More Trouble In Pennsylvania: Casino Operators Are None Too Happy With The State’s Online Lottery

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Pennsylvania casino operators want the state’s newly-minted online lottery games taken down, and they’re willing to take legal action to make it happen.

As first reported by Penn Live, all 13 of Pennsylvania’s casino interests petitioned the Governor’s administration via letter, asking that the Department of Revenue work with them to create a “lawful iLottery program.”

Their grievances stem from the nature of the games available on the online lottery site, which casino operators believe to be too similar to slot machines, and therefore in direct violation of the regulations for online lottery.

A united front

It’s rare for all 13 casino operators to share the same opinion on anything related to online gambling. Dating back to before online casino, poker, lotto, and sports wagering were legalized, there were contentious debates over how much power online sites should wield.

On one side of the equation were Penn National and Parx Casino, which called for strict restrictions on iGaming, including provisions that would limit the reach of out-of-state operators. The Sheldon Adelson owned Sands Bethlehem took that position a step further, making it clear that it was vehemently against online gambling in any capacity.

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The other side, led by Rivers Casino and SugarHouse Casino owner Rush Street, and some smaller casinos, lobbied for a more open iGaming landscape, similar to that in neighboring New Jersey.

Ultimately, it is believed that this divide is what caused regulators to take a middling approach to critical issues such as the tax rate on online gambling, and rules pertaining to iGaming “skins.”

On the online lottery, however, casino operators stand united in their belief, which serves as a frightening prospect for the nascent vertical.

Do casinos have a leg to stand on?

The casinos’ main argument is that the online lotto is in violation of a clause that bars it from supporting “games which simulate casino-style lottery games, specifically including roulette, poker, slot machines or black jack.”

None of the state’s 11 iLotto games simulate table games found in brick and mortar casinos, so it’s pretty clear that the casino operators feel the games are too similar to slots. In the letter, operators even went as far as to claim that the iLottery games use the same “backbone” as slot machines:

“An outcome that is determined by a random number generator with animated graphics and computer operations used to provide a visual depiction of that outcome.”

Are the casinos justified in their logic? It is our opinion that they are, to a degree.

On one hand, instant win games undoubtedly possess similarities to slot machines found both online and at brick and mortar locales. Online, these games allow players to select from a multitude of denominations, and can be played at a breakneck speed, with outcomes visually represented on the screen and determined by random number generators (RNGs). Some of the more ambitious lottery products even have bonus rounds, which are more commonly associated with slots than they are scratch-offs.

Going further, some PA iLotto games, like Big Money Slingo and Foxin’ Wins Reveal, even possess the same branding as online slots.

On the flip side, a case can be made that online lottery games are nothing more than beefed up scratch-off tickets. A fair number of games on the PA iLottery site are “Reveal” games, where players that match three symbols win a prize. Yes, they play faster and across a broader range of denominations than retail scratch-offs, but they’re effectively the same game. Games like Crossword Cash also have more in common with scratch-offs than slots.

Therefore, it’s at least plausible that we’ll see the games that more closely resemble slots taken off the sites, and the less offensive ones persist.

A potentially crippling blow

The Pennsylvania online lottery isn’t doing itself any favors offering games that are dangerously similar to slots to 18-year-olds, and allegedly marketing them as “slot-style” games.

However, it’s difficult to imagine that PA casino operators didn’t see this coming a mile away. After all, instant win games are the bread and butter of online lotteries in Michigan and Georgia, and it was expected that the PA online lottery would follow suit. This all could have been worked out before the iLotto launched, although in the casinos’ defense, they do claim that they asked for a demonstration prior to the iLottery’s launch and were refused.

In either case, it’s pretty clear that the casinos do not want the online lottery to cannibalize their businesses, and that they deem it unfair that the lottery gets to offer games to 18-year olds while they cannot admit patrons until they reach 21.

Fair point, but it’s worth nothing that should casinos pursue legal action — which they plan to do if they don’t receive a response from Gov. Tom Wolf‘s office by July 3 — and win, then the state could lose a valuable source of revenue, allocated to programs that benefit the state’s elderly.

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Robert is a veteran writer and analyst for the gambling industry, with a particular focus on the emergent US online gambling market. An avid poker and gambling enthusiast, Robert offers unique perspectives from both the vantage point of the player and industry professional, and is fit to cover a broad spectrum of topics.

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