Pennsylvania Slots Help Lift Casino Market by 2.8% in August

Pennsylvania Slots Help Lift Casino Market by 2.8% in August

On Monday, the Pennsylvania Gaming Control Board (PGCB) revealed that the state’s 12 brick-and-mortar casinos generated revenue of $275 million in August, representing a 2.8% increase versus the same month in 2017. While slots machines saw their business improve by 4.4% year-on-year to $201.7 million, table games, on the other hand, went in the opposite direction and fell by 1.3% to just $73.3 million.

Market Analysis

Last month, seven casinos posted positive year-on-year growth, while five venues saw their earnings decline compared to last year.

Leading the market in terms of both revenue and growth was Parx Casino, which saw its business jump by 8.51% to $52.17 million, up from the $48 million it collected in August 2017. It was followed by Rivers Casino up by 8.16% at $29.97 million; Valley Forge Casino Resort up 6.93% to $10.68 million; SugarHouse Casino higher by 6.86% at $24.65 million; Hollywood Casino at Penn National Race Course up 6.28% at $20.04 million; and finally Harrah’s Philadelphia which noted a 1.72% revenue increase to $21.22 million in August.

On the other side of the coin, Mohegan Sun Pocono saw its revenue decline by 5.54% to $19.54 million; followed by The Meadows Casino down 4.91% to $20.28 million; Lady Luck Casino Nemacolin lower by 4.19% at $2.78 million; Sands Casino Resort Bethlehem down by 1.43% to $44.43 million; and Presque Isle Downs and Casino, which reported a slight 0.68% revenue decrease to $11.46 million.

Historical Background

The Keystone State opened its first slot machine casino in 2006, with table games added to the gambling mix in 2012. That very same year, Pennsylvania generated $3.15 billion in revenue, marking a peak for the industry and propelling it past New Jersey ($3bn) to become the country’s second biggest gaming market behind Nevada.

Between 2012-2015, however, increased competition from neighboring states such as Maryland, Ohio, New York and West Virginia saw Pennsylvania’s casino market go into decline, before getting back on track in 2015 with revenues of $3.173 billion (+3.41%). The positive trend has continued ever since, and in 2016 casino revenue was higher by
1.25% year-on-year at $3.213 billion, with 2017’s total also up by a moderate 0.4% to $3.22 billion. As a result, Pennsylvania has now returned three straight years of record highs.

Furthermore, Pennsylvania has also experienced seven consecutive years of $3 billion plus revenues, which is likely to be extended further after the state approved a gambling expansion bill in 2017. This includes legislation to allow online casinos, online poker, daily fantasy sports and sports wagering products, as well as a number of mini-casinos to be built across the state.

Licenses For Out-of-State Operators

Between April 16 and July 16, Pennsylvania started accepting applications from local licensees for the 13 all-inclusive online gambling licenses (table, slots, and poker) it had made available at a price of $10 million. During the second stage, companies were subsequently encouraged to apply for individual online games licenses at $4 million per game, with a final phase then seeing the tendering process opened up to outside gaming companies with no current operations in Pennsylvania.

To date, 11 out of 13 state casino licensees have submitted applications to offer internet gambling, the exceptions being Meadows Racetrack and Casino and Lady Luck Casino. Furthermore, all operators have applied to offer the full range of online games, except Presque Isle Downs which omitted poker from its application. As a result, there are currently just seven licenses still unclaimed, namely three for online poker, two for slots, and two for table games, which are now being offered to other ‘qualified gaming entities’ (QGE). Nevertheless, applicants must satisfy a number of criteria before being considered, as laid out in the official licensure policy:

“(1) It is licensed in good standing in another gaming jurisdiction. (2) The licensing standards of that other gaming jurisdiction are comprehensive and thorough and provide similar safeguards as those required by this Commonwealth. (3) The petitioner has the business experience and expertise to operate an interactive gaming system.”

Interestingly, the winning applicants will have their names drawn at random from a box in order to ensure all candidates are treated fairly, after which the winners will be allowed 60 days to complete their license applications and tender payment.