What Are Video Gaming Terminals (VGTs)?

Video gambling terminals (VGTs) are opening monthly throughout Pennsylvania, though the average gambler may never notice them.

That’s because the slot machines are only allowed at approved diesel fuel truck stops. By the end of September, there were just seven locations, each with just five machines.

The first machines went live in mid-August of 2019, with more locations and machines added in September. The PlayPennsylvania revenue tracker tabulates how much the machines bring in for the state each month.

According to the Pennsylvania Gaming Control Board (PGCB), VGTs are very similar to the slot machines you might find at any one of 12 Pennsylvania casinos. Every VGT play has a randomly generated outcome from the previous play, the same way it does at a slot machine.

VGTs accept only cash, no credit or debit cards. By law, the maximum bet allowed on a VGT is $5. The maximum payout is $1,000.

The law requires a minimum theoretical payout percentage for VGTs of 85 percent. That’s the same return to player rate slot machines must provide in Pennsylvania casinos. That means that over the long haul, VGTs in PA should pay out 85 cents of every dollar put into them.

Illegal VGTs in PA

Researchers estimate there are as many as 40,000 illegal VGTs operating at various bars, restaurants, and social clubs across Pennsylvania today.

In an effort to stop this illegal activity and start collecting taxes, the state considered several options before striking a compromise. Both the House and the Senate passed a comprehensive gambling expansion package. It includes the authorization of VGTs at certain truck stops. Gov. Tom Wolf signed the bill into law soon after.

PGCB has since defined regulations for VGTs at PA truck stops.

Legal and regulated VGTs in PA

The gaming board opened the application process on May 7. New locations are gaining approval at each monthly meeting.

To host VGTs, the truck stops must:

  • Be equipped with diesel islands
  • Sell, on average, 50,000 gallons of diesel or biodiesel fuel every month for the previous 12, or be projected to sell an average of 50,000 gallons for the next 12 months
  • Have at least 20 parking spaces dedicated for commercial motor vehicles;
  • Maintain a convenience store
  • Be a PA Lottery Sales Agent
  • Be situated on a lot no smaller than three acres not owned by Pennsylvania Turnpike.

Pennsylvania counties that currently play host to one of the state’s 12 casinos were allowed to opt out of having VGTs at truck stops inside their borders. They all took advantage of the option.

As of the end of 2019, the PGCB reported there were 20 facilities, each with five legal VGTs in operation. Those VGT sites are expected to double to 40 in 2020, which would bring total machines to 200.

Eventually, there should be more than 60 VGT locations in the state. Perhaps 120 truck stops might meet the qualifying criteria, though not all have applied.

The state is charging operators a hefty 52 percent tax on all revenues. Of that 42 percent of the gross revenue generated by VGTs is going into a newly established Video Gaming Fund. The state will then deposit this money in its General Fund.

Another 10 percent of the gross revenue generated by VGTs at truck stops in PA will be used for grants to various counties in the Commonwealth and administered through the Commonwealth Finance Agency.

VGTs bring tax revenue increase in Illinois

In nearby Illinois, VGTs were authorized at any establishment licensed to serve alcohol in 2012. The industry has grown from 61 VGTs in September 2012 to almost 27,000 last summer.

In 2017, for the first time ever, Illinois VGTs generated more tax revenue than the state’s 10 riverboat casinos. However, tax revenue also increased overall.

The Illinois Commission on Government Forecasting and Accountability says Illinois VGTs paid $296 million in taxes last year. That’s compared to $270 million paid by casinos over the same period.

The year before authorized VGTs, Illinois’ riverboat casinos paid $340 million in taxes. Revenue numbers in the Illinois casino industry have certainly declined. However, the revenues haven’t simply shifted over to VGTs as some have suggested.

The state is receiving less money in taxes from riverboat casinos. But the increases from VGTs have more than offset that decline. In 2017, Illinois actually took in the most tax revenue from gambling in a decade.

Taxes collected from all gambling in Illinois, including riverboat casinos, VGTs, the Illinois Lottery, and horse racing, amounted to $1.31 billion in 2017. That was up almost eight percent from 2016. Plus, it marked the most taxes the state has pulled in from gambling since 2007.

Those figures make clear VGTs do more than just eat away at existing casino gambling revenues. They can help increase overall gambling revenues across the board as well.

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