvania Casinos

Decision says similarities in online games are unavoidable and state's lottery can continue reaping revenue from them, as legislature sought.
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Pennsylvania’s iLottery website displays 100-plus games that can be played digitally by those willing to create accounts, deposit funds, and gamble, just like many of the 16 different iCasino sites now available in the state.

The similarities between the electronic lottery games and those of the commercial casinos and their partners are too close for comfort, according to a lawsuit by seven casino operators, but a Commonwealth Court judge has sided with the state that there’s no unfair competition.

Judge Renee Cohn Jubelirer dismissed the suit May 25, finding natural overlap in the design and appearance of the iLottery games with those of the casinos rather than anything precluded by a 2017 law that allowed the Pennsylvania Lottery to begin online games.

“The Court finds that the features of iLottery games challenged by petitioners are not signature, iconic, or key features particular to casino slot machines,” Jubelirer wrote in a 47-page opinion alluding to use of such facets as random number generators and auto bet options, in addition to game graphics and imagery. She said technological advances in online gaming created unavoidable similarities between the iLottery and casino products.

The legislature did not intend to prevent the iLottery, any more than the commercial iGaming operators, “from taking advantage of technological advances, changes in gaming and entertainment, or features that are found in existing popular entertainment,” Jubelirer wrote in dismissing the casinos’ suit.

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Peaceful co-existence could be profitable

The Pennsylvania Lottery still reaps far more revenue from traditional paper lottery tickets than from online play, but the latter is expected to steadily increase. The iLottery has provided profits of $170 million since its inception in March 2018.

Lottery Executive Director Drew Svitko, hailing Jubelier’s opinion in a statement afterward, said “it was clearly the intent of the General Assembly to allow the Lottery and casinos to co-exist in the online space.”

Attorney General Josh Shapiro, whose office represented the commonwealth in defending the iLottery, called the suit “a cynical effort to knock out a competitor solely in the interest of increasing profits.”

Attorney Mark Stewart, who represented the casinos, said Jubelirer’s decision was still under review Monday morning, with no decision yet on whether an appeal would be filed.

Interestingly, while the lottery and casinos have been involved in their court fight over the iLottery games, they have been on the same side in assailing the competition both face from thousands of unregulated gaming machines that exist in bars, clubs, and other outlets around Pennsylvania.

Looking at their recent revenue, separate from any legal questions, it does appear there is room for both the iLottery and iCasinos to succeed in Pennsylvania.

The iCasinos have generated revenue of more than $90 million in each of the past two months, which would put them on pace to exceed $1 billion in revenue over the course of a full year. Some 40% or more of that is siphoned as government tax revenue.

The state lottery, meanwhile, reports it is on pace for $1.3 billion in overall profits used to support older adult programs and services in the 2020-21 fiscal year.

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