Study: Despite Pennsylvania Casino Growth, ‘Long-Term Disappointment’ Is Inevitable
A new study on state revenues from gambling takes a pessimistic long-term view of state revenue from land-based casinos in jurisdictions throughout the U.S. The study has particular relevance to states like Pennsylvania that are still relatively new to the gaming industry.
The study came out even as Pennsylvania casinos continue to post strong gaming revenues and growth in most months. That includes a banner year in 2015.
What the gambling study says
The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, put out the study in April. You can read it in its entirety here.
The study says that short-term gains in state revenue realized from gambling will not last in the long term. From the study’s preface:
New gambling activities may generate short-run increases in public revenues, but these increases are getting smaller and their duration shorter, perhaps as more and more states compete for a limited pool of gambling dollars.
What the study says about Pennsylvania gambling
The study looks at data in more mature gambling markets to paint a picture of the future in states that are newer to the gambling industry.
The study also seemed to warn most against the Pennsylvania government putting more eggs in the gambling basket:
The recent geographic expansion of gambling created stiff competition, particularly in certain regions of the nation where states and facilities are competing for the same pool of consumers. Therefore, the weakening of the growth in gambling revenues is also attributable to market saturation and industry cannibalization. For example, Pennsylvania enjoyed strong growth in revenues from casino and racino operations until the opening of new casinos and racinos in neighboring Maryland, New York City, and Ohio.
Pennsylvania is currently responsible for 8.8% of gaming revenue nationwide, the study says.
Why Pennsylvania is particularly at risk
Pennsylvania, of course, could be even more susceptible to the trend identified in the study, because of newer developments in neighboring states:
- New York will be adding three new casinos in the near future.
- Voters in New Jersey will be asked in November whether to allow gaming licenses in the northern part of the state.
- The Maryland gambling market continues to mature.
What PA thinks about the study
Rep. John Payne — who chairs the House Gaming Oversight Committee — dismissed the study in a story at the Allentown Morning Call:
“Not sustainable? I guess they’ve never heard of Las Vegas,” Payne said. “We know people are going to gamble, so we might as well regulate it and tax it. I hope they didn’t waste too much taxpayer money on that study. What we need to do is give casinos the tools to compete with other states.”
May is a particularly busy month on the gambling for Payne’s committee. Also on the horizon is the possibility of the legislature revisiting a big gambling expansion that could include legalization of Pennsylvania online poker and casino games.
The author of the study noted that the land-based gambling expansions proposed by Payne would be a “mistake,” per The Morning Call.
Image credit: silviofranca / Shutterstock.com