PA Gaming Industry Looks This Year To Grow Beyond $5.2 Billion Revenue

It took just 11 months for state gaming revenue in 2022 to match 2021's total
start of 2023

Pennsylvania’s commercial gaming industry drew revenue approaching a record $5.2 billion in 2022, and now the question is what lies ahead in 2023.

The past year was one that represented a plateau of sorts after several years of sharp gaming expansion, in that no new casinos opened and only PointsBet among major players added itself to the sports betting and online casino options in the state.

Still, while official December figures won’t be released by the Pennsylvania Gaming Control Board for several weeks, gamblers over the first 11 months of 2022 had already equaled the $4.73 billion they devoted to that form of spending in all of 2021.

Once December is added, the operators of casinos, sportsbooks, iGaming, video gaming terminals, and fantasy sports will have collectively captured at least $400 million more than in the year before. The majority of that is due to the 18 online casinos, which were on pace to reap about $1.35 billion in 2022, compared to $1.11 billion the year before.

With a Parx mini-casino slated to open in February and new online casinos — and perhaps sportsbooks as well — expected in 2023, the state seems only likely to grow upon 2022’s $5.2 billion figure, which itself equates to some $2.1 billion in taxes devoted to state and local governments. Pennsylvania draws more tax revenue from legalized gambling than any other state.

Key developments in 2022

While 2022 didn’t have the same level of gaming expansion as in prior years since the passage of wide-ranging 2017 legislation, it brought notable news affecting operators and their customers in many ways.

  • Pennsylvania became the second state after New Jersey to require multi-factor authentication by online operators as a safeguard for customers and their accounts.
  • The poker room at Rivers Casino in Pittsburgh set a U.S. record when awarding a $1.2 million “bad beat” jackpot in August to a group of players.
  • Multiple casinos obtained regulatory approval to reduce their number of slot machines in realizing new economic realities and gaming floor comfort issues in the post-COVID era.
  • Pennsylvania’s online and retail sportsbooks combined to have their first losing month ever in February, reporting minus $442,847 in their adjusted, taxable revenue after accounting for both money won by sports bettors and promotional credits given to them.
  • The state’s first non-traditional venue taking sports bets debuted in February, when a new Chickie’s & Pete’s in Chester County opened with a Parx OTB race and sportsbook accompanying the restaurant/bar.

A number of gaming issues were widely discussed but left unresolved, however, most notably what will happen regarding the proliferation of gray-market “skill games” in bars, clubs, convenience stores, and other outlets in the state.

Either Commonwealth Court or the state legislature could end up this year determining the fate of tens of thousands of those unregulated, untaxed devices that are in use statewide, much to the ire of the gaming board, casino operators, and Pennsylvania Lottery.

Also, in a matter of concern to online poker operators and their players, Pennsylvania has taken no action yet to join a multi-state compact through which state residents could join in the same iPoker games and tournaments with those in Michigan, New Jersey, Delaware, and Nevada. Michigan officials acted to join the interstate agreement last year, and it is expected that at some point Pennsylvania will do so.

What lies ahead in 2023

The most imminent and tangible example of gaming expansion that can be expected this year lies in Shippensburg, Cumberland County, where Parx is completing work on a mini-casino with 500 slot machines that will be the fourth of those smaller facilities to open in the state. It is to open sometime in February, although an official date has yet to be announced.

While it was once expected that a mini-casino would also open by 2023 at Nittany Mall near State College and Penn State University, that now appears unlikely. The licensing process for businessman Ira Lubert, who has Bally’s Corp. as his partner, has been delayed by protests filed with the gaming board and in Commonwealth Court from The Cordish Companies, which was a losing bidder for the project. It will take issuance of a license by the gaming board, and possibly a court decision against Cordish’s lawsuit, before construction begins.

Meanwhile, it seems certain that more online casino operators will debut in the state to join the 18, and there could be more online sportsbooks on top of the 14 presently available.

In its annual report issued last year, the gaming board said as many as 10 more online casinos could be coming. Notably, WynnBET is one major operator nationally that is not yet available in Pennsylvania, but the gaming board issued it a license in December, with no announcement of a launch date.

In addition, the gaming board has reopened its application process for what it calls “qualified gaming entities.” Those would be companies that have no relationship with a Pennsylvania-based casino, but which can obtain their own iGaming certificates, which would cost $4 million each to offer online slots, online table games, and online poker.

The new application period runs from Jan. 3 through March 3. Golden Nugget Online Gaming is the only pending qualified gaming entity in Pennsylvania from a prior application period, and it has yet to receive final approval from the state board.

While sports betting tends to receive far more attention than online casinos publicly, the iCasinos generate far more revenue for operators. In the first 11 months of 2022, their more than $1.2 billion in revenue compared to $347 million that operators reported from sports betting (after adjustments from their gross revenue to cover customer promotions).

Although Pennsylvania is known for high tax rates it applies to gaming, it is attractive to operators because it is among a small group of states with legalized online casinos as well as sports betting, and it has the largest population among those states.

The potential for growth in online sports betting options in 2023 is more limited than for iCasinos. Each brick-and-mortar casino is permitted just one sports betting license, whereas for online casinos they can take on unlimited partners.

The Cordish Companies had an agreement to enable Fubo to use the sports betting license of its Live! Pittsburgh property, but with Fubo deciding subsequently to get out of the sports betting business, it’s possible the license will be rededicated to another operator. That could be an entity such as WynnBET, which as of now only is approved for iCasino in the state rather than sports betting.

It’s also possible that with Churchill Downs Inc. planning to drop sports betting offered by its TwinSpires operation affiliated with Presque Isle Downs & Casino, another sports betting operator could acquire use of that license. Among the candidates could be BetFanatics, which has indicated intent to enter numerous U.S. markets in 2023.

Photo: Shutterstock


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