PA Lottery vs. PA Casinos Court Case: First Victory Goes to PA Lottery

Pennsylvania Lottery one, Pennsylvania casinos zero. Pennsylvania casinos have been going after the state lottery for its online gaming offerings. Casinos in Pennsylvania say that the Pennsylvania Lottery offers online gaming options that are similar to that of slot machines. Last week the first battle in the war between the casinos and lottery went in favor of the lottery.

The First Victory Goes to Pennsylvania Lottery

Seven casinos in Pennsylvania are part of a group that is going after the state lottery and their PA iLottery offerings. These casinos, (Hollywood Casino, Harrah’s Philadelphia, Meadows Casino Racetrack, Mohegan Sun Pocono, Parx Casino, Stadium Casino, and Valley Forge Casino Resort) alleged that the lottery is breaking the law by providing games similar to their slot offerings in their casinos.

The court case started back in August of 2018, but the first ruling was made just this past week. After a couple of hearings back in June, an opinion was handed down this past Friday (July 12th) by Judge Renee Cohn Jubelirer. Judge Jubelirer denied the injunction request from the state’s casinos that were attempting to put a stop to the iLottery games in question. According to the judge’s 50-page ruling, the case will still proceed to trial. While the Pennsylvania Lottery won the first battle, this war is far from over.

Casinos Fair to Have Beef With Lottery?

Pennsylvania has some of the highest taxes and licensing fees in the state for online gaming operations. Casinos had to pay a staggering $10 million licensing fee in order to apply for an online gaming license that features online sports betting, poker, and casino games. On top of that, taxes for these casinos is 54 percent on slot gaming revenue. Pennsylvania casinos believe the market is already saturated enough (at least nine casinos expected to offer online gaming) that the addition of lottery gaming will make it even more difficult to turn the desired profits in a state with such high taxes.

In 2017, a gaming expansion law allowed Pennsylvania to operate online gambling from both the lottery and casinos. The Pennsylvania iLottery launched back in May of 2018. Since its inception, the lottery has gained over 100k player accounts and generated $375 million in revenue, according to testimony from the Executive Director of the Pennsylvania Lottery.

According to court documents, there are four distinct aspects of the iLottery games that the casinos have issues with. The autoplay, reveal all, and bonus game features, as well as the ability to adjust bets. On top of that, the lottery never had to pay the $10 million licensing fees that the casinos did and they are allowed to attract the attention of players 18-years old, casino players must be at least 21.

Judge’s Ruling and What the Future May Hold

While Judge Jubelirer did rule in favor of the lottery, she did acknowledge the similarity between the iLottery games and slot machines offered at casinos. “While the side-by-side video comparisons of the iLottery games and the online or land-based casino games did highlight striking similarities, which gives the court pause, based on the evidence presented, it is not yet clear to this Court whether the General Assembly intended to preclude iLottery games from utilizing features that appear to have been used in paper-based instant tickets or scratch-off games, or the ability to use technology to make those instant games more entertaining and attractive to players,” said Jubelirer as part of her ruling.

This case will certainly spill over into 2020 and based on Judge Jubelirer’s decision not to deny the injunction, it appears everything will continue to operate as normal until this case is decided. The lottery will continue to operate its online games and casinos will continue to launch their products and operate as well. The only two outcomes would be the casinos win, and the iLottery is limited to offering just regular lottery-style gaming options online (POWERBALL, MEGA Millions, Keno, etc.), or the casinos lose, and everything remains the way it is.

Could This Court Case Effect Other State Lotteries?

Michigan, Kentucky, Georgia, Illinois, and New Hampshire all have online lotteries too. If the Pennsylvania casinos can manage a victory over the lottery, you can assume that other state casinos might follow suit and try to take some action against the online offerings by their respective state’s lottery. What happens in Pennsylvania doesn’t necessarily translate over to other states. However, you can bet that the casinos and lotteries in other states are keeping an eye on this case. If casinos think they can find a way to eliminate competition in their respective states, whether that is the lottery or not, you can bet that they will do all they can to remove any competitors from the market.