Fiscal year 2023/2024 saw Pennsylvania casino slot revenue produce $2.44 billion, a 0.56% decrease from the previous year. Of course, that’s a minimal drop-off. However, the Keystone State has added five new casinos since 2020. It raises the question of why slot revenue is decreasing at all.
While it’s difficult to pinpoint an exact reason, PlayPennsylvania has some theories on why retail slot revenue has slowed. Multiple factors can cause a direct impact, but here is our list of the five most likely ones.
PA slot revenue down in FY 2023/2024
Pennsylvania casinos have recovered from the pandemic. However, for the first since FY 2013/2024, properties reported a year-over-year decrease in slot revenue (excluding FY 2019/2020). Here are slot results over the last three years:
- 2021/2022: $2.41 billion
- 2022/2023: $2.45 billion
- 2023/2024: $2.44 billion
In the three full fiscal years before the pandemic, Pennsylvania casinos generated the following totals:
- 2016/2017: $2.34 billion
- 2017/2018: $2.35 billion
- 2018/2019: $2.39 billion
And, the following properties have opened in Pennsylvania since 2020:
- Hollywood Casino York
- Hollywood Casino Morgantown
- Parx Shippensburg
- Live! Casino Pittsburgh
- Live! Casino Philadelphia
Bally’s State College Casino is on the way after the Pennsylvania Supreme Court ruled in favor of Ira Lubert’s SC Gaming bid last week.
PlayPennsylvania has five theories on why revenue has slowed down despite adding five casinos in the last four years with another on the way.
#1 Skill games could be negatively impacting slot revenue
Pennsylvania skill games have been operating in a gray area for years, and have become one of the biggest lightning rod topics in the gambling industry.
The Pennsylvania Supreme Court is also ruling on the legality of the games at some point in the near future.
Pace-O-Matic, a Georgia-based skill games manufacturer, has been seeking regulation from the PA legislature for years. It also claims that it does not pose a threat to the casino industry.
The casino industry is extremely lucrative in Pennsylvania, there is no denying that. However, with hundreds of thousands of skill games proliferating in the Keystone State, some believe they play a role in slowing casino revenue.
Parx CEO, Eric Hausler, brought to light the potential impact skill games is having on the casino industry during a House GOP policy committee back in May. Hausler took the following revenue of surrounding states, where skill games are illegal, and compared them to Pennsylvania. It looked like this:
| Year | Delaware | Maryland | New Jersey | New York | Ohio | Pennsylvania | Total (ex. PA) |
|---|---|---|---|---|---|---|---|
| 2018 | $352.4 million | $1.09 billion | $1.8 billion | $2.43 billion | $1.60 billion | $2.37 billion | $7.27 billion |
| 2019 | $366 million | $1.14 billion | $1.77 billion | $2.54 billion | $1.67 billion | $2.36 billion | $7.48 billion |
| 2021 | $393.1 million | $1.30 billion | $1.87 billion | $2.53 billion | $2.02 billion | $2.29 billion | $8.12 billion |
| 2022 | $405.3 million | $1.33 billion | $2.04 billion | $2.66 billion | $2.03 billion | $2.39 billion | $8.46 billion |
| 2023 | $425.7 million | $1.33 billion | $2.10 billion | $2.82 billion | $2.10 billion | $2.46 billion | $8.78 billion |
| Total Growth Percentage | 21% | 22% | 16% | 16% | 31% | 4% | 21% |
It’s evident that, over calendar years, that Pennsylvania grew the least out of the other five states.
Hausler also brought up Virginia, which saw an 11% increase per day in the four months following Virginia’s ban of skill games last November.
Again, despite the lucrativeness of the casino industry, it’s likely that skill games are cutting into revenue totals. But, there is a scenario where both can coexist should the Supreme Court legalize the machines.
#2 Tons of iGaming options for players
We won’t say PA online casinos are cannibalizing retail properties because retail numbers are still above pre-pandemic totals. However, we can say that iGaming has given players another way to gamble in the Keystone State.
The obvious feature of online casinos is being able to gamble anywhere from the comfort of your own home, or even in the waiting room of a doctor’s office. With cellular reception, one can gamble just about anywhere in the Commonwealth.
The pandemic, without a doubt, evolved online casinos even faster than expected since so many people were stuck at home for months in 2020 and 2021. That likely changed the habits of some, who didn’t see the need to enter a casino, or at least, not go as often. It’s part of the reason PA casinos invested in more amenities to reinvent themselves.
As newer players become eligible to gamble, it’s also more likely that they gamble online before entering a casino. Young gamblers, who just turned 21, have 21 online casinos to choose from with more than 10,000 slots, table games and live dealer games. All of it is in the palm of their hands.
Those are a lot of options. Online casinos produced $2.36 billion in gross revenue during FY 2023/2024, which is a record for any 12-month period.
Both verticals are still performing very well, and while the impact is unknown, online casinos could be cutting into retail slot revenue, slightly.
#3 Casinos have old slot product
Many Pennsylvania casinos have had the same slots on gaming floors for years. And, over time, those become obsolete or less enticing to the average gambler looking for newer machines.
Plenty of casinos over the last year that have removed slot machines. Rivers Casino Pittsburgh removed 302 slots from its gaming floor in April. Assistant GM, Andre’ Barnabei, said that guest behavior drove the decision:
“The number of units does not determine or drive the revenue,” Barnabei told the PGCB. “It’s the guest’s choice, the guest’s preference in what they choose to play.”
Here are other examples of casinos removing slots in 2023:
- Harrah’s Philadelphia removed nearly 150 slots last July
- Hollywood Casino Morgantown and Lady Luck Nemacolin, took away a combined 49 slots in August
- Mohegan Pennsylvania reduced its count by 120 slots in September
Anthony Carlucci, President and General Manager of Mohegan Pennsylvania, directly blamed skill games for the removal of its machines.
“The skill games have proliferated and if you do a correlation between that and our volumes going down, there’s a direct correlation,” he told the PGCB during a September meeting.
The combination of old product along with skill games has been a reason for slot removal in Pennsylvania, according to casinos.
#4 PA casino market could be facing maturity
Despite the addition addition of five new casinos since 2020, it’s possible the casino market in Pennsylvania is facing maturity.
Mohegan Pennsylvania was the first casino to open in the Keystone State in November 2006. Since then, the state has added 16 more properties. It’s become one of the most successful retail markets in the country.
As previously discussed, habits from this in the mid-2000s have changed from the gamblers of today, especially with the amount of options available.
At some point, casino revenue is expected to level off. We’re not sure if it has happened, yet, but the slight decrease in profits could indicate that the period of maturity has arrived.
#5 Inflation is getting under control, but still high
The inflation rate reached 8.0 in 2022, according to US Inflation Calculator, which is the highest rate since the company started tracking in 2000. The rate dipped to 4.1 in 2023 and through June, it came down to 3.0. That is still the highest rate since 2011.
It’s certainly possible that people are still feeling the effects of it. The price of dinner, groceries and gas has increased over the years, which has altered many entertainment habits.
It’s possible that people aren’t visiting casinos as often, or using discretionary income elsewhere.
The extent of which each of these theories are affecting PA casino slot revenue are unknown. It’ll be difficult to ever know the exact reasons. However, the combination of all of these factors, in some way, are cutting into casino revenue.
