On a quick glance, it looks like a split verdict. As first reported by Penn Live, the Department of Revenue handed Pennsylvania casinos one loss and one win in regard to their united petition to disallow iLottery games. The online lottery games will continue, but they’re being forced to alter their marketing.
Not all elements of a verdict are created equal, however, and this is really a fairly comprehensive defeat for the 13 casinos that petitioned the governor’s administration. The iLottery now has to avoid certain terms in its promotional materials, but the games will remain out there, competing with the theoretically forthcoming casino-run slots.
Slot or not?
The iLotto officially went live on May 29, launching with 11 instant win games, and casino operators see them as being very similar to slot machines, putting them in violation of the iLottery regulations.
The Department of Revenue, which oversees the iLottery, has made the determination that the online lotto games can no longer be referred to as “casino-style” or “slot-style.”
That’s like telling Starbucks they can’t use the word “caffeine” on their website. As long as they’re pumping as much of it in their coffee as they want, it doesn’t matter what they call it.
On June 29, Revenue Secretary C. Daniel Hassell admitted in a letter to a lawyer representing the casinos that affiliates created ads using the undesirable terminology and “The Pennsylvania Lottery addressed this inaccuracy in the affiliates’ graphic and language immediately.” But that’s not nearly good enough for the casinos, which feel the iLottery games are aping the online gambling offerings they have in the works.
For now, the PA iLottery is here to stay, and it brought in nearly $3 million in its first month. By comparison, the much more established (and larger) Michigan online lottery did $77.9 million in 2017, for an average of roughly $6.5 million per month. For Pennsylvania’s program to be nearly halving that figure right out of the gate is quite the accomplishment, especially considering that Michigan only generated $18.5 million in its first full year (2015).
Suffice it to say, that whenever the first casinos get their games up and running, they’ll be playing catch-up, and also fighting against an oppressive 54% tax rate on slots, and other restrictive regulations.
And they’ll never be able to catch up when it comes to players who are 18, 19, or 20 years old and can get in on the iLottery action but not the casino games.
Show me the money
States like Michigan and Georgia have proven just how much of a windfall iLottery can generate.
Pennsylvania is a more populous state, by about 3 million people, so revenue projections should extend higher. How much will the money that citizens are putting into online lottery games cut into what casinos like Penn National, Parx, and SugarHouse could make when their games go live? It’s hard to say. But the simple fact is that slots players can currently get their fix playing these very similar iLotto games powered by the same sort of random number generators that online slots depend on.
And changing the wording of your marketing isn’t going to make that go away.
This was a swing and a miss by the casinos. Or, at best, it was a swing and a foul tip. It will be interesting to see whether they stay in the batter’s box on this issue and keep hacking away.