Cost of Pennsylvania Casino Closures Due to the Pandemic

The global pandemic and its associated health and economic crisis closed bricks-and-mortar casinos across the United States. Casino Game Tables were devoid of players, casino staff were temporarily laid off and the whirring electronic buzz of slot machines in casinos turned silent. However, some states were luckier than others.

The Keystone State of Pennsylvania and neighboring New Jersey were lucky and less afflicted than many other states thanks to legalized online casinos. In those states, revenue continued to flow in as players changed their habits and online casinos boomed to levels never seen before, particularly in Pennsylvania.

Online Casino Gambling revenue is continuing to defy all odds in Pennsylvania and recently topped $50 million again for the third straight month in July 2020 and for that, the state is thankful.

However, the casino closures did enormous damage to the Keystone State’s land-based casino industry, and perhaps changed the way forever by which we will continue to play casino games into the future. Let’s examine the damage done and the online bounce-back.

According to the March to June 2020 results submitted to the Pennsylvania Gaming Control Board (PGCB) by the operators in the Keystone State, brick-and-mortar casino table games and slots missed out on nearly $1 billion in gross gaming revenue (GGR) because of the state government ordered casino shutdowns. In 2019, the 12 land-based casinos in Pennsylvania had GGR of $968.8 million during the same 3-month period.

The Keystone State found itself more exposed to revenue loss than other states due to the high state taxes on the casino industry. Pennsylvania taxes casino table games at 16% and land-based slots at 54%. Those rates are a big increase on that of New Jersey, with the Garden State taxing at a rate of 8% across both. What’s more, at 36%, Pennsylvania’s sports betting tax is one of the highest in the nation.

Consequently, the state of Pennsylvania (with one of the highest gaming tax rates in the nation) missed out on approximately $424 million in tax income to fill the state government budget coffers.

According to Allegheny Institute for Public Policy;

“How exactly taxpayers will be affected (by the lack of government-funded services and infrastructure) remains to be seen. But entities that typically receive tax money from casino revenues, including school districts for property tax relief, should expect and likely will see a decrease in funding in the coming fiscal years”.

On the flip side, with the economic effects of the global pandemic still rampaging across the nation during those 3 months, the Keystone State still had revenue coming in thanks to online casinos and online sportsbooks providing a literal safe haven for the state’s players, and an income revenue stream for the Pennsylvanian State Government to continue their work.

Online Casinos Do the Heavy Revenue Lifting in Pennsylvania

Whether it is provenience ahead of the global pandemic or pure blind luck, online casinos had only become legal in Pennsylvania in 2019.

The Keystone State found itself in a situation whereby when the crisis began, that it was ready to brace for impact. In the month immediately following land-based casino closures, the online casino industry sector began to pick up the slack and experienced a surge in player numbers.

In April 2020, GGR in online casino play increased by 73% compared with the previous month and jumped by more than 84% on the same month in 2019.

The numbers continue to track with $43 million GGR reported in April and a record $55.8 million in May 2020, a further 79% jump on the May 2019 numbers.

Pennsylvania shows what a licensed and regulated online casino industry can do for economic recovery.