The State of Pennsylvania’s Casino Industry

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Monday, August 10th, 2015 | Written by Shane Larson

When we think of gambling in the U.S, generally speaking there are two locations which immediately spring to mind: Las Vegas, and Atlantic City. Back in 1988, however, just Nevada and New Jersey allowed casinos but nowadays 43 of the 50 U.S. states offer this type of gambling, the second biggest of which is Pennsylvania, much to Atlantic City’s chagrin. However, the days of huge casino-generated profits are nothing more than faded memories as an increasing number of casinos have opened in states all across the country, particularly in the East, which are devouring more gamblers and profits, an ongoing trend that has gotten experts and regulators pretty concerned to say the least.

Surrounded By Alligators

The competition is particularly intense near Pennsylvania, a state which is currently surrounded by five other states offering some type of casino gambling, namely Maryland, New Jersey, New York, Ohio and West Virginia. As New York money manager Harold Vogel, explains:

“They are surrounded by alligators. Everybody is competing for the same thing, and no new money is coming in. The growth will be minimal for all the states at this point. I doubt it can even grow 5 percent because the U.S. market is saturated.”

Is Pennsylvania’s Casino Industry Doomed?

In just a few words, No, absolutely not! Whereas the huge booms the state saw thanks to its casinos and gamblers may now be history, the industry itself is still very sustainable and pretty stable if truth be told. As William H. Ryan Jr., chairman of the Pennsylvania Gaming Control Board, explains:

“The boom times for casino revenues we saw in years past are probably history. Those were caused by the opening of new properties. And a lot of the novelty has worn off. But I think what you see is stability and an industry that is in good health.”

In 2012 for example, Pennsylvania actually managed to surpass New Jersey and become the second most prolific gambling state in all of the U.S, second only to Vegas. In that one year, profits generated via the casinos were over $3.1 billion. What is worrying, however, is that since then, the trend has gone the other way, meaning that whereas you would have expected profits to increase further as the state became more established, instead in 2013, profits were down at $3.05 billion. Now, of course $3 billion dollars is an astonishing amount of money but experts are still worried because the figure was less than what was generated the previous fiscal year. Furthermore, it was actually the very first decline in revenues reported in Pennsylvania’s gambling history.

So What Can Be Done?

In 2011 and 2012, annual revenues in the state peaked, which, not coincidentally, was the years when table games first arrived. There were 11 casinos open at the time, with each one showing increases in takings and profits. Unfortunately since then, out of the 11 state casinos, only 2 have recorded profits. Experts warn that as the number of casinos begin to increase, the revenue of existing casinos will of course decline. It’s the same with any industry, that whilst competition can sometimes be good, ultimately the more competition you have, the harder you have to work to make your business a success and the best of the bunch.

As a result, owners are now looking to make their casinos more desirable by turning them into popular destinations that people actually go out of their way to visit and have a good time, rather than just being somewhere they can gamble and hopefully win some money if they’re lucky. It’s all about adapting, evolving, and competing with the competition to make their casinos the most desirable so that more people choose their casinos, rather than their rivals. They’re going for more of a Vegas resort-like feel by opening luxurious hotels on the property, offering shows, fine food, and various other forms of entertainment, as well as just simply the gambling itself.

The idea is for people to have fun, gamble, but spend their money on other entertainment as well, so that the casino revenues aren’t solely generated by gambling alone. Basically they’re looking to follow in the steps of Vegas, but on a much smaller scale, and many believe this will result in an astounding success.