Pennsylvania Considers Allowing Legalized Online Gambling

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Saturday, January 18th, 2014 | Written by Shane Larson

According to online gambling consulting company, Spectrum Gaming Group, Pennsylvania, West Virginia and another nine US states might approve Internet gambling either this year or in 2015. As Spectrum Gaming Group founder Fred Gushin, explains:

“There’s intense competition in that part of the country. It’s something that will be considered not only by Pennsylvania but by all the other states that have gaming because they ultimately can’t afford not to.”

Study to determine impact of online gambling

Already, the possibility of introducing online gambling to Pennsylvania has been much debated in the Pennsylvania Legislature, and a major study outlining the potential impact of online gambling in the state is due by May 1st. The report will then give lawmakers the opportunity to integrate the results into its 2015 budget proposal, if they so choose, which is due to be approved by July 1st.

In 2006, Pennsylvania approved slots-only casinos, followed by table games in 2010, and by July, 2011, had raked in more gambling revenue that month than Atlantic City, which it subsequently supplanted as the country’s second biggest gambling resort. However, within the past week, the Pennsylvania Gaming Control Board released its casino results for 2013, revealing a 1.4% fall in revenue to $3.11 billion, down from the $3.16 billion generated in 2012. As Pennsylvania gaming board spokesman Doug Harbach, then commented:

“There continues to be increased casino competition from all of Pennsylvania’s bordering states and that certainly is affecting year-over-year revenue. The good news is we continue to see revenue numbers from slot machines that are second in the U.S. behind Nevada and tax revenue generation that is the highest. So, in many ways you can still make the argument that Pennsylvania’s casino industry is doing very, very well.”

Nevertheless, with the Legislature’s Independent Fiscal Office now predicting an $839 million deficit for the state budget over two years to June 2015, Pennsylvania is seriously considering online gambling as a cure for its budgetary shortfall.

Nevada, New Jersey and Delaware test cases for US online gambling

In the meantime, Pennsylvania and other states in the US will be carefully studying the three regulated markets in the country, namely Nevada, New Jersey and Delaware, before deciding to jump onto the bandwagon.

Pennsylvania’s neighbour, New Jersey, only introduced online gaming in November, 2013, but has already opened up around 150,000 gambler accounts, with gaming revenue expected to reach $400 million by the end of 2014. Nevada and Delaware’s online gambling results have been less spectacular, with Nevada having raked in around $3.2 million from late November up until the end of 2013. However, it is expected that eventually smaller gambling markets will need to pool their players together in order to remain profitable.

Opposition to online gambling from Sheldon Adelson

Up until April, 2011, online gambling was thriving in the USA until the Department of Justice invoked the UIGEA and shut down the main operators in the country, namely PokerStars, Full Tilt and Absolute Poker. A December, 2011, reinterpretation of the Wire Act, however, stated that it only applied to sports betting, thus paving the way for individual states to introduce online gambling and poker.

All the same, there still exists ardent opponents to online gambling in the States, the most vociferous of which is Las Vegas Sands Corporation CEO Sheldon Adelson, who has been campaigning against what he describes as “a societal train wreck waiting to happen.” Ironically, the casino magnate also owns Pennsylvania’s most successful gambling venue, the Sands Casino Resort Bethlehem, but is nonetheless seeking a federal ban on online gambling.

Also important to Sheldon Adelson is protecting the profitability of his brick-and-mortar casinos, although the 80 year-old is keen to deflect any purely protectionist motives that may be leveled against him.

“No, online gambling is not a threat to my business. It’s a threat to our society — a toxin which all good people ought to resist,” explains Adelson.

As a result, Sheldon Adelson has been launching a war on online gambling ever since, which has even put him in opposition to the American Gaming Association, of which Adelson is a member. In fact, Sheldon Adelson recently announced that he, along with the ‘Coalition to Stop Internet Gambling’ have drafted an anti-online poker bill called ‘the Internet Gambling Control Act’, designed to reverse the DoJ’s landmark 2011 reinterpretation of the UIGEA.

Whether the casino tycoon will be successful in persuading the state Capitol to change its stance is uncertain, especially with numerous other casino companies lobbying lawmakers to accept internet gambling, and many US states in desperate need to find additional sources of revenue.

One such proponent of US online gambling is New Jersey lawmaker Ray Lesniak, who was instrumental in pushing through online gambling laws in his state, on his stated quest to make New Jersey the “Mecca of Internet gaming.” As Lesniak commented after receiving news of Adelson’s anti-online poker bill:

“There is no way Congress is going to shut the doors on New Jersey after we are generating hundreds of millions of dollars in revenue from Internet gaming. There is no way Congress would shut that down..I don’t believe there is any way Congressional representatives would do that to other states.”