PA Casinos Generated Over $1 Billion in Tax Revenue in Tough 2020

The COVID-19 pandemic walloped the U.S. commercial casino gaming industry in 2020. However, Pennsylvania casinos weren’t impacted as much as other states, according to an American Gaming Association report.

Across the country, revenue dropped 31.3% from 2019, down to $30 billion. Pennsylvania casinos were closed about a third of the year in 2020 and it resulted in a 21% decline in revenue.

The American Gaming Association (AGA) annual “State of the States” report detailed the finances of all states with land-based and online casinos, including PA. The far-reaching 143-page review illustrated the impact of coronavirus on the gaming industry, gaming revenue, taxes and the growth of gaming across the country.

Coronavirus and its impact on casinos

Nearly 47,000 business days evaporated across jurisdictions due to pandemic closures. That’s approximately 27% of potential operating days across jurisdictions. All 25 states with commercial casinos had declines but the degree varied widely.

New Mexico saw the biggest decline (79%) in revenue and some casinos in the state still remain closed. Revenue loss correlated with the number of closed days. For instance, there was just a 4.5% revenue drop in South Dakota, where shutdowns lasted just a few weeks.

PA casinos were initially ordered closed from March 17 until June 9, when casinos were allowed to reopen but with restrictions, including operating at no more than 50% of maximum occupancy. Rivers Casino Philadelphia was required to shut a second time on November 20 through the end of the year based on a city-wide order. Then, on December 12, all casinos in Pennsylvania were required to close under a COVID-19 mitigation order imposed by Gov. Tom Wolf.

As a result, Pennsylvania’s commercial casinos lost an estimated 33% of total operating days.

PA casinos survived rough year in most competitive region

The Northeast region is the most competitive gaming market according to the AGA. Pennsylvania casinos held their own during a global pandemic.

PA casino revenue dropped 31% in 2020. Here’s how much revenue at casinos in state’s bordering Pennsylvania fell.

  • New York: 56.6%
  • West Virginia: 30.9%
  • Maryland: 30.2%
  • Ohio: 25.8%
  • Delaware: 24.5%
  • New Jersey: 16.9%

AGA President and CEO Bill Miller commented that those figures only tell part of the story:

“They don’t include lost revenue from live entertainment, dining, hotel bookings and meetings and conventions that are so crucial to gaming properties. More importantly, they don’t capture the difficult personal decisions and sacrifices that have impacted every single member of our industry.”

How Pennsylvania casinos fared versus the rest of the country

Slot revenue at Pennsylvania land-based casinos in 2020 was $1.36 billion, down 42.6% against 2019, while revenue from table games was $504.3 million, down 44.2%.

iGaming proved to be a tremendous asset for casino revenue and state gaming taxes, especially during prolonged closures. Pennsylvania reported a total of $565.8 million in online casino revenue during its first full year of legal iGaming. PA sports betting may get the headlines but iGaming revenue in PA more than doubled PA sports betting yearly revenue ($270 million).

Revenue from internet gaming operations in Delaware, New Jersey, Pennsylvania, and West Virginia collectively nearly tripled to more than $1.55 billion.

Top gaming markets in the USA includes AC, Philadelphia, and the Poconos

The AGA ranked the top 20 gaming markets in the country. However, it did not factor in sports betting or iGaming to revenue totals.

Las Vegas continues to be the top gaming market in the country raking in $3.65 billion in 2020. Atlantic City held the No. 2 spot with $1.48 billion. Philadelphia moved from the No. 7 spot to No. 6. The Poconos dropped from No. 10 to No. 14.

Pennsylvania collects more taxes from casinos than any other state

Pennsylvania collected more than twice as much in direct gaming tax revenue than any other state in 2020 due to one of the highest effective tax rates in the country, according to the AGA.

Just how much tax money did the state collect from gaming? Pennsylvania was the only state to generate more than $1 billion in gaming tax revenue . Pennsylvania casinos paid $1.2 billion in tax revenue in 2020, down 21.4% from 2019.

Land-based casino taxes

  • 54% tax rate on slot machine revenue
  • 16% tax rate on table game revenue
  • 34% tax rate on electronic table games

Pennsylvania iGaming taxes

  • 54% tax rate on online casino slots
  • 16% tax rate on online table games
  • 16% tax rate on online poker

Pennsylvania sports betting taxes

  • 36% tax rate which includes a 2% tax for local municipalities.
  • Sportsbooks are further subject to a 0.25% federal excise tax applied to the wagering handle.

Gaming tax revenue in Pennsylvania primarily offsets school taxes paid by property owners. Additional allocations go for local law enforcement grants and responsible gaming programs. In 2020, the state’s share of direct gaming tax revenue amounted to $751.4 million.

Pennsylvania casinos poised for bright future

The AGA report is upbeat about the future of gambling in PA, which has 13 casinos, six with racetracks attached.

The state saw strong growth in online sports betting during 2020, particularly at the end of the year. Video gaming terminal expansion continued across the state. At the close of 2020, electronic gaming devices were operational at 40 truck stops across the state.

There was an attempt to expand the presence of VGTs in 2020 further, but it went nowhere. Sources have told PlayPennsylvania another attempt is likely before the close of the fiscal year at the end of June.

Report recapped PA history and performance

Casinos in Pennsylvania were approved in 2004 and major expansion tacked on in 2017, with the results still building. And sports betting began in late 2018, months after a federal prohibition was struck down.

By the end of 2020, retail sportsbooks were operating at all but one of Pennsylvania’s casinos and racinos, one satellite casino, and one off-track betting facility affiliated with Parx Casino. And 12 online sportsbooks were in action by the end of 2020.

A mini-casino, Live! Casino Pittsburgh, opened in Oct. 2020 and four more are on the horizon. The 2017 gaming expansion included online casinos and poker which went live in 2019. Currently, there are 14 online casinos in PA.

2021 off to a strong start for Pennsylvania casinos

A new year brings new hope. In Pennsylvania, it also brought a new casino. Live! Casino Philadelphia opened in February 2021. It’s the second casino in the Philadelphia city limits and the fifth in the greater Philadelphia market which includes Harrah’s Philadelphia Casino and Racetrack, Rivers Casino Philadelphia, Parx Casino, and Valley Forge Casino Resort.

Vaccinated guests at Pennsylvania casinos do not have to wear masks, capacity restrictions have been lifted and drink service returned to the casino floor.

And more change is coming with some PA casinos planning to move to cashless payment systems sometime in 2021.

Miller concluded his opening message of the report:

“Although 2020 presented a tremendous challenge and many headwinds remain, I’m optimistic about gaming’s future. States around the country expanded access to our products in 2020 with voters and legislatures legalizing sports betting in five states and authorizing commercial casino properties in two new states. Beyond geographic expansion, we’re an industry in a constant state of reinvention and many of you are already moving to adapt to new consumer trends around payment preferences and the casino experience.”

Lead image credit: AP Photo/Wayne Parry

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