Pennsylvania Lottery Wins Legal Victory Over Casinos Regarding iGaming

Posted on: May 28, 2021, 02:46h. 

Last updated on: July 7, 2021, 01:44h.

The Pennsylvania Lottery has successfully defended itself against a lawsuit regarding its online games brought by state licensed casinos.

Pennsylvania Lottery online gaming casino
A screengrab of a Pennsylvania Lottery online game. A state judge this week ruled that such games do not infringe on internet casino products. (Image: Pennsylvania Lottery)

In 2017, the Republican-controlled legislature and Democratic Gov. Tom Wolf passed on a major gaming expansion package. The gaming bundle was the result of GOP lawmakers refusing to increase taxes on residents, while the governor sought additional revenue. 

The bill authorized new land-based casinos, online gambling, retail and mobile sports betting, video gaming terminals at truck stops, airport tablet gaming, and internet lottery games. 

The Pennsylvania iLottery went live in 2018. The following year, casinos contested the interactive gaming products. Seven casinos collectively filed a lawsuit seeking an injunction to halt the online lottery offerings. 

The complaint argued that the “slot-style” iLottery games are too similar to online slots, and violated the 2017 law that said the lottery’s internet products must not resemble or “simulate” casino games. 

Commonwealth Court Judge Renee Cohn Jubelirer ruled today in favor of the Pennsylvania Lottery.

The features of iLottery games challenged by petitioners are not signature, iconic, or key features particular to casino free slot machines,” her ruling stated. 

Jubelirer added that the plaintiffs’ argument that random number generators — a key component of traditional slot machines that’s also used for online gambling — is simply an advancement in technology that can be utilized by the lottery. 

Casinos Considering Appeal

The lawsuit’s plaintiffs included Penn National Gaming, Caesars Entertainment, and The Cordish Companies. A lawyer representing the casinos told the Associated Press that his clients are reviewing the court’s decision and their legal options.

Another criticism to the iLottery is that the brick-and-mortar casinos are required to pay the state a one-time $10 million fee in order for iGaming privileges. The Pennsylvania Lottery paid nothing for the online rights. 

The Pennsylvania Lottery is experiencing record play, and the online games are playing a substantial role. Lottery Director Drew Svitko said recently that the $4.5 billion in sales record set during the 2018-19 fiscal year won’t be the all-time high mark for much longer. 

Svitko explained that the lottery is pacing in the 2020-21 fiscal year to be “north of $5 billion.” Online games for 2020-21 are forecast to be upwards of $900 million. 

Mega Millions Winner

Along with its own internet games, the Pennsylvania Lottery allows people age 18 and older inside the state to purchase Mega Millions and Powerball tickets online. But the recent lucky winner of a $516 million Mega Millions jackpot instead bought the ticket inside a 7-Eleven in Middletown, Pa.

During the May 21 draw, the $2 ticket matched all five white balls, plus the yellow Mega Millions ball. 

If the winner is a Pennsylvania resident and takes the one-time lump sum cash option of $349.3 million, the money will be subject to nearly $130 million in federal taxes, and then a three percent state tax to result in a final payment of $209.37 million. 

So far, the winner has not come forward to claim the prize. Pennsylvania does not allow lottery winners to remain anonymous.