Pennsylvania Set To Go ‘All In’ With Online Gaming

The state of Pennsylvania has done contortions to simultaneously provide as many gaming options for players as possible while keeping the financial benefactors of the state’s gaming monopoly as free from any type of competitive marketplace dynamics as possible. Not too long ago, we talked about state governor Tom Wolf who takes political duplicity to new levels. While he acts like he’s wringing his hands and making a ‘difficult decision’ over expanding gaming in the Keystone State he’s doing everything possible to keep the status quo industry players as juiced in as possible. Wolf takes money from every labor organization imaginable so it’s clear that he doesn’t believe in free market economics. If he looks after their interests the way he protects the gaming industry status quo big labor is definitely getting their money’s worth.

Here’s the type of guy that Wolf is–this is from our discussion of the goofy ‘video poker in truck stops’ regulation recently enacted in Pennsylvania:

“Wolf, a Democrat, had not been enthusiastic about expanding gambling, but he entertained the idea in dealings with a Republican-controlled Legislature that saw it as a better option to balance the state’s persistent deficits than a tax increase.”

Few things are as hilarious as watching a politician try to pretend that he’s going against his personal beliefs for the greater good of the state. For the ‘good of our readership’ we took the time to translate some of Wolf’s comments about the current marketplace:

Before you give him credit for doing something that his constituents want make sure to check yourself. He wants to expand the market but not at the expense of current gambling entities that employ lobbyists and make hefty campaign contributions of the current revenue streams. The expansion was designed to protect industry incumbents and prevent any real competition prevent the cannibalization of the state’s existing gaming industry.

That’s why you won’t be surprised to hear that when Pennsylvania gaming comes completely online in July 2019 the big financial beneficiaries will be the same companies that already run gambling in the state. You got it–the legacy casinos and racetracks essentially have a stranglehold on anything offered online. The only entities that are going to licensed for online gambling are the 12 existing casinos and the one currently under construction in Philadelphia. The lottery will also find a way to benefit to the exclusion of any type of competition.

It wouldn’t be Pennsylvania unless there were some screwy regulations designed to protect the status quo from any type of actual competition. Actually, these rules are so screwy it appears to prevent actual competition within Pennsylvania’s gaming licensees. Each property is allowed to offer three types of gaming: poker, slots and table games. At one point, a permit could be had for all three for a discounted $10 million but now it’s $4 million per for each one. Sports betting online is licensed differently with even less competition–every property gets one and only one ‘technology provider’ that they can co-brand with. They also have the ability to ‘lease licensure’ to a third party brand but you can be sure that it’ll be one of the ‘usual suspects’.

There are no permits available to ‘qualified gaming entities’ without a presence in the state but there is a provision made to license them for one of the remaining licenses–6 online poker, 3 online slots and 3 table games. So why not open things up to any ‘qualified gaming entity’ that wants to pony up $4 million to serve Pennsylvania bettors? Because that would create actual competition and it becomes much more difficult for politicians to protect the interest of their financial benefactors in that environment. There was supposedly a ton of interest but ultimately only two applicants–and surprise, surprise they already have ties to the state’s legacy casino industry. MGM and Golden Nugget both applied, more to give them the opportunity to deploy their own branding more than anything else. MGM already has a partnership with Boyd Gaming in the state and the Golden Nugget is partnered with Rush Street Gaming.

The online casinos will launch in mid July with the online sportsbooks launching a month or two earlier. Despite the fact that state government has gone out of their way to protect the legacy casino owners from serious competition two have sued claiming that the expansion of gambling in Pennsylvania is ‘arbitrary and inequitable treatment’ that ‘violated it’s constitutional rights in multiple ways’. Uh….yeah.

About the Author: Jim Murphy

For more than 25 years, Jim Murphy has written extensively on gambling theory and practice. Jim Murphy has been quoted in media from the Wall Street Journal to REASON Magazine. Murphy worked as a radio and podcasting host broadcasting to an international audience that depended on his expertise and advice.