The coronavirus pandemic closed casinos in Pennsylvania for three months, some longer. Slot machines were turned off, tables emptied and most of the state’s 17,000 casino employees were furloughed.
For half of March, and all of April and May, brick-and-mortar casinos sat empty. The only source of gaming revenue, and subsequently tax dollars, came from sports betting, fantasy sports, and record-breaking numbers from PA online casinos.
It’s hard to pinpoint an exact dollar figure on total revenue lost by casinos since year-over-year growth may have been different due to the arrival of iGaming in Pennsylvania. However, by looking at reports released by the Pennsylvania Gaming Control Board, the numbers show unprecedented losses and a severe impact on taxes collected by the state from casinos.
By comparing the taxes collected last year in March, April and May to this year’s numbers for those months, the state brought in $315 million less in taxes from casinos.
PA casino taxes collected during COVID closures
This table shows the amount of taxes through all forms of gaming in 2019 vs. 2020.
Pennsylvania casino taxes
Pennsylvania taxes slots at 54% and table games at 16%. It’s a much higher rate than New Jersey that taxes at a rate of 8% for both. Also, at 36%, Pennsylvania’s sports betting tax is one of the highest in the country.
Where do taxes collected from Pennsylvania casinos go?
For every dollar produced as revenue from slots, 54 cents is returned to Pennsylvanians. According to the Pennsylvania Gaming Control Board, most is used to fund general school property tax reduction or wage tax reduction.
- 34%: Property tax relief
- 11%: horse racing industry
- 5%: Economic development and tourism fund
- 4%: Local and county government share
The 16% tax rate for table games is lower due to the overhead cost. The majority of the tax revenue collected from table games goes to state and local governments’ general funds.
In an interview with Play Pennsylvania in June, American Gaming Association SVP of strategic communications Casey Clark said of the prolonged casino closures:
“The tax implications are massive. Communities across the state will feel the shortfall in gaming revenue. It’s not just going to be in the areas around the casinos. The impact is going to be far-reaching. It will have a long and lasting impact on our industry and the people who rely on us.”
March begins the slide
March 2019 was a banner month for brick-and-mortar casinos in Pennsylvania. PGCB reported revenue from slot machines and table games reached an all-time monthly high of $309 million. The number was fueled by the biggest month ever for table games earnings ($82.5 million) and the third-highest ever for slots ($226.5 million).
One year later, things were much different. All 12 casinos were closed by March 17 to slow the spread of coronavirus. Total gaming revenue from March 2019 ($316 million) plunged to $153 million.
March 2019 vs. March 2020 Pennsylvania gaming revenue
April and May bring more fiscal pain
In April 2020, PA land-based casinos posted zero revenue for slots and table games for the first time in history. As a result, overall gaming numbers dropped a whopping 84% compared to the previous April.
April 2019 vs. April 2020 Pennsylvania gaming revenue
In May, casinos remained closed and again posted no revenue for land-based slots and table games. Good news came in the form of PA online casinos which saw a 30% month-over-month revenue increase for a record-breaking $55.8 million.
However, it was only a small consolation for huge losses. Overall, total earnings were down 79% from May 2019.
May 2019 vs. May 2020 Pennsylvania gaming revenue
A historic closure with lasting effects
Gaming historian David G. Schwartz, who is an author, associate vice provost for faculty affairs at UNLV and former longtime director of the Center for Gaming Research at UNLV, offered some insights in a recent interview with Play Pennsylvania.
It’s safe to say the coronavirus pandemic caused casinos to close their doors for the longest amount of time in history. Now, the question is, what will be the fallout from that.
Pennsylvania is only one of six states that that legalized iGaming. Will other states look to legalize?
“Yes, I think so,” said Schwartz. “Legislators might be more open to it because they need revenue coming in and it seems that brick-and-mortar revenue isn’t going to be what is was.”
With some people leery of air travel, Pennsylvania’s twelve commuter-friendly casinos might be at an advantage over other destinations. Would you agree?
“I think they are in a better situation. The people who do want to gamble might not want to hop on a plane and go to Las Vegas. The regional and local casinos could be very well supported. “
For Schwartz, the teaching moment out of the coronavirus pandemic that he would convey to students is:
“You have to expect the unexpected and be prepared for a wide-range of possibilities. It was something we should have been better prepared for but weren’t. I think the casinos that survive will be the ones that are flexible and able to change very quickly. They are also going to have to have resilient capital structures to be able to stay open. “
Allegheny Institute estimates the losses are larger
The Allegheny Institute went about quantifying the losses of the state’s casinos during the government shutdown. They estimated that the GTR from 2019 to 2020 would have gone up 2% for slots and 3% table games.
They calculated that from March to June, casinos in Pennsylvania missed out on $968.8 million in revenue. It would have meant $424.2 in tax dollars for the Commonwealth.
Research assistant Hannah Bowser and Executive Director Frank Gamrat said in their analysis:
“How exactly taxpayers will be affected remains to be seen, but entities that typically receive tax money from casino revenues, including school districts for property tax relief, should expect and likely will see a decrease in funding in the coming fiscal years.”
“Most difficult economic challenge” ever for casinos
By March 19, nearly all of the 465 commercial casinos and most of the tribal casinos across the country closed. The American Gaming Association believes a record start to 202o will provide a strong enough foundation to recover from a brutal second quarter.
The AGA’s new Commercial Gaming Revenue Tracker revealed that U.S. commercial gaming revenue in Q2 was $2.30 billion, a 79% drop from 2019.
AGA President and CEO Bill Miller commented in a press release:
“COVID-19 has undoubtedly posed the most difficult economic challenge the gaming industry has ever faced. Yet, gaming’s record popularity prior to COVID-19, as well our resilience in the midst of such adversity, is evidence of the industry’s foundation for continued success as we emerge from the pandemic.”