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?
Last updated: March 25, 2020
How does that number break down? Let’s look at how much each category brought in:
Sports betting revenue starts rolling in
Sports betting in PA started out with retail only. Since the addition of online sportsbooks, revenue has soared. The majority of sports wagering in PA now happens online, and the state broke handle records every month during the 2019/2020 NFL season.
Along with revenue, the state’s tax revenue has experienced large gains since online betting was added to the mix.
Here is a look at the tax revenue (state and local) from sports betting so far:
February 2020: $1,700,011
January 2020: $8,222,829
December 2019: $4,094,893
November 2019: $5,299,449
October 2019: $5,381,370
September 2019: $5,062,216
August 2019: $2,201,406
July 2019: $1,026,769
June 2019: $979,302
May 2019: $1,030,267
April 2019: $1,519,733
March 2019: $1,986,962
February 2019: $700,853.95
January 2019: $938,597.00
December 2018: $722,356.00
November 2018: $183,238.77
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 (same as online poker).
Here is a look at slot and table games breakdown by month:
Slot tax: $5,202,349
Table games tax: $1,284,237
Total online casino tax: $6,486,586
Slot tax: $3,883,784
Table games tax: $737,293
Total online casino tax: $4,621,067
Slot tax: $3,008,116
Table games tax: $412,956
Total online casino tax: $3,421,072
Slot tax: $2,750,645
Table games tax: $415,445
Total online casino tax: $3,166,090
Slot tax: $2,147,692
Table games tax: $154,517
Total online casino tax: $2,302,209
Slot tax: $1,746,962
Table games tax:$144,039
Total online casino tax: $1,891,001
Slot tax: $1,643,397
Table games tax: $191,601
Total online casino tax: $1,835,058
Slot tax: $279,564
Table games tax: $47,135
Total online casino tax: $326,700
Online Poker joins online slots and table games
Mount Airy launched the first online poker room with PokerStars PA going live Nov. 5, 2019. So far, it is the only operator live in the state, though more operators are expected to join the market in the coming months.
Here is a look at revenue and tax revenue by month for online poker in PA, plus total tax revenue to date.
Online poker revenue: $1,830,356
Online poker tax: $290,752
Online poker revenue: $2,157,266
Online poker tax: $345,162
Online poker revenue: $2,473,137
Online poker tax: $395,702
Online poker revenue: $1,965,494
Online poker tax: $314,479
Mini-casino auction profits
|Parent Casino||Bid Amount||Location||Additional table games license?|
|Hollywood Casino||$50,100,000||Yoe in York County||N/A|
|Stadium Casino LLC||$40,100,005||Derry in Westmoreland County||Yes|
|Mount Airy Casino||$21,888,888.88||New Castle in Lawrence County||N/A|
|Parx Casino||$8,111,000||South Newton in Cumberland County||N/A|
|Hollywood Casino||$7,500,003||West Cocalico Township in Lancaster County||N/A|
VGT tax revenue
February 2020: $697,806
January 2020: $579,914
December 2019: $457,159
November 2019: $342,830
October 2019: $242,522
August/September 2019: $168,849
Lottery expansion nears $45 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, 2018. 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 from launch through July 2019 are as follows:
Online lottery: $32.96 million
Keno and virtuals: $11.62 million
Draw tickets such as Mega Millions and Powerball are now available for purchase online through the iLottery as well, as of January 2020.
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:
- February 2020: $255,366
- January 2020: $309,716
- December 2019: $515,343
- November 2019: $447,174
- October 2019: $489,654
- September 2019: $439,357
- August 2019: $208,295
- July 2019: $186,730
- June 2019: $238,847
- May 2019: $270,458
- April 2019: $277,883
- March 2019: $245,226.70
- February 2019: $244,376.75
- January 2019: $317,475
- December 2018: $429,075.51
- November 2018: $486,174.15
- October 2018: $435,429.45
- September 2018: $320,057.10
- August 2018: $141,543.03
- July 2018: $131,727.75
- June 2018: $152,679.34
- May 2018: $199,755.94
Lady Luck Nemacolin lone sports betting holdout
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.
As of March 2020, 12 of the 13 eligible casinos have submitted applications for the $10 million license. The lone holdout is Lady Luck Nemacolin.
Interactive gaming petitions generate $94 million
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:
- Mount Airy
- Sands Bethlehem
- Hollywood Casino
- Valley Forge
- Harrah’s Philadelphia
- Sugarhouse Casino
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.
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.