Pennsylvania iGaming May Become a Concern for Casinos
As the online casino gaming sector grows in Pennsylvania, one analyst feels that the land-based casinos may start to see lower revenues.
When it comes to casino gaming, Pennsylvania is at the top in the United States. The state earns high revenues each month from its many land-based revenues. Online gaming services are also on offer in the Keystone state and the iGaming industry has really taken off, especially with the onset of the pandemic. Players are now used to using the online gaming sites and one analyst feels that online play may soon take over in the state, outpacing land-based play.
Low Recovery Numbers Post-Pandemic
In March 2020, casinos around the world started to shut down, including those in the United States, due to the COVID-19 pandemic. As the months went by, venues started opening up again and now in many states, land-based casinos are back to their pre-pandemic revenue earnings, or close to it. However, in Pennsylvania, that is not the case.
Comparisons are being made to 2019 in order to see if gaming venues are back to their normal operating status. In Pennsylvania, the 14 commercial properties offering casino gaming were down 12% in March, when compared to 2019. In April, the percentage was up slightly, while May was down 3%.
It is important to point out that the industry now has two new casinos. This plays into the percentage totals. The Live! Casino Philadelphia and Live! Casino Pittsburgh launched after the pandemic started and are now part of the totals reports.
Carlo Santarelli, a gaming specialist of Deutsche Bank, pointed out that if you look at just the 12 casinos operating in 2019, before the pandemic, the percentages are even worse. Gross gaming revenues were down 22% in March and 10% in April. May dropped 12%. So the new venues are helping the totals be higher than they would be when comparing the same operating venues pre-COVID.
Stunting Land-Based Growth
While the land-based casinos continue to struggle, online gambling is flourishing. When COVID-19 began, online gambling reached new heights as players stayed home and wagered via computer or mobile device. Players have now apparently gotten used to playing online and are not visiting the casinos as they were before the virus.
According to Santarelli, it is important to consider the fact that online gambling may be slowing the recovery effort of the land-based casinos. The analyst is questioning how different the customer is. Consumers may be making the right choice in staying home and playing as casinos are spending more on promotions and marketing for the iGaming industry than the land-based one.
There is a convenience factor to online gambling which is appealing, but there is also the fact that online casinos are offering major deals. There is more value in staying home and playing then traveling to the casino, where more money will be spent and there are less promotions on offer.
The problem now is that if the land-based casinos are being affected negatively by iGaming, it may cause other states to slow down in legalizing online gambling services. There will soon be six states offering iGaming services, and no others are showing any promise.
The analyst says that online casino legislation is less likely to be used by states as a new source of revenues than it would have been six months to a year ago. Online casino gaming seems to be a more challenging option than sports betting. Far more states offer sports betting than casino games, due to the popularity as well as the industry being less of a threat to the retail casino market.
According to the firm’s research into Pennsylvania and the iGaming market, there is some merit to land-based casino cannibalization from online operations.