For many years, the US has seemed to have had a strange relationship with gambling. While home to the undisputed world capital of the activity in Las Vegas, the rules governing the activity in other states have ranged from the liberal, such as in New Jersey, to the draconian in Utah and Hawaii.
But following the decision by the Supreme Court in 2018 which finally permitted states to set their own sports betting laws, there has been a growing enthusiasm among many states to not only permit this activity but to look at other kinds of betting too.
Pennsylvania is just such a state and its decision in 2017 to permit online casinos to operate has seen a dramatic increase in overall revenue since the very first of these opened for business in 2019. Of the four states in which online casinos are now legal, it’s only Pennsylvania that permits both gaming and lottery tickets online. As we shall see, this is proving to be very lucrative for the state’s finances.
The history of gambling in Pennsylvania
Considering the position that Pennsylvania was once in in relation to gambling, it’s a remarkable success story to have reached where we are today.
Up until 1971, no gambling was permitted, but this was the year in which the first ever state lottery was introduces. Its primary aim was to raise revenue to provide property tax relief for Pennsylvanians aged 65 and over, its secondary one was to provide a legal alternative to the illegal gambling believed to exist in the state.
Following its smooth operation, in the 1990s there was growing pressure on the state government to legalize the riverboat casinos that operated in something of a legal grey area. However, the legislation to allow these took until 2004 to be passed.
The Pennsylvania Racehorse Development and Gaming Act at last permitted casinos and racetracks to open in the Keystone State and established the Gaming Control Board. The law was passed largely thanks to the changed, and more permissive, attitudes of the population as well as the increasing legitimacy of the casino industry overall.
Quickly, seven casinos opened their doors and by the end of their first year of operation they had raised $1 billion in revenue and contributed around $776 million in taxes.
The next major leap forward came in 2017 when the Truck Stop and Casino Bill was passed which allowed casino-style gambling at various locations including truck stops and airports. This also permitted online casinos to operate in the state greatly increasing the choice of where to play slots for PA residents. Quickly a number of online casinos applied for licences and began operating in late 2019.
Looking at the figures
Since the passing of the Act permitting online casinos, it’s this sector that has been the one to perform spectacularly well, certainly over and above the state’s 13 bricks and mortar casinos.
Over the course of 2020, online casinos generated a staggering $680.2 million out of the grand annual gambling revenue for the state of $2.65 billion. What’s more, each subsequent month proved to be better than the previous one for online casinos. The year’s highest figure came in December when $71.6 million was wagered online, a 17% increase on the figure for the same month in 2019. Of this, the lion’s share, $68.9 million, was generated by online casino games, with $2.7 million coming from the state’s poker players.
Out of all forms of gambling it was the slots that were responsible for the biggest single contribution, with the line-up looking like this:
- Slots — $1.3 billion
- Table games — $504.3 million
- iGaming — $565.7 million
- Sportsbooks — $189.7 million
- Fantasy sports betting — $21.1 million
It’s no real surprise that slots lead the way by quite such a huge margin as they are present in many more locations than any of the other kinds of gambling, and this is especially good news for the state as they raise a higher percentage of tax revenue than the other forms of play.
As to the increasing revenues generated by online casinos, it’s thought that people first attracted by sportsbooks have been gradually migrating, attracted by the range of casino games on offer. It’s also thought that experienced online casino gamblers are also gradually increasing the amount that they spend each month on games.
The benefits to the state
It’s ironic, but true, that an activity that was once considered to be a moral danger to the population of Pennsylvania is now having so many benefits. The most important of these, without doubt, is the $1.5 billion it contributes each year in the form of taxes. This is around six times the revenue that neighbouring New Jersey generates, thanks mainly to the gambling in Pennsylvania being spread across the whole state, as opposed to all being concentrated on Atlantic City.
The other important way that gambling helps the economy is in the number of people who are employed by it both directly and indirectly. According to the latest available statistics that relate to 2018, over 33,000 people rely on casinos for employment, the third highest total in the country.
As the sector grows, it’s likely that this figure will too. There will undoubtedly also be more online casinos approaching the Pennsylvania Gaming Control Board. So, by this time next year, we could be looking at an even more optimistic picture – and probably a narrowing of the gap between Pennsylvania and Vegas.
