Pennsylvania iGaming Revenue Surges 31% YOY for April

It's starting to sound like a broken record over here, but there are only so many ways you can say iGaming had another record month. The state may change, but the refrain is pretty constant, and this time, it was Pennsylvania casinos blowing past last year's April by more than 31% to $227 million. They just missed the all-time record set last month in March, which has an extra day, by $9 million.

Online slots once again led the charge, up 34% to $170 million in total, which is a lot of smashing that spin button. And table games also had a good April, up 24% to $60 million. While they don’t break out live dealer games, it’s clear in looking at company earnings that live dealer casinos continue to grow in popularity in the Keystone State. 

Poker Finally Gets a Seat at the Table

While not reflected yet in April numbers, another area of growth for Pennsylvania will be online poker. The state finalized rules allowing it to join the Multi-State Internet Gaming Agreement, which, among other things, will allow poker players in the state to play against players in other states where poker is legal and which have opted to pool players. 

In this case, BetMGM is now allowing players in Michigan and New Jersey to play online games with Pennsylvania players. This added liquidity and player pool size may finally move the needle on poker revenue in the state, which has largely been a rounding error before now. In April, the online casino posted revenue of just $2.3 million. We will see what growth, if any, the entrance into MSIGA brings next month.

Handle Up, Hold Down in Sports Betting

Meanwhile, sports betting cooled slightly year over year at 42 million. Handle, which can be a better indicator of growth, was up 10% over last April, but the Pennsylvania sportsbook continued a months-long trend of low hold and player-favorable outcomes, with April coming in just under 6%.

Speaking of lackluster performances, let’s discuss brick-and-mortar slots, which fell by 1% to $203 million, and table games, which managed to eke out a 2% gain to $80 million. First off, let’s note that a combined $283 million, which is still significantly higher than that of iGaming, which came in around $230 million. 

This is not the case in the country’s two other largest legal online gaming states, New Jersey and Michigan, where iGaming has surpassed brick-and-mortar revenue and shows no sign of looking back. So, flat revenue while still beating out online gaming revenue by $50 million isn’t the worst outcome.

Grey Market Machines Wave Red Flag

But Pennsylvania brick-and-mortar revenue, especially its slots, isn’t just threatened by legal, licensed online operators but also by grey market, so-called skill games. It is believed that the untaxed and unregulated slot lookalikes now number nearly 70,000 machines in truck stops, restaurants, and bars dotted all across the state. 

Those slots in Pennsylvania casinos pay an unprecedented 54% tax to the state, while machines that look and play just like those casino slots down at the local VFW pay zero, which is a huge problem when multiplied by 70,000 machines. 

Skill Games Stir the Pot in Harrisburg

Governor Shapiro believes that a 42% tax on these “skill” games would add an additional $200 to $300 million in taxes over time. But even more importantly, it would level the playing field between brick-and-mortar casinos and small, mom-and-pop businesses that have chosen to skirt the law and currently pay no taxes or contribute funds for responsible gaming programs.

But first, he will have to face down a powerful and well-funded opposition. Pace-o-matic, one of the companies that runs and builds skill-based games in the state, has more than twenty lobbyists and spends millions defending its rather unique position. 

They walk a weird tightrope: they would like the state to legalize and license their industry, but they don’t want to pay too much in taxes or face competition from other, more risk-averse competitors who are likely to enter the state once actual legal guidelines are in place.

It remains to be seen how all of this will play out this legislative session, but you can bet that land-based operators paying the highest tax in the country for the privilege of having a casino license are wondering if and when the enforcement division of the Pennsylvania State Gaming Control Board might decide to do some enforcing.