If PA Expands Gambling, What Does It Mean For Atlantic City And NJ?

Pennsylvania’s legislature is currently in the middle of authorizing what could be a massive expansion of gambling in the state. Will it hurt New Jersey?

Pennsylvania’s legislature is currently in the middle of authorizing what could be a massive expansion of gambling in the state.

What, if any, impact will that have on Atlantic City and New Jersey?

Downplaying the impact on AC

The biggest potential changes to Pennsylvania gaming law, as legislation is currently written, are:

  • Regulation of online gambling
  • Video gaming terminals in taverns across the state
  • Tablet gaming in airports

While some in the Garden State are worried what all this might mean for the NJ casino industry, the Press of AC downplayed those concerns:

“One of the biggest take aways is that it’s not a done deal,” said Colin Mansfield, director of US corporates at Fitch Ratings. “The risk is to the current operators in the state. The Atlantic City market took a hit when Pennsylvania first introduced casino gaming but I don’t see this being that big an impact.”

The bottom line is that any changes in PA likely don’t affect AC’s rebound.

PA and NJ online gambling

The biggest change, by far, would be the legalization of online gambling, if PA goes down that path. (So far, both the PA House and Senate have approved iGaming, but they disagree on how to do it.)

There are already legal NJ online casinos, of course. Would PA legalizing iGaming affect NJ? Not really.

In order to take part in regulated online gambling in any state, you have to be located in that state. There’s no reason for New Jersey players to cross the border to play at online casinos across the border, if PA legalizes them.

If anything, Pennsylvania representatives a positive opportunity for New Jersey. New Jersey could theoretically enter into a compact with Pennsylvania for online poker, in which they would share players across state lines. That would result in larger prize pools for tournaments and more tables running at online poker sites in both states.

Such a compact would appear to be a no-brainer. But NJ, so far, has avoided compacting with Nevada and Delaware for online poker.

Also of note: One PA casino — SugarHouse — already offers real-money online gambling in New Jersey.

Gaming in taverns?

Pennsylvania could install up to 40,000 legal video gaming terminals, or VGTs, around the state. These would not be placed in casinos, but instead in private establishments.

This is not likely to impact New Jersey in a major way, either. New Jersey residents close to the PA border can already reach a variety of casinos fairly easily (three in the Philadelphia area, one in Bethlehem.) The legalization of casino gaming in PA a decade ago — and in other states like New York and Maryland — was a much bigger deal for AC.

The taverns are also not going to be destination for NJ residents; each venue will likely just have a handful of VGTs. While some NJ residents may take their gaming dollars to those VGTs, it’s likely at the expense of a PA casino, not an AC casino.

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Still, NJ might be wise to expand gaming

New Jersey has thought about the idea of expanding gaming outside of AC in recent years, although a referendum to add two casinos in North Jersey failed badly.

The state wants to protect AC from further competition. But more competition is coming from outside of the state all the time, even if the PA expansion doesn’t hurt New Jersey’s bottom line.

It likely won’t be long till there are more casinos closer to New Jersey — particularly in New York. Will New Jersey continue to stand pat as states around them continue to expand? Right now it looks like it will. But that might not be the best bet for the future of the state’s casino industry.

Pennsylvania Gambling Expansion On Hold, For Now: Less Competition For NJ?

Pennsylvania is considering a major gambling expansion, but its future is in doubt, leaving in question its impact on New Jersey.

Pennsylvania’s attempt to institute a major gambling expansion in the state has run into an uncertain future after wranglings in the legislature this week. By default, that would be good news for casino interests and the online gambling industry in New Jersey.

What happened in PA on gambling?

The short answer? Not much, in reality.

Gambling expansions have been on the table in the statehouse for more than a year. After months on the shelf, a proposed gambling expansion resurfaced this week as a way to generate revenue for the state.

On Tuesday, two different gambling expansions were considered in the House, but both were defeated. Shortly afterward, the House also passed motions to reconsider both of those defeated amendments to a gambling bill. The amendments will apparently be considered again next month.

More on all of the legislative shenanigans here.

What’s all that mean for NJ gaming?

The wrangling in the PA statehouse leaves a murky picture for New Jersey.

If the status quo prevails, it means no increased competition across the border for New Jersey.

That goes for both land-based casinos — although that impact might be limited — and online gambling. New Jersey, of course, has legal online poker and casino games, while PA does not.

New Jersey, meanwhile, is attempting its own casino expansion, with a referendum slated for November that would allow casinos in the northern part of the state.

The PA gaming expansion does not include any plans for new casinos, but it could include an expansion of where people can play at video gaming terminals.

The online gambling part of the equation in NJ

Online gambling, should it come to PA, could have both positive and negative repercussions for New Jersey.

The positive would come should NJ ever decide it wants to share liquidity for online poker — something it has been reluctant to do with Nevada and Delaware, two states that do pool poker players.

The negative? NJ would no longer be the only major player in the East Coast for iGaming. The state, of course, is coming off a big month for online poker with the addition of PokerStars to the market. And online casino games continue to trend upwards.

Online gambling also helps attract and retain customers for land-based casinos, so it would no longer be an advantage for the Atlantic City casinos over its PA counterparts. AC saw some of the results of “poker tourism” when PokerStars held a VIP event at Resorts AC this month.

What’s next for PA gambling?

The gaming expansion package isn’t dead. But given the level of politics coming into play, it’s possible the whole package is simply scuttled, at some point.

Whatever is going to happen appears to be on tap for June. Then, New Jersey will learn what its neighbor might have planned for the future of gambling.

 

Atlantic City Casino Revenues Down While Online Casinos Are Flourishing

New Jersey online gambling showed a significant percentage increase in revenues for the month of January, but Atlantic City casinos continue to perform poorly.

A nasty storm was one factor which kept would-be patrons of Atlantic City at home last month. As a result, Atlantic City saw a 3.8 percent decrease in overall revenues this January. However, that didn’t stop New Jerseyans from gambling online. In total, New Jersey internet gambling saw an overall increase of 26.5 percent for January 2016.

Atlantic City’s eight casinos only saw $190.1 million in revenues last month. So while online gambling did see a massive increase, all it did was help keep Atlantic City afloat. NJ Online gambling revenues only account for eight percent of that $190.1 million.

Only four AC casinos saw revenue increases last month; the leader among the four was Tropicana, who saw a 6.6 percent increase of $24 million. The Borgata achieved the highest monthly revenues totaling $56.6 million. The other two with January revenue increases were Harrah’s and Trump Taj Mahal.

Matt Levinsion, chairman of the NJ Casino Control Commission, made a statement to the Associated Press regarding the reason for January’s weak numbers:

“January started off strong with the New Year’s holiday weekend, but those gains were erased later in the month when a blizzard dropped up to two feet of snow in Atlantic City’s main feeder markets.

As a result, a lot of people just couldn’t get here that weekend. So it isn’t surprising that revenue from the slots and tables was down for the month. But the bad weather that kept people home contributed to the 26.5 percent hike in revenue from online gambling.”

What about NJ online poker?

Online poker in NJ came in with its fourth consecutive month of growth. The NJ Division of Gaming Enforcement released January’s online poker revenues on February 12. The report shows that in total, online poker networks brought in $2.2 million.

While the NJ online gambling industry as a whole showed a month-over-month increase of 8.4 percent, it’s not quite as exciting as it sounds for poker – January was still down year-over-year. January 2015 brought in $2.3 million in online poker revenues, and many casinos must be wondering why their online casino products are far outperforming online poker.

While AC struggles, competition in neighboring states thrives

The Pennsylvania Gaming Control Board has released its own January figures, and it reported that overall casino revenues were up 3.6 percent in January. It also reported that a little over $71 million in gross revenues was earned in the month of January. Taxes collected from Pennsylvania casinos totaled about $10 million.

Considering Atlantic City’s dependence on gambling compared to Pennsylvania, it is certainly discouraging for the seaside town to see the neighboring state’s revenues at over 37 percent of New Jersey’s.

This chart released by the Gaming Control Board shows the growth in Pennsylvania between the January 2015 and January 2016:

CasinoTotal Gaming Revenue,
January 2016
Total Gaming Revenue,
January 2015
% Change
Statewide Total $255,905,079$246,986,9473.61%
Sands Casino Resort$44,406,878$38,993,92413.88%
Parx Casino$43,610,308$40,720,9097.10%
Rivers Casino$26,832,210$28,943,350-7.29%
SugarHouse Casino$24,345,849$21,459,27613.45%
Harrah’s Philadelphia$22,110,967$23,244,730-4.88%
Mohegan Sun Pocono$21,046,190$20,386,3013.24%
The Meadows Casino$20,025,365$18,715,4767.00%
Hollywood Casino $18,640,397$19,827,433-5.99%
Mount Airy Casino$14,206,656$13,869,1112.43%
Valley Forge Casino$9,328,958$9,434,846-1.12%
Presque Isle Downs$9,036,437$8,969,4410.75%
Lady Luck Casino$2,314,864$2,422,150-4.43%

PA iGaming Moves Forward for House Vote

A Pennsylvania iGaming bill is ready to be voted on by the state House, meaning that it is one step closer to being legalized. There is a lot of potential.

You hear that New Jersey? That’s the sound of Pennsylvania beginning to catch up with you online.

On Wednesday, the House Gaming Oversight Committee passed HB 649 by a margin of 18-8, meaning that the state will soon begin to vote on whether to regulate online poker and casino games.

This move has been months in the making but likely expedited due to the current budget crisis in the state. Lawmakers are still working on a budget for 2016, one that is nearly five months overdue.

Bill can bring $120mm to state in first year

There are some major benefits to proceeding with iGaming regulation, ones that could help resolve the budget deadlock the state is experiencing. Based on the current draft of HB 649, the state could see up to $100 million in licensing revenue up front.

OnlinePokerReport broke down the figures regarding licensing fees and on the low end, the state can expect $64 to $88 million from casino licensing fees. Casinos must pay an $8 million fee to obtain a license. Significant vendors must pay $2 million for a license. The significant vendor fees could potentially push licensing revenue up to $100 million in year one.

There’s quite a bit of overlap between New Jersey and Pennsylvania, most notably through Caesars. The company has lobbied aggressively to expand legal NJ online gambling to the Keystone State.

Then there’s the revenue generated by iGaming in Year 1. OPR predicted between $121 and $129 million in first year revenue. Since casinos will be taxes at 14% of gross revenue, that would bring in another $18 million. Robert DellaFave believes that PA could bring in as much as $200 million during the first year, meaning that taxes would be in the neighborhood of $28 million.

Keep in mind that these figures are based on the current draft of the bill and assuming that most casinos participate in online gambling. We can guarantee that the Bethlehem Sands will not participate due to being owned by Sheldon Adelson. How many of the state’s 12 casinos will participate will remain to be seen.

Also, will PokerStars be permitted to operate in PA? The bill is devoid a bad actor clause, which is good for PokerStars, but regulators could still block their participation and a bad actor clause could always be added at some point during the legislative process.

Bill may be absorbed by budget bill

Another distinct possibility is that HB 649 will become part of the state budget bill that’s past due. It has reportedly been used as a negotiating tool already in talks and a potential $120 million in tax revenue is hard to ignore.

If the bill is absorbed by the tax bill, that could present the best possible scenario for PA iGaming. Once the budget bill moves through both chambers and is passed by Gov. Wolf, iGaming would become legal and the process of drafting regulations and issuing licenses can begin.

Keep in mind that nothing is in stone at the moment. Bills can change at a moment’s notice and negotiations can fall apart. That’s why we urge the people of PA to contact your local representatives and tell them you want them to support HB 649.

The Poker Player’s Alliance recently upgraded their site to include an easy access portal to lawmakers. Just go to theppa.org and click on “Take Action” to begin.

Ballot Measure Allowing Northern New Jersey Casinos Likely In 2016

New Jersey may make a push to allow casinos in the northern part of the state, outside of Atlantic City, according to a story at Politico.

New Jersey may make a push to allow casinos outside of Atlantic City, according to a story at Politico.

Casinos in northern New Jersey?

Politico reporter Matt Friedman talked with politicians and gaming interests about the possibility of a referendum allowing casinos in northern New Jersey. Senate President Steve Sweeney had tried to get a measure on the ballot for this November, but that didn’t happen.

Politico reports that a referendum is far more likely next year, and Friedman reports that “backers of building casinos in northern New Jersey are planning to spend $10 million to $15 million on advertising to convince a skeptical public to side with them.”

The reason that much money would need to be spent? Because there isn’t much support for more casinos in New Jersey. A majority of New Jersey residents do not favor casino expansion, and under 40 percent favor it. More from Politico:

“From what I see when we do polling, if you simply ask the question, ‘Are you in favor of expanding gambling?’—the immediate reaction is no. Why would we expand gambling because Atlantic City is doing bad? Why add casinos?”Meadowlands Racetrack operator Jeff Gural said. “But when we say, ‘Would you be in favor at the Meadowlands if we give the state $500 million a year and some of that money would go to help Atlantic City recover and rebuild?’—then it would be a positive.

“The key to us to get the referendum passed is to get the message out,” Gural said. “If we can’t get the message out, it will lose.”

Other stumbling blocks

The polling numbers aren’t the only issue with a possible casino ballot measure in New Jersey:

  • Gural also noted that a measure in 2015 likely would have had a better chance of success than in 2016, because the message and advertising wouldn’t be competing against the presidential election.
  • Politicians in and around Atlantic City aren’t in favor of casino expansion. While a potential measure promises to help the region, legislators and interests in southern N.J. worry that cannibalization of A.C. revenue could occur.

But is NJ losing gaming revenue by not expanding?

Taking revenue away from Atlantic City may be only a secondary concern. Residents of New Jersey have fairly easy access to several casinos in Pennsylvania, including Parx and Sugarhhouse in Philadelphia, in addition to Mohegan Sun Pocono, Mt. Airy Casino Resort and Sands Bethlehem.

For instance, Sands is actively trying to lure players away from the state, and Atlantic City. Losing revenue to its neighbor to the west may be a driving factor in trying to build casinos elsewhere in New Jersey.

Atlantic City is also in danger of seeing more casinos fail, without a stimulus package that is sitting on Gov. Chris Christie’s desk. At the same time, gaming revenue in Atlantic City was up in July’s recently released figures.

The question New Jersey will have to ask itself is this: Is blocking the possibility of casino expansion worth trying to save an Atlantic City economy that may not succeed in the long term anyway?

Pennsylvania iPoker May Not Launch for a Year Even if Passed

Pennsylvania is slated to be the next state to regulate iPoker according to some officials but they still have a lot of work to do before that happens.

For those hoping to play online poker in Pennsylvania sometime this year or even by early 2016, you may want to slow your roll. Information shared during a hearing on iGaming held by the Senate Community, Economic & Recreational Development Committee on Thursday has all but confirmed that online poker is still nine months to a year from launching regardless of when it is legalized.

Many have considered Pennsylvania as the new frontrunner to legalize online poker in the United States following recently increasing tensions between stakeholders. Recent hearings have proven positive for the potential of passing a bill but doing so doesn’t guarantee PA residents will be playing anytime soon.

Other Pieces of Puzzle Needed Before Launch

Kevin O’Toole, Executive Director of the PA Gaming Control Board, was among those that spoke on the issues surrounding iGaming on Thursday. He stated that even if the legislature manages to pass a bill, several things need to happen before online poker will actually launch in the state. He also reiterated that they cannot control the speed at which applicants apply for a license.

O’Toole estimates that online poker will take anywhere from nine months to a year to launch following the passage of any online poker bill in the legislature. One would assume that much of this delay would be due to drawing up new iPoker regulations, approving licenses and then testing of various platforms to ensure that they comply with state regulations.

Ward Suggests Bill Will Not Be Ready in Time

Senator Kim Ward chairs the Community, Economic & Recreational Development Committee and has a different view on the bill. According to a report in the Pittsburgh Post Gazette, Ward believes a bill will not be ready by June 30 which is the end of the fiscal year and the deadline for the state budget.

According to Ward, “Right now we’re working on a budget in the Senate that does not include any money from gaming, whether it be Internet gaming, whether it be [off-track betting] — new gaming, new ideas.”

There are multiple bills currently under consideration in Pennsylvania but none have been pegged as the vehicle for iPoker regulation. With less than two weeks remaining in the month, it would seem that the odds of getting a bill passed are long at best.

What Happens if a Bill Fails in 2015?

If a bill fails this year, it will not be due to lack of interest or any political grandstanding but rather due to the process not being a swift one. With a lot of the initial legwork having been completed in 2015, the odds of a reintroduced passing in 2016 would be likely be 70% or greater.

It’s no secret that the state is suffering a budget crisis and one that online poker can help resolve. If they move forward with a budget this year without including iPoker, it will be a tool that will be reintroduced next year.

At present, there doesn’t appear to be enough opposition to block a properly drafted bill. If this matter moves on to 2016, expect a comprehensive bill to be at the top of the priority list for lawmakers supporting the measure.