Casino gambling in Pennsylvania could expand beyond casino walls in the future.
At a state Senate committee hearing in Harrisburg on Tuesday, online gaming was discussed as a way to keep Pennsylvania casinos competitive with the growing number of casinos in surrounding states.
One casino representative said, though, that attracting youth to online gambling would be “our Joe Camel moment,” referring to claims in the 1990s that the R.J. Reynolds Tobacco Co. used the cartoon figure to attract young smokers.
Mike Bean, president of the Mohegan Sun at Pocono Downs in Plains Township, did not attend the hearing, but when contacted later, he said Mohegan Sun would favor online gaming.
“We support the concept of online gaming to the extent that it is limited to the authorized brick-and-mortar casinos in the state of Pennsylvania,” Bean said.
The Senate Community, Economic and Recreational Development Committee, chaired by state Sen. Kim Ward, R-Westmoreland, held the hearing to discuss the findings in a report titled “The Current Condition and Future Viability of Casino Gaming in Pennsylvania.”
It was commissioned by the Joint Legislative Budget and Finance Committee, a joint committee of the General Assembly. Econsult Solutions of Philadelphia conducted the study and compiled the report.
Econsult Solutions President Stephen P. Mullin told the committee the state should see what it could do to reduce the overall burden on casinos. He said regulatory reforms would give casinos greater ability to be competitive.
The report notes gaming tax revenues grew each year from 2007 to 2012, exceeding $1.4 billion annually, but fell slightly last year by about 4 percent, with 92 percent of tax revenue generated by the state’s casinos in 2013 coming from slot earnings. The state’s 12 casinos generated $3.1 billion in total revenue in 2013.
Citing the report, Mullin said that when casinos first opened in Pennsylvania in 2006, New Jersey, Delaware and West Virginia had commercial casinos and New York had Native American casinos.
Since then, Maryland, New York and Ohio have opened casinos, and more are expected to open in each of those states in the next few years. In addition, three more casinos are expected to open this year in Pennsylvania.
The new out-of-state casinos include four opening in New York sometime in the next few years, two that were opened in Ohio in late 2013 and three more opening this year, and two opening in Maryland in the next few years. The increased competition is expected to decrease Pennsylvania casino revenues by $156 million, about a 4 percent to 5 percent reduction, by the year 2020.
The report states a more speculative possibility is that New Jersey will add casinos to Camden and the Meadowlands, which would reduce Pennsylvania casino revenues by another $210 million, approximately 6 to 7 percent less than where they would be otherwise.
According to the report, if Pennsylvania authorized online gaming, ongoing revenues of $307 million, generating $113 million in annual tax revenues, appear realistic.
Revenues from online poker are estimated at $129 million and from online casino games, $178 million. Other opportunities discussed in the report for expanded gaming include sports betting, fantasy sports, prediction markets, small games of chance and slots in airports.
Adam Ozimek, Ph.D., director of research and a senior economist with Econsult Solutions, said the company’s study recommends the following changes:
• Allow alcohol sales beyond 2 a.m.;
• Improve the approval time for new games;
• Allow more flexibility in table game rules;
• Allow for cash advance with credit cards on the gaming floor;
• Allow players to cash third-party checks and personal checks for more than $2,500;
• Decrease required state police presence;
• Investigate the potential for decreasing the cost of regulatory bodies;
• Allow more flexibility for staffing requirements, and remove or decrease non-gaming vendor certification.
William J. Ryan Jr., chairman of the Pennsylvania Gaming Control Board, said enforcement of the rules protects patrons. He said, though, the board would be willing to review the check-cashing limit.
He said the state should allow online gaming only if it is operating by a registered vendor.
Mullin said online gaming wouldn’t hurt the casinos.
“The net effect of online gaming would complement on-site gaming,” he said.
But Andrew Abboud, senior vice president for government relations and community development for Las Vegas Sands Corp., which operates the Sands Casino Resort Bethlehem, said it would be a mistake for the gaming industry to allow online gaming, which would draw young gamblers and expose casinos to potential lawsuits.
He said if the industry allows online gambling, “this is our Joe Camel moment.”