What’s Next For Pennsylvania’s Gaming Industry?

Although by all accounts Pennsylvania’s gaming industry has a been a great success since the first casino opened in the Commonwealth in 2006, the industry now faces stiffer competition than ever for gaming dollars in the region. From 2006 to 2012, gaming revenues grew each year on a year-over-year basis, but declined slightly from 2012 to 2013. Within the next few years, several new casinos will open along the east coast in New York, Massachusetts and Maryland. Additionally, New Jersey and Delaware each recently launched Internet gaming in their states and Delaware has entered into a compact with Nevada to attract more Internet gaming revenue. The stakes are high for Pennsylvania’s gaming industry to remain competitive and to not lose gaming dollars to neighboring states.

This week, the Pennsylvania Legislative Budget and Finance Committee, a joint committee of the Pennsylvania General Assembly released a report to the entire General Assembly detailing potential options to boost gaming revenue in the maturing Pennsylvania market. The report proposes various new types of gaming for Pennsylvania to consider, amongst the avenues to consider are Internet gaming, sports betting, fantasy sports and slot machines at airports. The report suggests that Internet gaming and sports betting would complement existing casinos and not add another layer of competition to currently operating brick and mortar casinos. According to the report, Internet gaming could eventually generate over $300 million per year in revenue – this would lead to tax revenues of over $100 million annually to the Commonwealth. Similarly the report notes that sports betting could generate tax revenues of $20 million to $110 million annually as well.

Importantly, under the current interpretation of Federal law, the Pennsylvania General Assembly is free to legalize Internet gaming in the Commonwealth. However, as discussed frequently in this blog, the Professional and Amateur Sports Protection Act (“PASPA”) makes it illegal for a state to regulate sports betting. The state of New Jersey has asked the Supreme Court to review the constitutionality of PASPA. So any action by Pennsylvania with respect to legalizing sports betting would turn on the ultimate resolution of New Jersey’s PASPA challenge.

In addition to suggesting new types of gaming activities, the report suggests certain regulatory changes that might spur economic growth. Amongst these suggestions are allowing casinos to sell alcohol past 2 a.m., allowing for faster approval of new games, permitting gamblers to use credit cards for cash advances on the gaming floor, permitting gamblers to cash checks in amounts over $2,500 and decreasing the required state police presence at casinos.

Now that the report has been issued, it is up to the General Assembly to act. We will update this post as developments occur.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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