Casino Coalition Lawsuit Against PA Online Lottery Games Tossed Out, But Appeal Possible

Posted By Kevin Shelly on June 1, 2021

Imagine Godzilla v. Kong but set in a slow-motion courtroom confrontation with vast wagering revenue at stake. That’s Round One of the Pennsylvania State Lottery fending off a coalition of casinos challenging the PA online lottery.

Last week, the iLottery prevailed, just like Godzilla in the recent movie remake of titans clashing.

A judge rejected the casinos’ arguments that the lottery’s internet-based games used systems unique enough to slot machines and casino-style gambling to violate state law.

The two-year-old case got tossed out.

Pennsylvania Lottery Executive Director Drew Svitko hailed the decision, but a rematch is still a possibility.

Legal challenge of iLottery spans years

The history of the cast reaches back to 2017 when Act 42 passed. The law authorizes online gambling and online lottery games in PA. The casinos filed a lawsuit in August of 2018. The court had previously denied the casinos’ request to keep the lottery games offline.

The iLottery games are a growing source of cash for the agency as it heads towards a record-breaking $5 billion in sales for this fiscal year. But for the casinos, they saw the lottery as unfairly eating their lunch.

A coalition of casinos challenged the PA online lottery

The casino coalition consists of the majority of PA’s brick-and-mortar casinos. The list includes Mohegan Sun Pocono, Valley Forge Casino Resort, Live! Casino Philadelphia, Harrah’s Philadelphia Casino, Hollywood Casino, Parx Casino, and the Meadows Casino.

Casinos argued the Lottery’s online games were supposed to differ from casino offerings. But the Lottery games were not different. Casinos also argued the iLottery uses functions such as random number generators used by casino games. Some iLottery games share names and/or graphics with casino slots.

And casinos in other states, such as Ohio, are concerned about the spread of iLottery games, including PA-based Penn National.

The PA Lottery has more than 50 instant win games available to play online at any time. The lawsuit cited nine instant win titles. Also, gamblers must be at least 21 years old to play a slot machine at a PA casino, but they need only to be 18 to play the iLottery games.

Judge rejected the casinos’ argument

The casinos argued unsuccessfully that the iLottery games were too much like casino offerings.

The judge was having none of that. Commonwealth Court Judge Renee Cohn Jubelirer flatly dismissed the case.

She said:

“The features of iLottery games challenged by petitioners are not signature, iconic, or key features particular to casino slot machines.”

The judge wrote of the iLottery game features:

“…Relate to technological advances in online gaming; are based on online entertainment and gaming, as well as existing entertainment sources like television and board games which have indisputably inspired both iLottery game and slot machines game designers; or existed in the same or similar fashion in traditional lottery products that were translated into a new online medium.”

Summing up, the judge found the Legislative intent was never: “to preclude either one of these newly authorized online games – iLottery or interactive gaming – from taking advantage of technological advances, changes in gaming and entertainment, or features that are found in existing popular entertainment.”

Casinos have until Friday to challenge the PA online lottery decision

With an automatic right to appeal, the Pennsylvania Casino Gaming Coalition (PCGC) now has until this Friday to decide if they will challenge the decision.

Mark Stewart, a Harrisburg lawyer for the casino group, said that is under discussion, but mounting a challenge remains undecided for now.

iLottery offerings had sales – before payouts to winners – topping $433.7 million in the first six months of the current fiscal year. That’s up from $290.2 million for the same period in 2019-20.

On the other hand, the 10 casino operators with online casinos in Pennsylvania have seen total interactive gaming revenues soar. They went from $240.9 million in their first fiscal year 2019-20 to $707.1 million for the first 10 months of 2020-21 (with many more sites operational).

Lead image credit: AP Photo/Joe Puetz

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Kevin Shelly

Kevin C. Shelly is an award-winning career journalist who has spent most of his career in South Jersey. He's the former assistant city editor of The Press of Atlantic City, where he covered the casino industry and Atlantic City government as a reporter. He was also an investigative, narrative enterprise, and features reporter for Gannett’s Courier-Post.

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