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    Categories Casino & GamingIndustry Insight

Pennsylvania Going All In with Newly Legalized Online Gambling Industry

It’s been nearly nine months since Pennsylvania lawmakers approved an ambitious package of laws designed to expand the state’s gambling industry, but things are finally starting to pick up.

Back in October of 2017, the Pennsylvania Legislature sent House Bill 271 to Governor Tom Wolf’s desk. When Wolf signed the bill into law, he officially legalized online casinos with table games and slots, poker rooms, daily fantasy sports (DFS), sports betting, and lottery in one fell swoop.

Since then, the Pennsylvania Gaming Control Board (PGCB) has been hard at work crafting regulations to oversee the state’s new iGaming industry.

The first segment to launch was online lottery, which is known as the iLottery on the Pennsylvania Lottery website. Sales of iLottery games began on June 4, and within the abbreviated month, it quickly became clear that this new vertical was a hit among players.

Per a statement issued by According to Jeffrey A. Johnson – who works as communications director for the Pennsylvania Department of Revenue – the state’s newly launched iLottery attracted more than 45,000 unique players. That group spent upwards of $21.6 million to play, and while $18.7 million was paid back as prizes, the state’s coffers swelled by nearly $3 million in immediate revenue.

Extrapolating that performance throughout the rest of 2018, Pennsylvania should be on pace to bring in close to $25 million through iLottery sales alone.

In an interview with the Times Leader newspaper conducted shortly after the June revenue figures were released, Pennsylvania Lottery executive director Drew Svitko celebrated the introduction of online play:

“PA iLottery games are a fun, new way to play and win from home or while on the go.

iLottery is a big part of our effort to meet our players where they already are, while generating new funds to benefit older Pennsylvanians.”

While traditional draw lotto games like the PowerBall and Mega Millions aren’t available online, Pennsylvania offers the following iLotto games: Big Money SLINGO®, Bigfoot, Cash Buster Towers, Cash in the Lamp, Crossword Cash, Foxin’ Wins, Monster Wins, Robin Hood, Super Cash Buster, Super Gems, and Volcano Eruption.

These titles are more akin to scratchers or slots than draw lottery games, providing an immediate result as soon as the player places a wager. Those wagers can be priced as low as one penny, but most games use a quarter or dollar minimum bet.

Using the ticket sales and revenue data from above, it would appear that Pennsylvania’s iLottery games pay out at an 87 percent return to player (RTP) rate.

The software behind each of the games listed above is provided by Scientific Games, a company known for powering online casinos and sportsbooks worldwide. The company already had a deal to service the Pennsylvania Lottery’s backend, but that was expanded in June to include iLottery games as well.

When the expansion was struck, Pat McHugh – senior vice president of global lottery systems for Scientific Games -released the following statement:

“Scientific Games has a long history of investing in innovative games, technology and services that maximize Lottery funds to benefit older Pennsylvanians. Our partnership with the Pennsylvania Lottery has resulted in one of the highest performing lotteries in the world.

Now we are thrilled to combine Scientific Games and NYX’s market-leading capabilities to offer entertaining digital games to Pennsylvania Lottery players, and to continue our support of Pennsylvania Lottery retailers with the iLottery affiliate program.”

Where You Are, Not Where You Live

The new law states that players must be physically located in Pennsylvania in order to place iLottery wagers.

Not everybody is a fan, however, as the state’s 13 licensed casino operators – a group which includes industry heavy hitters like Harrah’s, Mohegan Sun, and Sands -wrote to Governor Wolf asking him to suspend iLottery sales altogether. The casinos claim that certain iLottery products such as Ballroom Bingo don’t abide by House Bill 271, which specifically bans the new industry from offering game types found in the casino:

“In virtually every way imaginable, Lottery’s iLottery program mimics a casino operation offering simulated casino-style games in direct contravention of (the law’s) express prohibition on Lottery offering ‘interactive lottery games which simulate casino-style games.”

Wolf wasn’t impressed by the argument, however, and according to Svitko, it’s full steam ahead for iLottery in the Keystone State:

“We’re partnering with our more than 9,400 Pennsylvania Lottery retailers to encourage players to sign up for iLottery.

Lottery games sold in stores will continue to be the foundation of our business and produce the majority of proceeds to benefit older adults.”

And speaking of those 13 casino operators, nine of them have tossed their hat into the ring as potential iGaming interests.

The (PCGB) recently revealed that the following nine casinos in the state have applied for full-scale interactive gaming licenses:

  • Parx Casino, operated by Greenwood Gaming and Entertainment, Inc. (received July 12, 2018)
  • The unopened Live! Hotel and Casino Philadelphia, operated by Stadium Casino, LLC (received July 13, 2018)
  • Mount Airy Casino Resort, operated by Mount Airy #1, LLC (received July 13, 2018)
  • Sands Casino Resort Bethlehem, operated by Sands Bethworks Gaming, LLC (received July 16, 2018)
  • Hollywood Casino at Penn National Race Course, operated by Mountainview Thoroughbred Racing Association, LLC (received July 16, 2018)
  • Valley Forge Casino Resort, Valley Forge Convention Center Partners, LP (received July 16, 2018)
  • Harrah’s Philadelphia Casino & Racetrack, operated by Chester Downs and Marina, LLC (received July 16, 2018)
  • Rivers Casino, operated by Holdings Acquisition Co., LP (received July 16, 2018)
  • SugarHouse Casino, operated by Sugarhouse HSP Gaming, LP (received July 16, 2018)

Each of these nine casinos has elected to pay the state $10 million for a three-part iGaming license, one which covers online casino table games, slots, and poker.

Conclusion

With a $90 million haul in the opening round of iGaming licensing, Pennsylvania’s gamble on the industry has already returned $36 million more than lawmaker’s initial estimates.

Full-fledged online gambling in Pennsylvania is expected to launch by the end of 2018.

Michael Stevens :