Pennsylvania Lottery Could Be The First To Take Advantage Of Expanded Gambling Legislation (Update)
Lottery spokesman says iLottery products could be available this spring
Some of the Pennsylvanian municipalities may be concerned at the prospect of mini-casinos as part of the gambling expansion legislation passed by the Legislature last year (see previous InfoPowa reports) but the state lottery appears to be keen to take advantage of the online business opportunities the new gambling laws offer.
A spokesman told the Tribune-Review newspaper Saturday that state players may be able to take a bet on the Pennsylvania Lottery online or by mobile this spring, making the lottery the first state body to claim the fruits of the gambling expansion.
The state Gaming Control Board is already working on regulations, with spokesman Doug Harbach telling the newspaper: “We’re talking with the (casino) companies that would be involved in online gaming and what’s being offered.
“We have to put together regulations that will guide not only the games themselves, but also the licensing.”
Online casino and lottery sales were among several provisions of the law that included provisions permitting satellite casinos, truck stop gambling, fantasy sports and sports betting and airport betting (see previous InfoPowa reports).
The vast majority of new gambling revenue will be funneled to the state’s general fund.
A state Revenue Department spokesman told the Tribune-Review that the provision that permits online lottery sales adds a much-needed market for the 46-year-old state lottery, which has funnelled more than $1 billion a year for the last six years to programs designed to serve older Pennsylvanians.
“Consumer tastes are changing, which is why the Lottery must modernize its 45-year-old business model,” spokesman Jeffrey A. Johnson said. “We are facing growing competition from other forms of entertainment and must act to increase our market share, because older Pennsylvanians are relying on our support for vital benefit programs.”
Records show state lottery sales slipped about 3 percent last year after a 35 percent increase in sales between 2010 and 2016, Johnson revealed, adding that the lottery plans to provide retail outlets with monitor-based games, including keno and virtual sports.
“Over the first five years, we predict these new categories could generate up to $250 million in new profits to support benefits for older adults,” Johnson said. “Traditional games will remain our bread and butter, but it’s simply time to start giving our players new options.”
But he said that officials have yet to decide which games will be for sale online.
In going online, Pennsylvania’s lottery follows Illinois, Michigan, Georgia, Kentucky, North Dakota and North Carolina, which have reported successful outcomes on online initiatives.
Legal Challenges Filed Against Aspects Of Pennsylvania’s New Gambling Expansion Legislation (Update)
Complaints against mini-casinos and subsidising payments for struggling land casinos
Barely two months on from its successful but agonisingly slow passage through the Pennsylvanian Legislature, the state’s new gambling expansion laws are already under fire, with legal actions filed against provisions relating to the establishment of mini-land casinos and subsidies paid by successful land operators to underperforming rivals.
InfoPowa readers will recall that the $376 million in revenue the state expects to harvest from the expansion is an important element in balancing a state budget that had a $2 billion deficit.
In a federal action filed by the Hollywood Casino Tuesday, the casino claimed that the gambling expansion law leaves its business uniquely vulnerable to the poaching of its customers by the proposed new “mini-casinos” envisaged in the new law.
Hollywood’s parent group, the Mountainview Thoroughbred Racing Association, has already filed a petition with the Commonwealth Court requesting tighter regulation of where such mini-casinos may be located.
The new law protects established land casinos from the ten proposed mini-casinos across the state by imposing a prohibition on locating the satellites within a 25-mile radius of an existing casino.
According to the suit, Hollywood Casino would lose $34 million a year if gamblers use new facilities, causing “significant and unique” financial harm.
It has also transpired that on December 28 Sheldon Adelson’s Sands group filed a lawsuit in the state Supreme Court alleging the new law violates the state and federal constitutions by requiring high-performing casinos such as Sands to pay a special tax to subsidise financially struggling casinos.
That tax, the lawsuit claims, violates the state constitution’s tax uniformity clause and another section that says all taxes must go to the public good. Sands claims it also violates the due process protections in the U.S. Constitution.
State lawmakers planned that the money from this special tax will be paid into a marketing fund to help struggling land operators. Observers have speculated that this was a move designed to placate Mount Airy Casino, which in 2016 successfully sued over a provision in the original state law that required casinos to pay host fees to municipalities in and around their facilities (see previous InfoPowa reports).
Although the fees, which generated $142 million annually for communities, applied evenly to all casinos, the state Supreme Court found they had a greater impact on smaller, less profitable casinos.
Thus far the state Governor’s office has not commented on the legal actions, a course followed also by the state Gaming Control Board.
The auction for the first mini-casino licence will take place at 10 a.m. today (Wednesday) before the board’s regular meeting. A spokesman said the board has no idea how many bidders will attend, or if existing casino operators, who also may seek mini-casino licenses, will participate.
Nine other public auctions are scheduled, with one winner announced at each, between Jan. 24 and May 16.
The minimum asking price is $7.5 million for a mini-slot parlour and another $2.5 million fee from a separate table game licensee to be awarded at a later date to the same entity.
Legal experts have pointed out that in the event of pending litigation it is standard practice for courts to order a suspension to parts of any law being challenged,
First Pennsylvania Mini Casino Licence Sold For $50 Million
Penn National the applicant in a move to protect its flank
The first of Pennsylvania’s ten mini land casino licenses – part of the state’s move to boost tax revenues by expanded gambling – was sold Wednesday to land casino operator Penn National, which put in a high bid of $50.1 million for the licence (almost as much cash as operators pay for a full licence, and well above the minimum $7.5 million prescribed by the new expansion gaming law).
A spokesman for Penn National said the operator was motivated by a desire to have prime choice of location (it has revealed that it is considering the Yoe area) but also a need to “protect its flank” from other operators bidding for mini casinos.
The operator can now build its mini-casino anywhere within a ten mile radius of the point it has selected, but must come up with the cash by 4pm on January 12 to secure the licence.
The mini casinos can operate up to 750 slot machines, and if operators pay an additional $2.5 million they can add up to 30 table games.