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Gambling expansion generates almost $400m for Pennsylvania

| By iGB Editorial Team
Estimates are based on online lottery sales and licence application fees

The gambling expansion package passed by the Pennsylvania legislature in 2017 that paved the way for online lottery sales, daily fantasy sports, iGaming and sports betting has generated almost $400m (£314.5m/€350.6m) for the state.

Since the legislation was signed into law by Governor Tom Wolf in October 2017, around $385m has been generated for the state – more than $1m a day.

The analysis of the market, conducted by the US gambling news portal PlayUSA Network, has calculated the figure using official statistics for licence application fees, and estimates based on online lottery, keno and virtual sports sales.

While the state has collected an estimated $23m from online lottery games, which went live in June 2018. This comprises $19.6m from draw-based games, $3.6m from keno and $87,000 from virtual sports, the vast majority of the revenue came from licensing fees.

This includes $128m from auctions for satellite casino licences, followed by $94m from interactive gaming fees, despite the Pennsylvania Gaming Control Board having not yet set a date for the vertical to launch.

A further $78m came from casino licence fees, followed by $60m from sports betting licence applications, and the final $1.4m coming from taxes paid by licensed daily fantasy sports operators, after the market opened in May this year.

This complemented the $799.8m in taxes generated from the operation of slot machines in its 2017-18 financial year. In total, more than $34bn is expected to be generated for the Pennsylvania General Fund for the 2018-19 period, due in part to the expansion of gambling across the state.

“If the point of the expansion was to fill short-term gaps in the state's budget, then the expansion would have to be considered a success so far,” PlayUSA analyst Jessica Welman said. “We believe that the gambling expansion will eventually prove to be a winner for the state's budget, but the long-term picture is less certain.”

Welman said the question of whether the state’s high tax rates and steep licence fees would limit the growth of the market – and revenue generated for the state – would only be answered once iGaming launches and more sportsbooks launch.

To date just the William Hill-powered sportsbook at the Hollywood Casino at Penn National has gone live. A number of other venues such as Parx Casino and SugarHouse in Philadelphia are expected to follow before the end of the year.

The roll-out of online sports betting and iGaming, however, is not expected to take place until early 2019. This will be complemented with the launch of satellite casinos, another feature of the gambling expansion bill.

The launch of online sports betting would be key, PlayUSA noted, in driving revenue for the vertical.

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