PA Casinos Split on iGaming Issue

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Pennsylvania’s existing brick and mortar casinos appear to be divided on the issue of legal and regulated online gaming inside the state.

Tuesday, a joint committee of the Pennsylvania House and Senate held a hearing regarding the expansion of legalized gambling. The joint public hearing brought together the Pennsylvania State Senate Community, Economic & Recreational Development committee and the House Gaming Oversight committee featuring testimony from lobbyist groups and industry stakeholders focused, in part, on proposed iGaming legislation.

Pennsylvania currently has 12 brick and mortar casinos inside the state and representatives from five made presentations at the hearing, including Harrah’s Philadelphia, Lady Luck Casino Nemacolin, Mount Airy Casino Resort, Parx Casino and Racing, and Valley Forge Casino Resort.

While all of the casinos represented seemed to stand together against the wide expansion of casino gaming into bars, taverns, restaurants, social clubs, fraternal clubs, truck stops and bowling alleys around the state, in the form of Video Gaming Terminals, they seem to be split on the issue of Internet gaming.

Donn Mitchell, CEO of the Isle of Capri Casinos, which operates the Lady Luck Casino Nemacolin in Farmington, said the organization is supportive of iGaming legislation, as long as it is run through the 12 existing brick and mortar casinos.

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“Legalizing online gaming through the existing casinos will allow current licensees to drive new customers to their facilities and increase revenues to the state,” he said.

However, a representative from the state’s largest casino gaming complex, Parx Casino and Racing, disagreed.

“We believe that many of the proposals currently under consideration will actually lower the tax revenue generated by our industry and effectively kill the golden goose,” said Parx CEO Tony Ricci.

“To be clear, these proposals ask the Commonwealth to trade the 59% tax brick-and-mortar casinos are paying for either the 30% paid by VGT’s in Illinois or 15% for Internet Gaming. It is clear that the net effect of these proposals will be a reduction in gaming taxes for the Commonwealth, along with thousands of jobs and hundreds of millions of investment dollars by the brick and mortar operators.”

Ricci went on to say that Internet gaming in Pennsylvania will likely cannibalize the existing brick and mortar casino industry, considering the population’s proximity to brick and mortar casinos is much greater in New Jersey, where iGaming has successfully coexisted with the existing casino properties.

He also said that the tax rates for brick and mortar casino’s are much lower in the neighboring state, making comparisons difficult.

“It is our view that the Commonwealth will lose revenue by implementing Internet gaming,” he said. “How can we reasonably assume that after Blockbuster video, Tower records, Borders, and now many major retailers like Macy’s, JC Penney and Sears are closing stores and eliminating jobs due to competition from online retailing, our industry is somehow different? Who else should we expect will gamble online but a person who has visited a casino?”

Representatives from Sands Casino Resort Bethlehem did not speak at the hearing, but owner Sheldon Adelson has maintained a position as a staunch opponent of iGaming across the country. In fact, he is behind an effort to restore the Federal Wire Act, which would make it illegal for states to enact separate iGaming legislation. He has also been named as the person leading the opposition to iGaming in Pennsylvania by the local press.

Back at the hearing, a written statement from the Mount Airy Casino Resort in Mount Pocono claimed the organization “fully supports the legalization of internet gaming with reasonable license fees and a tax rate commensurate with the rate imposed in New Jersey.”

“Internet gaming will provide a critical new source of tax revenue for the Commonwealth and new local share tax revenue to assist local communities,” the statement read. “In addition, it will protect consumers from the existing illegal market.”

Representatives from Caesars, which operates Harrah’s Philadelphia in Chester, also displayed support for iGaming in Pennsylvania. In fact, the organization’s presentation was focused on a regulated industry being able to provide the kind of oversight that would answer many of Adelson’s moral concerns.

Additional testimony from Eric Pearson, CEO of the Valley Forge Casino Resort in Upper Merion Township, appeared to be in agreement.

“I hope you will consider allowing Internet gaming in the Commonwealth,” he said. “Pennsylvania has an opportunity to be among the first in what will be a significant growth opportunity for the industry moving forward. As we can see from our neighboring state to the east, once the Internet gaming market is established, then a real opportunity for consistent healthy growth exists.”

Outside of Adelson’s moral opposition, the major sticking point on iGaming from an existing casino industry standpoint, and Parx specifically, appears to be the tax rate differential, as Pennsylvania lawmakers continue to consider the issue.

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Marty Derbyshire has been covering online gambling for various industry media outlets since 2007.

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