Video Gaming Terminals (VGTs) do not come to mind initially when thinking about Pennsylvania gambling. However, executives from the industry want a bigger slice of the pie.
VGTs are not slot machines, but are similar, according to the Pennsylvania Gaming Control Board (PGCB). Every VGT play has a randomly generated outcome from the previous play, the same way it does at a slot machine.
Three top executives in the VGT market participated in a Pennsylvania Senate hearing earlier this week to improve the sector:
- Matthew R. Hortenstine, General Counsel, J&J Ventures Gaming, LLC
- Brent Mayes, President, Venture Gaming and Pro ATM
- Rick Kirby, Chairman, Betson Enterprises
Despite PA online casinos and retail slots driving much of the state’s gambling revenue, there’s potential for VGTs to be a major contributor. The regulation or banishment of Pennsylvania skill games could allow VGTs to thrive, too.
VGTs contribution to Pennsylvania gambling revenue
According to the PGCB’s FY 2022/2023 Annual Report, there are 69 facilities in 33 counties offering VGTs, compared to the 65 locations in 31 counties at the close of the previous fiscal year. VGT machine count increased from 325 to 345 over the same period.
VGTs are held at truck stop establishments. These facilities must meet the following criteria to offer VGTs:
- Have a diesel island
- Sell an average of 50,000 gallons of diesel per month
- Be located on at least three acres of property not owned by the Pennsylvania Turnpike Commission
- Have at least 20 dedicated commercial parking spaces
- Have a convenience store
- Be a Pennsylvania Lottery sales agent
VGTs generated $42.1 million in gaming revenue, contributing $21.9 million to state and local share taxes this past year.
There’s potential for a considerable amount of growth in Pennsylvania, Hortenstine said during the hearing.
Pennsylvania VGTs want to expand, model Illinois for growth
Illinois has one of the most robust VGT industries in the country. There are about 45,000 terminals in 8,200 locations.
The sector generated $31 billion in handle, where players won $29 billion and VGTs made $2.7 billion in net income. That translated to $921.5 million in taxes ($786 million to the state and $135.5 million to local municipalities).
Unlike in Pennsylvania, VGTs can be found in Illinois bars, restaurants, veterans’ associations and fraternal organizations, in addition to truck stops. Hortenstine, of J&J Ventures Gaming, said:
“We believe it would be in the best interest of the Commonwealth of Pennsylvania to expand that to a similar model to include those types of locations.”
By expanding into other locations, Hortenstine believes that Pennsylvania could have an industry almost as strong as Illinois’. He predicts that tax revenue could reach $800 million with the proposed expansion.
Pennsylvania skill games hurting Video Gaming Terminals
Later in the week, other PA casino executives provided testimonies on the impact of skill games on the regulated gaming market. However, during Kirby’s testimony, he spoke about the unregulated gaming industry hurting VGTs:
“We are finding it extremely, extremely difficult in today’s market to stay profitable. I’ve made a huge investment in a facility, in my employees and to the state through my licensing process. And quite honestly, we’re getting killed with the amount of unregulated games that are in the state.”
Kirby is finding that truck stops in Pennsylvania are installing skill games because it’s easier than going through the hoops of background checks and licensing for VGTs.
Senator Gene Yaw (R-23) has proposed a 16% tax rate in a framework he developed in June. Yaw attended and spoke at the hearing, explaining that the idea behind his bill is regulation. Hortenstine and Yaw agreed that there might need to be some compromise, but a path forward for regulation of skill games would work for VGTs.