Tuesday marked the 84th time Pennsylvania officials have met to discuss gaming expansion, including online poker, over the past two years, according to one state lawmaker.
There was no vote at the joint House and Senate hearing, but testimony in favor of internet poker shows that the Keystone State could be close to finally pulling the trigger on online gaming.
“Gaming expansion is not a new topic,” said Pennsylvania Senator Mario Scavello. The state has a $3.2 billion casino gambling market, but lawmakers are seeking new ways to bolster the market in the face of increased competition from nearby states. Pennsylvania, the second largest commercial gaming market in the country, gets 59 percent of slot machine revenue generated within its borders.
Kevin O’Toole, Executive Director of the state Gaming Control Board, testified in support of online gaming and his team’s ability to regulate the new games. The state’s first casino opened in 2006, and O’Toole stressed the fact that regulators now have a decade of experience.
Some critical questions were posed by a handful of lawmakers, including Sen. Lisa Boscola, who implied that internet gaming wouldn’t be good for casino workers.
O’Toole had a reply regarding the cannibalization concern.
“If internet gaming generates up to $5 million a month [for some of the casinos], it’s just an amenity, it won’t compete against the [brick-and-mortar] slot and table game operations,” O’Toole said. “I doubt you find many people who go to casinos want to stay at home on a laptop. People above Generation X love going to the brick-and-mortar casinos.”
Boscola said she didn’t want casinos to have “internet gaming lounges.”
A representative from Caesars later pointed out in his testimony that “millions” of Americans across the country currently play on offshore gaming sites. Regulation provides not only consumer protections, but also tax revenue to states, Caesars said.
Caesars, owner of the famed World Series of Poker brand, offers online gaming in Nevada and New Jersey. “The internet is here to say; prohibition doesn’t work,” said David Satz, Senior Vice President of Government Relations & Development at Caesars.
According to Satz, every industry needs to adapt to technology changes and evolving demand from consumers. Online casino betting, for example, especially appeals to millennials because they grew up with mobile phones and other forms of internet games.
Concerns over technological advancements, including automation, is a macro-economic issue, and doesn’t have a ton of coherence in the narrow context of Pennsylvania’s casino industry. Pennsylvania, like all 40 states with at least one casino, must adapt or it will get left behind, according to web casino backers.
According to Satz, Pennsylvania’s online gaming market could be worth more than $300 million annually and generate tens of millions of dollars for the state’s coffers.
Later in the hearing, Rep. Aaron Kaufer cited a report on Carnegie Mellon University’s poker bot Libratus threatening the future of internet poker. It is true that future poker bots could be of concern, but Kaufer said that the machine took $1.7 million from the poker pros, which was a very misleading claim because the chips in that match didn’t have cash value.
Satz testified that online gaming sites have ways of detecting poker bots. “We don’t want [machines playing], nor do our customers,” he said.
A representative for the Coalition to Stop Internet Gambling repeated the falsehood that Libratus won nearly $2 million. CSIG is backed by billionaire casino boss Sheldon Adelson. It’s worth noting that Adelson’s one and only casino in Pennsylvania has found a potential buyer.
Later, representatives from Valley Forge Casino and Lady Luck Casino both told lawmakers that they’d like internet gaming regulation to help shore up their respective businesses. “Online gaming represents a very exciting opportunity for us,” said Valley Forge Casino.
Parx Casino, located near Philadelphia, was up next and said that it actually opposes internet gaming. Parx said it generates more tax revenue for the state than any other casino. So, it wants the status quo.
“There couldn’t be a greater difference in approach, structure and success of the Pennsylvania and New Jersey [casino] models,” Parx testified. “Revenue in Atlantic City is actually down since online gaming.”
Parx actually believes that cannibalization will occur, and that because Pennsylvania’s 12 casinos are spread out geographically, the upside for online gaming will be less than what was seen in New Jersey, where all the casinos are located in Atlantic City. Garden State online gaming was nearly a $200 million market last year, but Parx said that the figure includes some $50 million generated from “social” internet gaming, which could occur in Pennsylvania without a new law.
“The commonwealth will lose revenue by implementing internet gaming,” the casino said.
According to Parx, Nevada’s online poker market was just $7 million last year. Delaware casinos won about $3 million from online gamblers.
A representative for SugarHouse and Rivers Casino followed Parx and said that they support internet gaming as a way to boost revenues.
“Online gaming offers a chance to increase the health of the brick-and-mortar casino industry in Pennsylvania,” said Wendy Hamilton, General Manager of SugarHouse.
Both SugarHouse and Rivers see online gaming as a way to attract a new demographic and as a “compelling marketing tool” to bring people to the live setting.
Aside from the testimony from Parx, Tuesday’s hearing showed that nearly all of the state’s casinos support internet poker. Another hearing is planned for Mar. 20.