Pennsylvania Casino Market Figures Not So Hot When Adjusted for Inflation
Posted on: January 22, 2019, 10:46h.
Last updated on: January 22, 2019, 10:46h.
Pennsylvania casinos either enjoyed their best year of all time in 2018 or their worst since 2010, depending on how much of a stickler you are for economics.
Last week, the Pennsylvania Gaming Control Board reported that combined gross gaming revenues generated by all the state’s casinos was a record $3.24 billion, topping the $3.22 billion of the previous year by around $22 million, which was itself a record. That yielded around $1.4 billion for state and local governments.
But on Monday The Courier Express chose to rain on the PGCB’s parade. When adjusted for inflation, these figures aren’t actually so hot, it noted. In fact, they represent the worst year for Pennsylvania casinos since table games were introduced in 2010.
Using the inflation calculator provided by the federal Bureau of Labor Statistics, The Courier Express found the casino market has actually contracted by six percent since 2012, which was its all-time best year, when inflation is taken into account
Market Has Slowed
For all the talk of record revenues, unadjusted “growth” over the past few years has been modest, and the truth is, the market has been in slowdown for some time.
The growth of table games revenue has been slowing year over year since 2014 and revenues were actually in decline in 2018. Meanwhile, slots revenue has been diminishing year on year since its $2.47 billion 2012 peak, although it saw a slight uptick in 2018.
Decreased revenues are concern for the state — especially for slots, which are taxed at 54 percent, while table games are taxed at just 16 percent.
Pennsylvania is currently in the process of implementing a wide-ranging gambling expansion package. As well as the rolling out of sports betting and online gaming for the casinos, a new full-fledged casino resort is under development in Philadelphia’s sports complex district, while five so-called satellite casinos will soon be established in small communities across the Commonwealth. There will also be VGTs at truck stops.
All of this has the potential to add thousands more slots — and, it is hoped, tax dollars — into the mix.
But Jake Haulk and Frank Gamrat, president and senior research associate, respectively, at the Allegheny Institute for Public Policy have suggested the equation might not be so simple and have called the expansion “risky.”
Because Pennsylvania’s neighbors — Delaware, Maryland, New Jersey, Ohio and West Virginia — all have gambling, there are fewer visitors to its casinos from across the state line. That means the vast majority of casino visitors need to come from within the state, which raises a simple question of supply and demand in a market that is about to become more crowded.
“Clearly, the question of ‘saturation’ needs to be answered,” Haulk and Gamrat told Penn Live last year. “Can Pennsylvania’s population and economy support in a profitable manner 22 casinos, gaming in airports, truck-stops, and on the Internet?”