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Pennsylvania Gambling Expansion Could Hurt Existing Casinos’ Revenues

A report presented by the credit rating agency Moody’s suggests that the recent gambling expansion that was greenlighted in the state of Pennsylvania may not be very positive for casinos, after all. In addition, the report shows that the commonwealth could become less attractive to the industry.

Under the recently-announced gambling expansion, the state of Pennsylvania could see up to 10 new mini casinos start operation. Furthermore, video gambling terminals located in truck stops were also allowed, as well as online gambling and betting in airports.

According to Peggy Holloway, an analyst at Moody’s, the long-awaited gambling expansion could actually off-set the existing casinos’ revenue. The agency said in its report that the state finances may draw benefit from Pennsylvania’s gambling expansion bill and probably would, but it is still unclear if the existing gambling operators in the state would actually benefit from the expansion, too. Even worse, the Moody’s credit rating agency shared an opinion that the expansion of the gaming market in the state would cripple the performance of the 12 casinos that already exist in the state, as well as the results of the casinos in Atlantic City.

Ms. Holloway explained that local gambling operators do not seem to be happy with the gambling expansion bill and the possible effects it could have on the gambling landscape of the state. She further shared that gaming demand in the US as a whole has been suffering a decline over the past few years, with the state of Pennsylvania experiencing a relatively flat revenue growth estimated to 1% to 2%.

Questions Raised about Pennsylvania’s Gambling Expansion

The recent report of the agency also says that the gambling expansion in Philadelphia would negatively affect Atlantic City revenues. Moody’s reminded that the last gaming expansion in Pennsylvania led to the closure of five Atlantic City casinos since 2014, with the gambling industry there suffering serious losses.

Recently, the casinos in Atlantic City have shown signs of growth, with them generating revenues of about $2 billion. According to the New Jersey Division of Gaming Enforcement, the revenues which seven casinos accounted for a year earlier amounted to $1.8 billion.

As mentioned above, the agency shared in its report that Pennsylvania online gambling is expected to provide a revenue boost for operators, but the proposed 52% tax rate is a lot higher than the 16% tax rate implemented in the state of New Jersey. According to Moody’s agency, such a large tax rate would make Pennsylvania’s gambling environment “unattractive”.

Under the new gambling law of Pennsylvania, which allowed long-awaited gambling expansion after Governor Wolf signed the proposed bill only recently, the slot machines supply in the state could increase from 13% to 31%. Table games, on the other hand, are expected to rise by 16%. The Moody’s agency shared that the largest effect by the new piece of gambling legislation would be seen in the performance of the SugarHouse Casino and Rivers Pittsburgh Casino due to the fact that they operate only one venue in the state. SugarHouse, on the other hand, would face a lot of pressure on its earnings and revenues considering the new Live! Hotel & Casino that is set to be open in 2020.

 Author: Harrison Young

Harrison Young is an experienced writer, who started his career almost 8 years ago. Prior to joining our team at CasinoGamesPro, he worked as an editor for a small magazine.