PA Budget And Gambling Revenue Issues Could Push Online Gambling Forward

December 8, 2016
PA Budget And Gambling Revenue Issues Could Push Online Gambling Forward

Discussions in Pennsylvania regarding online gambling and a wider gaming expansion in the state went on hiatus this fall. That happened when the Senate decided not to act on legislation passed by the House.

The Senate has been reluctant to move forward on a host of gaming issues. But that lack of movement ignores the real world, in which such gaming expansions provide revenue to a state that could probably use them.

Budget woes in PA

The fiscal year for the state began in the summer. And in recent months, actual tax revenue collected has fallen well behind estimates, to the tune of hundreds of millions of dollars.

From Penn Live:

Since the turn of the fiscal year in July, Pennsylvania has collected about $10.8 billion for the General Fund. That’s 2.4 percent, or $261.8 million, “below estimate.”

According to the Independent Fiscal Office, which issued a gloomy five-year outlook last month, the state faces a projected current-year budget deficit of $500 million. That’s expected to balloon to a $3 billion per year deficit by 2021.

How iGaming fits in PA

Of course, plugging some of that budget deficit would be easy, if the state government does what it promised to do earlier this year.

The statehouse and Gov. Tom Wolf agreed that part of the budget would be funded by $100 million from a gaming bill. Most of that would come from the legalization of online gambling. Such legislation has not yet been passed.

The bigger the deficit, the more appealing a gaming expansion likely becomes to the state’s lawmakers.

If actual receipts had been closer to estimates, the pressure to pass a gaming expansion would likely be less. With this real-world problem arising, there’s at least more pressure to get it done.

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Is PA casino revenue an issue?

Gross gaming revenue (GGR) in the state had been doing really well through the middle of 2016. But there are at least signs that the market is slowing or plateauing.

Total GGR was down in two out of three months from August through September. The initial numbers for November for just slot machine revenue were less than encouraging (down four percent year over year).

The sample size is too small to determine if this is truly a trend that will hold moving forward. But there are limited ways to grow the PA casino market right now, with one exception: online gambling.

Casinos could still grow their bottom line if online poker and casino games are legalized in the state. And if flat or declining land-based revenue is the start of a trend, this would help stem the tide.

Most of the casinos in the state, outside of the Sheldon-Adelson owned Sands Bethlehem, are on the side legalization of online gambling.

Will all this spur PA to action on iGaming?

Until the legislature returns to session, it’s difficult to know where the gaming expansion will land on the priority list, or if the Senate will change its tune.

One state senator recently implored the House to slow its roll on online gambling, daily fantasy sports, and other gaming issues. Instead, Sen. Robert Tomlinson wants the statehouse to focus just on a fix for a gaming tax law ruled to be unconstitutional earlier this year.

But if lawmakers face increasing pressure to make up the shortfall in the budget, then things could change quickly.

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