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New Lobbying Group Has Bright Ideas For Pennsylvania Casinos

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The online gambling expansion bill remains stuck in debate between the Pennsylvania House and Senate. The sticking point seems to be video gambling terminals (VGTs). What both groups do seem to agree on though is that online casinos are a good idea.

iDEA spreading the word about online casino benefits

It is increasingly difficult to deny there is much more good than bad when it comes to the online casino industry. The facts and figures are there. Moreover, they are hard to argue with.

Now a new lobbying group intends to get those hard facts in front of the change-makers. The iDevelopment and Economic Association (iDEA) formed this week to represent the interests of the online casino industry. The group immediately got to work with a paper on the New Jersey online casino market.

Researchers Alan Meister, Ph.D. of Nathan Associates and Gene Johnson of Victor authored the paper, which was reviewed by the University of Las Vegas. Titled “Economic Impact of New Jersey Online Gaming: Lessons Learned,” it debunks misconceptions about the industry’s dangers. It also presents very persuasive fiscal facts about how iGaming boosts the entire casino industry.

What online casinos bring to the table

While Nevada and Delaware have online poker, New Jersey is the only state to offer both online poker and online casino. With that in mind, iDEA’s report focused on that market. The numbers are staggering. From its inception in 2013 through the end of last year, the New Jersey industry generated:

  • $998.3 million in output
  • 3,374 jobs
  • $218.9 million in employee wages
  • $124.4 million in tax revenue

Our own estimates suggest the Pennsylvania online casino industry could be worth $364 million annually by the fifth year of operation. Additionally, through five years, the Keystone State would generate even more tax revenue than New Jersey. The estimates suggest, with higher rates and upfront licensing fees, there would be $426 million in tax revenue.

This is where an important caveat needs emphasis. The current Pennsylvania bills feature two radically different tax rates. The Senate rates are oppressively high, 54 percent. It may seem counterintuitive, but the bill with the lower tax rates actually stands a much better chance of reaping higher returns.

At 54 percent, the rate and the upfront licensing fee, there is simply not enough money to be made for companies to bother launching a product. As iDEA’s Jeff Ifrah notes, it is important to observe the New Jersey model, not just the existence of the industry:

“New Jersey’s experience provides valuable lessons for other U.S. states considering iGaming legalization in the future. The state’s operating environment and regulatory structure provides a portable model which can be modeled by other jurisdictions, bringing much-needed jobs and tax revenue.”

Debunking those cannibalization misconceptions

The iDEA report certainly highlights what works about online casinos in New Jersey. It also provides overwhelming evidence that arguments against online casinos have no merit. Here are just a few examples:

Online casinos cannibalize land-based casino revenue

When it comes to proving online casinos help, not hurt, their land-based counterparts, there is every kind of evidence imaginable. The report cites numerous studies in the US, Canada, and Europe.

The New Jersey operators interviewed for the research unanimously agreed their casinos benefit from their online participation.

The most interesting conclusion is that these sites actually help the brick and mortar brand bring in new customers. Those playing online are decidedly younger than most casino patrons. If anything, it appears iGaming brings players to brick and mortar casinos in a way the casinos cannot accomplish on their own.

Problem and underage gambling

One of the major concerns voiced by the family values sector of online gambling opponents is that kids are going to run up debt on their parents’ credit cards gambling online.

This is certainly a valid concern when it comes to offshore gambling sites with minimal oversight. Really though, it is all the more reason to regulate sites. In regulated markets, intense scrutiny when it comes to identity verification means not a single minor has ever successfully created a fradulent online casino account.

In fact, fraud is not a concern at all either thanks to geolocation technology, identity verification protocols, and round-the-clock security monitoring. These concerns also make money laundering incredibly difficult to pull off.

In other words. iDEA’s report tells us what online casino supporters already know–this is an industry with nothing but upside. Now the group is doing the important work of spreading the word and getting states like Pennsylvania to push through similar legislation.

About

Jessica Welman is the managing editor of PlayPennsylvania. A longtime poker media presence, Jess has worked as a tournament reporter for the World Poker Tour, co-hosted a podcast for Poker Road, and served as the managing editor for WSOP.com.