Valley Forge Casino Resort, King of Prussia, PA (Montgomery County Planning Commission photo)
HARRISBURG, PA—Gambling has injected more than $385 million into Pennsylvania coffers in the first year since a law was passed to expand gambling in the state, surpassing state budget estimates. Upfront licensing fees for casinos, online casinos, and sportsbooks, as well as mini-casino auction profits and tax revenue from lottery expansion and daily fantasy sports, have combined to net Pennsylvania more than $1 million a day since late 2017, according to a recent analysis by PlayPennsylvania.com.
“The most notable aspect of the significant revenue that has been generated is that this is almost completely from fees, rather than tax revenue gained from gamblers,” says Jessica Welman, analyst for PlayPennsylvania.com. “Clearly there is enough interest in Pennsylvania's enormous market so far to generate the fees.”
The revenue estimates were tabulated by PlayPennsylvania.com using a combination of official statistics and estimates based on iLottery, keno, and virtual sports sales numbers.
Using return-to-player rates of the games, PlayPennsylvania estimates that the state has collected more than $23 million in revenue from online lotto games ($19.6 million), keno ($3.6 million), and virtual sports ($87,000) through October.
Other sources of revenue so far from the law include:
- Mini-casino auction profits, $128 million
- Interactive gaming petitions, $94 million
- Casino licensing, $78 million
- Sports betting petitions, $60 million
- Daily Fantasy Sports tax revenue, $1.4 million
By comparison to the gambling expansion, the state collected $799.8 million in taxes from statewide slot revenues in fiscal 2017-18. Pennsylvania estimated in February that the state will generate more than $34 billion in general fund revenues for its 2018-19 fiscal year.
“If the point of the expansion was to fill short-term gaps in the state's budget, then the expansion would have to be considered a success so far,” Welman says. “We believe that the gambling expansion will eventually prove to be a winner for the state's budget, but the long-term picture is less certain. More casinos and sportsbooks must open before we get a clear picture of whether Pennsylvania's relatively steep tax rates and license fees will produce the desired outcome.”
With the November opening of the sportsbook at Hollywood Casino at Penn National, the rollout of sports betting is just beginning in Pennsylvania. More openings are expected in December and January, too.
In addition, Pennsylvania should begin adding revenue from online gambling in early 2019, and further down the line, mini-casinos should enter the fray.
“The addition of retail sports betting should help buoy a slowing Pennsylvania casino industry,” says Dustin Gouker, lead sports betting analyst for PlayPennsylvania.com. “If New Jersey is any indication, though, the more significant revenue generator will be online sports betting. A successful rollout there should generate millions of dollars in tax revenue for the state.”
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Steve Lubetkin
Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].
