Pennsylvania’s Online Gambling Revenues Would Suffer Mightily With In-Person Registration Requirement

Avatar June 16, 2015 1231 Reads
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Pennsylvania formally introduced its fifth online gaming bill last week, reinforcing the notion that legislators are serious about a concerted iGaming push in 2015.

SB 900 is significant in that it was the first bill introduced by the Senate. That, and several of its key components come off as either controversial or counterintuitive, not the least of which is a caveat requiring patrons to register for an Internet gaming account at the permittee’s brick and mortar facility, pending they reside within 20 miles of a licensed gaming venue.

One clause, multiple interpretations

SB 900 dedicates two paragraphs to in-person registration, with the first (13(a)(2)) stating:

An Internet gaming account shall be in the name of an individual. Except as provided under paragraph (4), an individual must apply to establish an Internet gaming account at the premises of a permittee’s facility and must hold an active players club membership.

Turning to paragraph (4):

The board shall promulgate regulations for an individual who resides at least 20 linear miles from a facility to allow the individual to become an account holder using the Internet website of a licensed gaming entity.

While the message conveyed in paragraph (2) is straightforward and clear, the language utilized in paragraph (4) comes across as ambiguous, lending itself to multiple interpretations.

The leading explanation is that players will only be required to in-person register at casinos located within 20 miles of their home address, and no others.

Although this interpretation is the one least divorced from reality, it is not without one glaring flaw. Namely, it makes it more difficult for players to register at online casinos affiliated with brick and mortar venues located in their own backyard than it does those located halfway across the state.

That’s an issue – more so when one considers that several of Pennsylvania’s casinos are clustered together in the most densely populated areas of the state (four in the greater Philadelphia area).

An alternative interpretation presents even greater issues. Read a particular way paragraph (4) indicates that if an individual lives within 20 miles of any Pennsylvania casino licensed to offer online gaming, then the individual would always be required to sign up in person for an online account, regardless of distance.

Other interpretations exist, but in my estimation, the aforementioned are the two leading candidates.

Given the poor phrasing and controversial nature of 13(a)(2) and 13(a)(4) my inkling is that they were only tacked-on as a means satiating Bob Green of Parx Casino, who at a recent online gaming hearing was the only casino representative that spoke up in-favor of in-person signups.

At least that’s the hope, as in-person registration requirements will likely have a damaging impact on the online gaming industry’s bottom line.

Easy sign-up process paramount to success

Enabling players to register for multiple accounts may just be the most integral facet of any successful online gaming operation. We needn’t look further than New Jersey, a state which doesn’t require in-person registration, to see that.

As of April 2015, it is estimated that approximately 638,000 online gaming accounts have been created in the Garden State. At a population of roughly 8.94 million, that equates to 7.1 accounts per 100 residents. Yet, we can safety assume that nowhere near 7.1% of New Jersey residents have registered for an online gaming site, and here’s why:

  • The New Jersey market consists of a dozen online casino sites and four online poker skins, almost all of which run their own promotional schedules and can be registered for independently.
  • Data extrapolated from a British Gaming Prevalence Survey (2010) revealed that only 1.8% of respondents participated in online casino games, and 2.59% played online slots. Assuming some overlap, that places total online casino participation in Britain’s more mature market at somewhere around 2.25%.
  • A quick surveying of New Jersey online poker lobbies readily shows that most players grind on multiple sites.

Based on this, I estimate that the average New Jersey player has somewhere between 2.5 to 3 online gaming accounts, and conceivably many more.

How likely is it that the average Pennsylvania player will own three online gaming accounts when they either have to travel to either their local casinos or any casino just to sign up?

Not very, I’d say.

Online liquidity begets live foot traffic, not the other way around

The myth that regulated online casinos will cannibalize land-based casino revenue has been debunked time and time again. If anything, the overwhelming majority of new online registrants had not set foot in an affiliated land-based casino in over two years, if ever.

What has been proven before, and this notion was recently reinforced via an analysis by gambling experts Kahlil S. Philander, Brett Abarbanel and Toni Repetti, is that online gambling drives land-based traffic, creating a complementary effect. But in order for this synergy to be achieved, the player must first possess an online account.

Then, the magic happens.

Whether it be via cross-promotional poker events, online sweepstakes that award free stays at affiliated land-based casinos, comps earned online that can be redeemed at brick and mortar establishments or simply increased brand awareness, online gaming sites have the ability to coax players to land-based properties.

Industry experts highlight additional problems with in-person registration

There are a myriad of other reasons why in-person registration is best left out of any final online gaming legislation, not the least of which is that it discourages competition by limiting the number of reasonable playing options available to players.

For other arguments against in-person sign-ups, as well as other reasons as to why SB 900 should be sent to the chopping block, I encourage you to read articles penned by industry experts Steve Ruddock and John Mehaffey.

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