Pennsylvania Sets the 7-Month Consecutive Record of iGaming Revenue

Pennsylvania’s growing reputation as the next iGaming heartland continued to grow as the first industry statistics for 2021 were made available to analysts. In fact, the numbers are escalating in a style reminiscent of the progressive jackpots on the slot games with which the Keystone state has become so enamored.

Revenue in January was the highest ever – the seventh month in succession that a new record was set. The year kicked off with first-month turnover of $80.4 million. An increase of more than 12 percent on the December figure of $71.6 million is impressive enough. But what really brings the growth of iGaming in Pennsylvania into focus is comparing today’s revenue with the $20 million that the sector generated in January 2020.

Growth and profitability

The dramatic surge gives the lie to theories from some quarters that Pennsylvania’s “honeymoon period” after the legalization of online sports betting in 2019 is coming to an end. The new legislation certainly boosted the profile of all types of gambling activities, and when November saw only a nominal increase of $15,000 over October, some suggested the market was about to flatline. Events of December and January have proved them wrong.

In addition, the industry can take comfort from the fact that it is not just hype and promotion that is causing ballooning revenue. Profitability remains stable while the sales increase, despite the tactics being adopted by industry players to gain market share. The USA has a proliferation of no deposit casinos, yet this has not stopped profits from exceeding expectations. It’s the clearest indication that visitors are not merely registering to satisfy curiosity and walking away after exhausting the no deposit bonuses.

Shifting gaming patterns

At the macro level, online slots games remain the primary contributor to iGaming revenue. Pennsylvania gamblers fed $51 million into these games in January, compared with just $7 million in the same month in 2020. However, over recent months a definite shift in habits has started to become apparent.

Tax revenue actually slipped slightly in the last months of 2020, and this can be attributed to table gaming revenue increasing at a faster rate than that of slots. Table games are taxed at a lower rate, and so while this might not be the news they want to hear at the State Capitol in Harrisburg, it bodes well for the long-term health and viability of the iGaming sector.

Habits in both online and land-based casinos have demonstrated time and again that newcomers tend to gravitate towards slot games while more experienced casino-goers prefer the likes of blackjack, baccarat and roulette. Gaining solid sales revenue from these particular verticals is what helps casino owners sleep soundly in their beds at night.

Land-based casinos holding firm

It is easy to assume that the meteoric rise of iGaming is down to people changing their gambling habits as a result of wider factors over the past 12 months. Of course, the restrictions and temporary closures at land-based casinos played a role, especially in late spring and early summer 2020. But the impact is not as significant as you might think.

When the land-based casinos closed their doors, iGaming revenue rose dramatically. When those doors reopened, iGaming revenue leveled out for a month, then continued to rise dramatically. Land-based revenue is down on last year, but that is only to be expected. After all, they are operating at a restricted capacity and with heightened safety and sanitation measures in place that some gamers find inconvenient. Even James Bond would find it hard to look suave sipping a vodka martini while wearing a face mask.

However, given the circumstances, as well as the competition coming from cyberspace, the land-based casinos are weathering the storm admirably. The state’s four largest such operations, Parx Casino, Valley Forge Casino, Hollywood Casino and Rivers Casino turned over just under $170 million between them in January, more than twice the revenue generated by all the online operators put together.

What about sports betting?

It was the legalization of sports betting and the associated media hype that really pushed the concept of online betting to the front of people’s minds, and the move had a major effect on the neighboring casino industry. Here, there is also growth, but not at the exponential rate being seen in the gaming sector. Revenue for January stood at £34 million, slightly down on the previous month but almost 50 percent higher than the previous year.

What really stands out here, however, is that it is the online sportsbooks that hold sway. While in the casino sector, around three-quarters of the overall revenue still comes from land-based operations, sports betting is something that the vast majority choose to pursue via their smartphones, with 88 percent of in-state sports wagers placed online.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes