Pennsylvania online gambling hearing generally positive

Tuesday’s hearing before the Pennsylvania Senate Committee on Community, Economic and Recreational Development on intrastate internet gambling was generally positive, according to local media reports, despite Andy Abboud, a Sheldon Adelson lieutenant, again voicing the objections of his employer’s land casino group to any legalisation.

The majority of witnesses appeared to support properly legalised and taxed online gambling, although some were more cautious in approach than others, suggesting delays to assess how other states were doing.

Abboud’s claim that legalised online gambling in Pennsylvania would steal customers from his company’s Bethlehem land casino were countered by Michael Cohen from Caesars Entertainment, who said that broadening empirical evidence has now shown that punters who gamble online do not typically frequent land casinos.

“The Internet is a new distribution channel, tapping a new customer,” Cohen said.

Pennsylvania represents an important opportunity for online gambling due to its populous nature. The state already has twelve land casinos and is regarded as second only to Las Vegas in terms of revenues, but faces rising competition from other Eastern states like New York and New Jersey, which have either legalised online gambling or are actively considering the possibility.

A spokesman for Parx Casino in Philadelphia, Robert Green, was concerned about the 20 percent drop in revenue at his company’s land poker tables since online poker was legalised in neighbouring New Jersey late last year.

“I don’t think you can say with any authority that there is not an impact on bricks-and-mortar casinos,” he said.

A report by Econsult Solutions earlier this year estimated that Pennsylvanian online gambling operators could generate $184 million in first-year revenues $307 million annually after that (see previous reports).

But Adam Ozimek, Econsult Solutions director of research added: “We don’t include any license fees in there. And really, those revenues should be thought of as illustrative because we don’t know what the tax rates are going to be.”

Robert Pickus, chairman of the Valley Forge Casino Resort, felt the projections were reasonable and demonstrated why the state should move quickly to take a lead in the industry.

Stephen Mullin, the Econsult’s president, said legalising online gambling isn’t expected to eat into the profits of brick-and-mortar casinos.

“It’s a different audience out there,” Mullin said. “Not to say that there isn’t somebody who plays I-games and also goes to a casino, but it is a very different audience.”

A number of managers from Pennsylvania’s 12 operating casinos say they’d be fine with online gambling as long as it were offered exclusively by existing casino licensees.

Pennsylvania lawmakers have proposed several bills, including one to prohibit any expansion of gambling without a referendum or two-thirds vote of the legislature, and another to allow online bets for many casino-style games.

Senator Edwin Erickson announced last week that he plans a state Senate measure to legalise only Internet poker.

Pennsylvania’s land casino revenue fell 1.4 percent to $3.1 billion last year, the first decline since the state began opening land casino operations in 2006.

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