Last updated: Aug. 27, 2018

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 latest state budget only expected $100 million from online gambling. That is a figure Pennsylvania surpassed after just the first mini-casino auction.

The state is still waiting for license applications to come in. However, thanks to other elements of the new law, it is already raking in money. How much so far?

$309,184,059.03

And that number doesn’t even count the money coming from PA Lottery expansion. Currently, there are no regular reports on precisely how much the new iLottery and Keno bring in each month. However, an August report said Keno generated $12.7 million in revenue so far, while the online Lottery brought in approximately $50.6 million.

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.

Other sources of revenue from the law include:

  • Online lottery
  • Video gambling terminals
  • Mini-casino licenses

When it comes to the mini-casino licenses, the auctions are generating significantly more revenue than expected. The bare minimum of $7.5 million per mid meant the process would net at least $75 million. That was the worst case scenario.

Well, the process exceeded that number on just the second mini-casino auction. Here is a look at how much each mini casino cost its host property:

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 CountyN/A
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
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Interactive gaming petitions generate $112 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 nine casinos who filed for petitions 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.

The Meadows and Lady Luck Nemacolin can still apply for the remaining seven licenses, but don’t expect them to any time soon. 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. PGCB should establish terms for what kinds of groups can apply in September, then open up the application process in October.

Sports betting off to slow start with one license

In August, Pennsylvania finally got its first official sports betting applicant. Penn National filed its petition, breaking the weeks of inactivity that had many worrying no one would bite.

Later in the month, Parx Casino filed its petition as well, bringing the official tally to two. That number should grow though, given many companies have spoken about sports betting in PA as part of their future plans.

With a hefty $10 million licensing fee, it is not surprising casinos are gun shy, but at least the state knows they officially have one under their belt, with hopefully more to come.

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. 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

Total DFS tax revenue earned to date: $484,163.03