Pennsylvania Gambling Expansion Revenue

Updated on August 16, 2019

The new Pennsylvania gambling expansion law passed largely because the state desperately needed a new source of tax revenue. One of the biggest sources of that revenue will be the upfront licensing fees for all the new types of gambling.

Even with the potential for big returns, the first state budget after expansion only expected $100 million from online gambling. That is a figure Pennsylvania surpassed after the first mini-casino auction.

Thanks to other elements of the new law, it is already raking in money. How much so far?

$471,833,268

Last updated: Aug. 16, 2019

How does that number break down? Let’s look at how much each category brought in:

 

60%
Licensing Fees
28%
Mini-casinos
9%
Lottery expansion
3%
Taxes on revenue

Sports betting revenue starts rolling in

The first month of sports betting revenue was not exactly awe-inspiring. With only one property open for less than two weeks, the first month of total revenue came to just over $500,000. Of that, $173,000 went back to the state and $10,000 or so to local communities.

Now that online sports betting is underway, the state is breaking handle records every month. Online betting is already more popular than retail betting, which means the revenue, and the state’s tax revenue will continue to rise.

Here is a look at the tax revenue from sports betting so far:

November 2018: $183,238.77
December 2018: $722,356.00
January 2019: $938,597.00
February 2019: $700,853.95
March 2019: $1,986,962
April 2019: $1,519,733
May 2019: $1,030,267
June 2019: $979,302
July 2019: $1,026,769

Total sports betting tax revenue earned to date: $8,849,233

Online casino taxes now a PA revenue stream

With the launch of online casino sites, the state got another tax revenue stream. This one will eventually offer quite a bigger chunk than sports betting. With online slots raking 54% in taxes on revenue, that means the state gets even more than the site when it comes to profit.

Table games provide a good chunk as well, with a 16% taxation rate.

Here is a look at each months slot and table games breakdown:

July 2019
Table games tax: $47,135
Slot tax: $279,564
Total online casino tax: $326,700

Total online casino tax revenue earned to date: $326,700

Sports betting up to 11 applicants

In August 2018 Pennsylvania finally got its first official sports betting applicant. Penn National filed its petition, breaking the weeks of inactivity that had many worrying that nobody would bite.

Later in the month, Parx Casino filed its petition as well, bringing the official tally to two. A month later, Harrah’s Philadelphia applied as well. SugarHouse joined the pack just a couple of days later along with its sister property, Rivers Casino.

After a long period with no applications, Valley Forge Casino submitted its paperwork Nov. 15. Presque Isle Downs followed a month later, submitting on Dec. 7.

After a long period without any new applicants, both Mohegan Sun Pocono and Mount Airy submitted applications on March 29.

The Meadows surprised the industry when it applied for a sports betting application in tandem with Draft Kings at the start of July. Then, Stadium Casino aka Live! Hotel & Casino submitted plans for sports betting on July 26. Wind Creek is expected to submit its plans in the coming months as well.

Interactive gaming petitions generate $94 million so far

The 90-day window for PA casinos to apply for $10 million comprehensive interactive gaming petitions opened in mid-May. For the first 85 days, there was no news — a panic set in that there might be few or no applicants.

In the end, though, a majority of the 13 casinos ponied up the fee, which allows them to offer online peer-to-peer games like poker, online slots, and online table games. The seven casinos who filed for petitions and received approval are:

Once the all-in-one license application period ended, PA casinos could still purchase a la ca carte licenses for each of the three categories. Presque Isle Downs owner Churchill Downs spent $8 million applying for online poker and online slots. In an unusual move, Mohegan Sun Pocono paid a $2 million premium to apply for all three licenses for $12 million.

On Oct. 4, Rivers surprisingly rescinded its interactive application. Rush Street Gaming owns both Rivers and SugarHouse, so presumably, Rivers will support that interactive offering instead of launching a separate one. That opens up three more licenses, bringing the total to 10.

On Oct. 31, Stadium Casino rescinded its peer-to-peer application but retained its online slots and table games licenses so that it will pay $8 million in licensing fees.

A third casino rescinded its peer-to-peer application Nov. 28. Mohegan Sun Pocono informed PGCB that it would not seek to offer online poker either, so it too will pay $8 million.

The Meadows and Lady Luck Nemacolin opted not to apply for any interactive gaming licenses. The Meadows is owned by Penn National, who already applied for a comprehensive license. Lady Luck Nemacolin is managed by Churchill Downs now, and will likely defer to Presque Isle on the online gaming front.

Where does that leave these leftover licenses? Well, the law states the next step is to open up the applications to entities outside of Pennsylvania.  The two applicants in that category are MGM Resorts and Golden Nugget Atlantic City.

Mini-casino auction profits

Parent CasinoBid AmountLocationAdditional table games license?
Hollywood Casino$50,100,000Yoe in York CountyN/A
Stadium Casino LLC$40,100,005Derry in Westmoreland CountyYes
Mount Airy Casino $21,888,888.88New Castle in Lawrence CountyN/A
Parx Casino$8,111,000South Newton in Cumberland CountyN/A
Hollywood Casino $7,500,003West Cocalico Township in Lancaster CountyN/A
Total mini-casino auction profit to date: $130,199,897

Lottery expansion nears $25 million in revenue

PA Lottery was part of the gambling expansion bill as well. The laws allowed for the introduction of three new elements of lottery offerings. Those are:

Keno rolled out May 1, 2018, followed by online lottery games on May 22. Xpress Sports, the virtual sports element, went live in August.

Based on numbers provided by the PA Lottery in its annual fiscal reports, profits from each of the following game types since launch are as follows:

Online lottery: $32.96 million
Keno and virtuals: $11.62 million

Daily fantasy sports revenue

While daily fantasy sports (DFS) was not explicitly illegal in Pennsylvania, the 2017 gambling expansion regulated the industry. With that regulation comes taxation and licensing fees.

Ten fantasy sports operators needed to each pay a $50,000 licensing fee. Their revenue is taxed at a rate of 15 percent. Here is a look at each month’s tax revenue from DFS as well as the total amount of tax revenue to date:

  • May 2018: $199,755.94
  • June 2018: $152,679.34
  • July 2018: $131,727.75
  • August 2018: $141,543.03
  • September 2018: $320,057.10
  • October 2018: $435,429.45
  • November 2018: $486,174.15
  • December 2018: $429,075.51
  • January 2019: $317,475
  • February 2019: $244,376.75
  • March 2019: $245,226.70
  • April 2019: $277,883
  • May 2019: $270,458
  • June 2019: $238,847
  • July 2019: $186,730
Total DFS tax revenue earned to date: $4,077,438

Law generates $51 million for PA in a matter of hours

In 2017, the state received two payments in the days immediately following the passage of the law. One was a $1 million payment from Valley Forge Casino to remove the amenity fee requirement on the Category 3 property. The other was a $50 million payment by Stadium Casino LLC for its Category 2 casino license. The group is in the process of building a casino in the Stadium Park area of Philadelphia.

In June of 2018, the Stadium Casino project paid the state an additional $24,750,000 for the right to offer table games at the property when it opens, bringing the total licensing brought in from the group to $74.75 million.

Other sources of revenue from the law include:

On Oct. 31, Valley Forge also took advantage of another change in the law. For $2.5 million, the resort casinos could up the number of slot machines on property. After a year of gaming revenue growth, the casino decided it was time to expand.

After nearly a year and a half of the law being in effect, Lady Luck Nemacolin elected to pay the $1 million to eliminate its $10 Category 3 amenity fee, leaving the state with no more casinos charging for entry.

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