Pennsylvania Land-Based Casinos Once Again Lag iGaming

While the past several months saw slight to flat revenue growth for the Keystone states land-based casino operators, while iGaming revenue surged ahead, that wasn’t the case this month. Make no mistake, iGaming continues its record growth, up 12.3% to $207 million. However, land-based casino revenue plunged by almost 8%.

This, combined with the fact that the total number of real slots YOY has slightly contracted, may give cannibalization proponents new data to troll the waters. While a decline of less than 500 machines on an installed base of more than 24,000 is less than 2%, any contraction in either land-based slots or tables will likely lead to iGaming detractors pointing toward accelerating job loss as online casinos continue their phenomenal growth. 

In fairness, some of Pennsylvania’s imbalance can partly be blamed on tax rates on brick-and-mortar slots, which are some of the highest in the nation, with effective total rates over 50%. Tax rates for both online and land-based slots are essentially the same, while costs to buy, lease, operate, and maintain an actual machine on a casino floor are not. 

Another problem in Pennsylvania’s slot market is the imbalance in more than half of revenue from a licensed and regulated slot being sent off to Harrisburg, but a tax rate of zero percent on the more than 65,000 unregulated “skill” machines peppering the state.

This injustice led twelve Pennsylvania casinos to file a petition with the Pennsylvania Supreme Court asking for relief in August of last year.

Still, much of this untaxed competition and ill-conceived tax rates will be lost in the fingering, pointing at an 8.1% decline in February in land-based slots and a 7.2% slide in Table games. It was always going to be a tough comparable with Leap Year’s extra day last year.

Still, these numbers and a slide of 4.4% in total gaming revenue to $477 million will likely re-spark a bitter debate about the future coexistence of iGaming and a healthy land-based casino ecosystem.

iGaming growth was uneven. In the month, online slots increased 22.5% to $154 million, compared to retail slots, which now stand at $186 million. On the table game side, online operators brought in only $51 million, a decline of 10.4% compared to retail table games, which had $71 million in revenue. 

Hollywood Casino at Penn National Race Course was again the monthly stand-out in iGaming, with more than $77 million in total online revenue, easily eclipsing second-place Valley Forge Casino, which booked $56 million. 

Sports betting had a wild ride in February as the hometown team, the Philadelphia Eagles, won the Super Bowl early in the month. While that ended the lucrative NFL season until August, it also brought a huge influx in handle, which rose 14% in February to $757 million wagered. 

Unfortunately, much of that money was on the local favorites, which meant revenue took a massive hit, falling more than 75% to just $7.5 million. That is a hold percentage of just 1%.In fact, of the 17 sportsbooks in Pennsylvania, 11 of them lost money for the month. 

March will likely look a little different, with sportsbooks likely to contribute their more usual $50 to $60 million in revenue and land-based slots and tables bouncing back as winter storms and travel issues abate. The Leap Year bump will also not be returning in March, so it will be much more of a comparable. 

Looking ahead, March should provide a more accurate comparison, with sportsbook revenue rebounding and land-based gaming stabilizing. Yet, the bigger trend remains clear: iGaming continues to post double-digit growth, while retail casino revenue struggles to keep pace.