Pennsylvania Slot Revenues Continue to Stagnate

Home » Poker News » Pennsylvania Slot Revenues Continue to Stagnate

Friday, May 5th, 2017 | Written by Shane Larson

Pennsylvania has been debating whether to legalize online gambling and make other major modifications to its gambling regulations for several years. However, recent data from the state’s regulator indicates that the Keystone State may now find it necessary to quickly reform its industry, or else experience serious financial woes in the not so distant future.

Declining Slots Revenue

The Pennsylvania Gaming Control Board recently released its gross gaming revenue report for April, revealing a 1.6 percent fall in revenues to $205.7 million compared to the $209 million generated in the same month in 2016. From that tally, just one-third of the state’s casinos posted an improvement in their gross slots revenue, with all the rest seeing this important revenue stream slide year-on-year.

In addition, March saw the state’s one dozen land-based casinos collect $210 million in revenue from their most profitable vertical–slots. While the number may seem like a lot at face value, it once again represented a decrease, in this case of 0.6 percent, compared to March 2016 when the state generated $211.3 million in revenue from slots.

Ongoing Downward Trend

A few month of low year-over-year numbers might not be cause for alarm, but April and March 2017’s data seems to be part of an ongoing trend. In October 2016, for instance, slot revenue was down 2.44 percent compared to October 2015, and every month since, Pennsylvania casinos have brought in less revenue from slots than they did during the previous year. Initially, the small year-over-year decrease in March 2017 had some analysts hoping that the industry was starting to stabilize, but April’s result shows that the negative revenue is continuing its downward spiral.

Two Casinos Particularly Affected

Overall, two of Pennsylvania’s 12 casinos seem to be struggling more than others, namely the Mohegan Sun Pocono, and the Presque Isle Downs.

Mohegan Sun Pocono saw a 6.94 percent year-over-year decrease in slots revenue in March, followed by a 5 percent fall to $18.12 million compared to the $19.23 million collected in the same month a year earlier. The casino is currently in the midst of a major brand overhaul, and industry insiders believe that for now, players are looking elsewhere to play. In the meantime, Presque Isle Downs is also struggling with a 6.97 percent year-over-year decrease in March, and a 6.05 percent drop in April, with both casinos reporting the biggest contractions in revenues over the past two months.

Reversing Negative Forces

Although some casinos are managing to prosper and grow their most important vertical, those most familiar with the state of Pennsylvania’s gambling industry have started raising red flags. Furthermore, with Atlantic City in the process of revitalization, Pennsylvania casinos, especially those in the eastern part of the state, are likely to find it increasingly difficult to remain competitive. In fact, those who understand the challenges that Pennsylvania’s casinos are facing are calling for the state to expand the state’s slots operation, and also finally legalize online gambling.

Online Gambling could Help

Many believe that regulated iGambling would help prop up casinos based in the Keystone State, and have an overall positive effect on the industry, just as it is currently doing for those casinos in New Jersey. Some projections have the casinos increasing revenue by as much as $230 million in just the first year. Even if online gambling did not bring in the millions anticipated, there is reason to believe that it would at least be enough to offset the shrinkage in the market that is currently taking pace.

This year, two separate online gambling bills which made their way into the Pennsylvania State House and Senate initially seemed to be gaining support. Unfortunately, Republican anti-online gambling advocates subsequently introduced their own bill to the House, while a Democratic Senator has also introduced a regulatory bill calling for a much higher rate of tax and licensing, adding further discord to proceedings. In the meantime, another State Senator has suggested that the state’s lottery should administer any future potential online gambling market, serving to only muddy the waters further, and push the topic even further away from any kind of resolution or vote.