Penn Lottery Launches Sports Games to Casinos’ Dismay

Penn Lottery Launches Sports Games to Casinos’ Dismay

The Pennsylvania iLottery is offering another new gaming option – and again upsetting the state’s casinos.

Pennsylvanians can now play simulated sports games through the iLottery. The games, Xpress Football and Xpress Car Racing, allow players to bet on randomized results for a simulated football and racing game, respectively. Players see odds then can place bets on, for example, the end result of a football drive or the winner of a race.

According to PennLive, these games are expected to generate $55 million for the lottery in the 2018-2019 fiscal year. That’s if the Pennsylvania casinos don’t have their way.

The casinos blasted the release the two games Aug. 14, saying they infringe on an exclusivity agreement to offer simulated sports gaming.

It’s another challenge for the Keystone State’s fledgling gambling market.

How Pennsylvania Gambling Got To This Point

For more than 50 years, gambling hasn’t come easy in Pennsylvania.

Pennsylvania was one of the first handful of states to institute a modern lottery, creating a program in 1972 which specifically allocated proceeds to aid the state’s elderly. Lottery revenues now makeup about one percent of the state’s annual budget and still receives widespread bipartisan support and protection, even when It’s run up against the state casino industry.

State residents were more hesitant to embrace casino gambling, even when neighboring New Jersey legalized the facilities in the 1970’s and the nation’s attitudes toward gambling shifted in the 1990’s. But by 2004, the state finally moved forward with racetrack and casino gaming and by 2010 had Las Vegas-style table games. There’s now 12 licensed casinos with a 13th currently under construction.

Pennsylvania then pushed the ante even further last year. Gov. Tom Wolfe and the state legislature passed a sweeping gambling expansion bill that, among other components, opened gaming options to the commonwealth’s airports and truck stops. The bill also made Pennsylvania the fourth state in the nation with legalized online slots and table gaming, which was to be under the exclusive purview of the land-based casinos.

That didn’t stop the Pennsylvania Lottery from creating a slot site of its own.

Earlier this year the Pennsylvania iLottery launched a site with more than a dozen slot-styled games that are similar to online slot offerings in other U.S. states. Advisements touted the slot games as such, drawing the ire of the casinos. After a flurry of complaints the lottery changed its marketing, but the site is still taking players. Unlike the privately-owned casinos, the state’s lottery slot site reallocates revenues to government programs and lawmakers and Pennsylvania officials have shown no inclination toward curtailing its offerings.

In media reports and press releases, the casinos have decried the state-run competitors, saying it will cannibalize the market. But, largely due to state regulations, the casinos haven’t yet created a competing offering of their own.

Taxes Dissuade Casino Partners

Though Pennsylvania legalized online betting its casinos have yet to take a bet through the web. The state places one of the most burdensome licensing fees on any jurisdiction in the world.

Would-be gaming providers have to pay an initial combined fee of $10 million to offer online poker, slots and table games in the commonwealth and then face heavy taxes on all winnings afterward. Even as they watched the lottery record millions in wagers through its slot games, Pennsylvania casinos waited months to apply for similar offerings, hoping to lobby lawmakers to amend the fee structure. Facing a deadline that would have seen the initial fee rise even higher, several casinos relented and filled their applications last month.

Three applicants received licensing approval and privately-owned casinos will have slot sites to compete against the lottery, as well as poker and table games, in the coming months. That will not include sports bets.

The landmark gambling legalization bill also included a sports betting provision. After the Supreme Court decision to strike down the federal ban on sports gambling earlier this year, Pennsylvania could in effect take bets right away. But subsequent regulatory discussions weren’t enacted until this week. More significantly, none of the casinos have applied to take bets in the first place.

Like with the online gaming, sports betting has inordinate fees on providers. All winnings are taxed at 36 percent, far and away the highest of any state with legalized wagering, and nearly four times the rate across the Delaware River in New Jersey. Casinos have also pushed lawmakers to lower the rates and so far have been rebuffed.

There’s still no timeline for when Pennsylvanians can take their first sports bet. If recent gambling rollouts are any indication, state residents shouldn’t hold their breath.

Interested in learning more about the current US sports betting landscape? Check out our latest Gamblecast explaining everything you need to know about US sports betting:

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