Gambling expert Frank Gamrat, PhD., told PlayPennsylvania the state’s gambling industry has hit a saturation point.
Gamrat is the Executive Director of the Allegheny Institute for Public Policy. It is a non-profit research and education company that dives into topics to defend the interest of taxpayers.
He noted that there are several gambling verticals that have been added to the market, including Pennsylvania skill games, which aren’t regulated yet, and PA online casinos.
The number of ways to gamble in Pennsylvania has grown rapidly
Mohegan Pennsylvania became the first casino to open in the Keystone State. It opened the door for gambling to flourish in Pennsylvania. The state has come a long way since, adding 16 more retail casinos.
Pennsylvania casinos produced a record of $5.7 billion in gambling revenue last year, with $2.5 billion coming from slots. It’s the highest slot revenue recorded since the Pennsylvania Gaming Control Board (PGCB) started tracking calendar year results in 2013.
Pennsylvania had 12 casinos in 2013 and generated $2.38 billion in slot revenue that year. Last year’s total represented only a 3.4% increase, despite there now being 17 casinos in the state.
Shouldn’t that increase be larger with the amount of casinos in the state?
“Yes, you would absolutely think that because they put these casinos in places where they didn’t have access [to gambling] before,” Gamrat told PlayPennsylvania.
The opening of new casinos, especially in the Greater Pittsburgh area with Rivers Casino Pittsburgh, Hollywood Casino at The Meadows and Live! Casino Pittsburgh, should have significantly increased slot revenue. But it hasn’t happened that way, as other means to gamble became legalized.
“Internet [gaming] came along and now I don’t have to go to the casino, I can play internet slots. People might stay home and game,” Gamrat said of a potential reason for slow retail growth.
There are currently 21 online casino platforms in Pennsylvania, which produced $215.2 million in February revenue, an all-time record.
How Pennsylvania skill games have contributed to saturated market
There are other forms of gambling, in addition to online casinos, that are saturating the industry.
Gamrat referenced skill games as a possible threat to the gambling industry in a policy brief published last week. He mentioned in his piece that there are approximately 15,000 skill games across the state, which is likely on the lower side, compared to an estimated 25,000 retail slot machines.
“I think right now you’re at a saturation point and skill games may be contributing to that saturation,” Gamrat said. “Instead of driving into the city of Pittsburgh to game, I can just walk next door to the bar.”
Gamrat said he’s noticed more and more skill games popping up in convenient stores and bars, along with establishments that are operating mini casinos with several machines.
Skill games are headed towards regulation, however, the framework remains unclear. Gov. Josh Shapiro proposed a 42% tax in his FY 2024/2025 budget with the PGCB regulating the machines. Pennsylvania Senator Gene Yaw’s (R-23) bill proposes a 16% tax with oversight from the Department of Revenue (DOR).
Gamrat made it clear that he’s not choosing a side when it comes to taxation. However, he discussed a condition where skill games can become an asset to the gambling industry:
“It depends how they designate that tax money. If it just goes into the General Fund, then it probably won’t be as much of an asset. If it goes back into the communities where they are, then the asset equation changes. It would be an asset.”
Gov. Shapiro estimates the games will generate more than $150 million in tax revenue next fiscal year. By FY 2025/2026, skill machines could produce more than $313 million in tax earnings.
It is clear that Pennsylvania is a rich state with numerous ways to gamble that can benefit communities across the state.
