Pennsylvania Casino Industry Reports 6% Increase in Revenue

The regulated gambling industry is quite fascinating from an economic perspective. It has shown itself to be remarkably resilient against recessions. Even in times of plummeting consumer income, casinos and betting shops flourish while other businesses fail.

The COVID-19 pandemic-induced recession presented an altogether different challenge for the global gambling industry. Lockdowns and travel restrictions disproportionately affected the entertainment and tourism sector, which also includes traditional casinos.

But even the twin effects of a viral pandemic and economic slowdown have failed to bring down the gambling industry. While traditional sectors like land-based casinos have struggled, it has been balanced by a spurt in online gambling.

The story from Pennsylvania

The Keystone State is among the leading proponents of legalized gambling in the United States. While Nevada bats exclusively for land-based casinos and sports betting, Pennsylvania and New Jersey also opted to welcome online gambling.

All forms of online gambling are legal in Pennsylvania – online casinos, poker, and sports betting were legalized in 2019. This is on top of the 12 land-based casinos operating in the state. Harrah’s, Rivers, Mohegan Sun, and Parx Casino are among the major PA casinos.

Much like their counterparts in Vegas and the rest of the US, these land-based casinos in PA suffered heavy losses in 2020 due to shutdowns and occupancy limitations. Despite all that unprecedented disruption, revenues from gaming in the Commonwealth increased by around $15 million.

Going from $293.4 million in 2019 to $310.7 million in 2020, it represented an increase of nearly six percent. All this is based on data released by the state Gaming Control Board. The state received tax revenues worth $128 million from the industry last year.

The reason behind this remarkable feat was quite simple – legal online gambling.

How PA casinos benefited from internet gambling

Running an online gambling platform in the Commonwealth requires a local partner – one which is already licensed in the offline gambling industry. This automatically meant that the major land-based casinos in PA all had online platforms in place when the pandemic struck.

In May 2020, Hollywood Casino at Penn Race Course launched the online Draft Kings Casino in partnership with the famous fantasy sports brand. Caesars online casino is the result of a partnership between Harrah’s Philadelphia and Caesar’s Interactive.

FanDuel Casino Online is linked to the Valley Forge Casino Resort in King of Prussia, PA. The casino recorded the greatest increase in revenues in August 2020 – an 88% surge over the same period in 2019, with $27 million vs $14 million.

Mount Airy Casino Resort at Mt Pocono was close behind with a revenue increase of 54%. The casino’s online venture is the PokerStars Online Casino. Rivers Casino Philadelphia was another big winner with a 40% bump in revenues, thanks at least in part due to its Borgata Online Casino.

One single statistic perfectly encapsulates the surge in online gaming – in August 2019, internet gaming revenues at PA casinos stood at a paltry $3.4 million. By the same time in 2020, it had increased by 94%, to a jaw-dropping $55.4 million.

Heidi from NoDepositDaily provided some context to the uptick, "legal online casinos are a relatively new phenomenon in the US. But in the UK and EU states, online gambling has already surpassed traditional casinos as the major source of revenues. Online is the future of US gambling – the COVID-19 pandemic just gave it a significant boost."

The potential of online sports betting

The contribution of online gambling pales in comparison to the numbers posted by sports betting. Ever since the 2018 US Supreme Court legalization of betting on sports, the market has seen exceptional growth, with $20 billion wagered by 2020.

In Pennsylvania, the monthly handle on sports wagering in August 2020 was $365 million. 12 months ago, it had been less than half that amount - $164 million. This represented the peak of sports betting in the state, with a 122% increase year on year.

All major sports leagues and tournaments were temporarily shut down in the state in the first half of 2020. But when the sporting action resumed after May-June, it resulted in an unprecedented surge of betting activity.

The revenues to the state coffers also grew exponentially, reaching almost $18 million. A single casino accounted for nearly half the state revenues from sports betting – the Valley Forge Casino Resort.

Fantasy sports are starting to play an increased role in gambling revenues in the state. The major players are FanDuel and DraftKings, but the market is large enough to accommodate some home-grown competition as well.

Revenues from fantasy sports also witnessed a steep 54% increase year on year in August 2020. Brands like FanDuel, DraftKings, and Yahoo Sports collected an impressive $2.1 million in that month.

PA is part of a wider trend in the global gambling

What happened in Pennsylvania in 2020 is not an isolated incident. The same story is being played out across regulated gambling markets all over the world. As traditional casinos and betting shops struggle with the pandemic restrictions, players are flocking online in search of gambling options.

The WHO expects the current pandemic situation to last well into 2022 and beyond. Online gambling provides a safe, convenient alternative. Land-based casinos will always have a place in the gambling industry – what they offer is a more social experience.

This is especially true in the case of the United States, home to more land casinos than any other country in the world, no contest. However, it will be interesting to see how these resorts react to the growing clout of online casinos and sportsbooks.

The smarter option would be to expand into these segments – as the Pennsylvania experience indicates, it is a win-win situation for all concerned. As one of the world’s biggest gambling markets, there are lessons here for Australia as well.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes