Pennsylvania gaming revenue rebounding, according to report
(The Center Square) – After a 22.2% tumble a year ago, Pennsylvania’s gaming-related revenues from casinos and other sources are rebounding this year, a recent independent analysis shows.
But amid the encouraging preliminary information, the head of the Allegheny Institute for Public Policy, a Pittsburgh-based think tank, is cautioning against heavy reliance on gaming as a revenue source, pointing to unknowns on the horizon.
In a recent policy brief, Executive Director Frank Gamrat combed through data from the Pennsylvania Gaming Control Board over a six-year period and the evolution of the revenue source in more recent years.
Last year, gaming revenues declined $0.76 billion, from $3.41 billion in 2019 to $2.65 billion during 2020. The figures factor in Gov. Tom Wolf’s pandemic-induced shutdowns in all or portions of four months throughout 2020 – March, April, May and December.
But the pre-pandemic decision to legalize Internet-based gaming – or, as is referred to in Pennsylvania, iGaming – in mid-2019 softened the blow of what could have been even steeper declines in the revenue source. Its rollout in the back half of 2019 totaled $33.6 million, but shot up to $565.8 million for all of 2020.
“As happened to most industries, Pennsylvania’s casinos took a big hit during the pandemic,” Gamrat wrote in the policy brief. “But the losses were not as heavy as they could have been, thanks to the advent of Internet gaming, which cushioned the blow created by mandated casino closings.”
Gamrat’s analysis of the year-to-date gaming revenue rebound looked at figures from the Pennsylvania Gaming Control Board from January to April. The board has since reported May figures, suggesting further continued growth in the near first half of 2021.
Slot machines are the most lucrative form of gaming revenue within Pennsylvania because of a gross terminal revenue, or GTR, formula that funnels 34 percent of the state’s share of the proceeds toward property tax relief and an additional 20 percent divided between tourism, the racehorse development fund and contributions to local communities.
Statewide GTR for casinos last year totaled $1.355 billion, more than $1 billion less than what had been reported in the years leading up to the pandemic.
“In 2021, there appears to be a rebound to statewide GTR,” Gamrat said. “First another mini casino in Philadelphia opened, bringing the total to 14. Secondly, as the pandemic began to wane as vaccines increased, more players returned to the casinos.”
Other gaming revenue sources also have seen year-to-date revenue increases, including table games and sports wagering. As it nears its 2-year anniversary, iGaming also is holding steady, even as a growing number of people are funneling back into physical casinos.
But amid the upbeat projections, Gamrat said he believes the unknowns of the future should give state government officials pause in relying too heavily on gaming revenue as a dedicated line item in the budget.
“What happens when the economy has a serious downtown, the discretionary spending ebbs and the federal government is unable to provide a bailout?” Gamrat said. “Politicians may be running out of ways to expand gaming options.”
In his policy brief, Gamrat said deeper questions also should be considered about gaming, which inherently is a recreational outlet.
“Pennsylvania should not count on the gaming industry to sustain its economy or keep its tax coffers full,” he said. “And, certainly, it cannot afford to ignore the social ills and costs that can accompany gambling addiction.”
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