gold and silver pill capsules

Gambling Expansion Will Be Good For PA, But Not A Revenue Miracle Drug

Since the first legal slot machines opened up in Pennsylvania in 2006, the state has developed into the second-highest grossing gambling market in the country behind only Nevada.

The local casino industry consists of 10 stand-alone and racetrack casinos, alongside two smaller resort casinos. Plus, a 13th casino project is currently underway in Philadelphia’s Stadium District. That property should open in 2020.

In October 2017, state lawmakers saw fit to pass a widespread and comprehensive gambling expansion package that will surely grow the industry even further over the next few years. On the way are:

  • Online gambling operations
  • Construction of up to 10 mini-casinos
  • The possible expansion of gaming operations at existing resort casinos
  • Tablet gaming at select airport locations
  • Video gaming terminals at select truck stop locations

In 2017, Pennsylvania’s 12 casino operations combined to generate a whopping $3.227 billion in gross gaming revenue. It marked a new gaming revenue record for the state, outpacing the previous record of $3.213 billion generated in 2016.

Revenue records sure to be broken

Once the full range of gambling expansion initiatives is online, those revenue records are sure to be broken. The question is, how much revenue growth will the PA casino and gaming industry see? And will that growth be enough to see Pennsylvania suddenly competing with Nevada for the title of highest-grossing gambling market in the country?

For the first question, it’s easy enough to make some educated guesses about the impact gambling expansion in the state will have on revenue by looking at examples from other states that have implemented similar initiatives.

For example, there’s online gambling in New Jersey, a state of 9 million people. It generated approximately $245 million in online gambling revenue last year. Pennsylvania has 12.8 million people, suggesting Pennsylvania online gambling could generate as much as $349 million per year at maturation just by keeping pace with New Jersey.

Other figures can be determined by looking inside the state.

Mini-casino numbers

The authorization of up to 10 mini-casinos in PA, each with up to 750 slot machines and 30 table games, brings about the possibility of 7,500 more slots and 300 more table games in operation across the state by the time the expansion is complete.

According to Pennsylvania Gaming Control Board figures, there were approximately 25,800 slots in operation in PA in 2017. They generated $2.336 billion in gross revenue. That’s an average of approximately $90,500 per slot per year. Therefore, 7,500 more slots at mini casinos across the state would generate approximately $678,750,000 in gross gaming revenue annually if that per slot number remained static. Even if you lower that number to account for market saturation, it is still a big number.

Similarly, there were close to 1,250 table games in operation statewide in 2017. These games generated a total of $890,697,914 in gross revenue. That’s an average of approximately $700,000 per table per year. Therefore, 300 more table games at mini casinos across the state would generate approximately $210 million in gross gaming revenue annually, again of course, if the per table revenue remains close to the same.

Put it together and the new mini-casinos could generate approximately $890 million in gross gaming revenue annually. Even more pessimistic outlooks would still concede roughly half a billion dollars.

Additional expansion initiatives

Without many examples to look at, or a clear idea of the size of the market, estimating airport tablet gaming and truck stop video gaming terminal revenue might prove a little more difficult.

For argument’s sake, let’s say it equals the same $349 million a year in gross gaming revenue generated by online gambling operations. Therefore, gambling expansion in PA would bring in approximately an additional $1.59 billion in gross gaming revenue annually. That represents about a 50-percent increase in gross gambling revenues across the board. which seems like a reasonable estimate.

If this happens PA would be bringing in approximately $4.9 billion in gross gaming revenue annually. A number that is still nowhere close to what Nevada is doing.

Nevada on top and holding

According to numbers released by the Nevada Gaming Control Board (NGCB), Nevada casinos generated $26.2 billion in gambling revenue in 2017. That beat a previous record set in the Silver State in 2007.

Even if the estimates here are low, there a long way off what’s going on in Nevada. In fact, Pennsylvania would have to grow gross gambling revenues by as much as 10 times before they would really compete with Nevada numbers.

Why the huge difference? Nevada doesn’t have a dozen casinos spread across the state. The NGCB says there are more than 330 in operation across the state.

Gambling expansion is clearly going to help gross gambling revenues in the state grow significantly. However, there’s little doubt the state will remain a distant second to Nevada when it comes to the top gambling revenue generating states in the country.