A prominent gaming analyst has issued a report suggesting that Pennsylvania’s healthy internet gaming business may be slowing the growth of the state’s brick-and-mortar industry, which recently was surpassed in growth gaming revenue by Atlantic City as the second-highest GGR in the U.S.
Deutsche Bank analyst Carlo Santarelli noted that while Pennsylvania’s gaming revenues are outpacing 2019, the last pre-pandemic year, exceptions in internet vs. brick-and-mortar casinos should raise concern.
“We think it is worth considering the notion that the presence of iCasino in Pennsylvania could be stunting the casino recovery,” Santarelli wrote. “Compared with 2019, gross gaming revenue (GGR) in 2021 at the state’s 14 commercial casinos was down 12 percent in March, up 1 percent in April, and down 3 percent in May. But Pennsylvania added two new casinos since 2019—Live! Casino Pittsburgh, a satellite venue at the Westmoreland Mall, and Live! Casino Philadelphia, a full-scale casino resort in the city’s Stadium District.
“On a stand-alone basis, given the pandemic, these results would appear reasonable in isolation. However, when compared with performance across a host of other states across the Northeast, Midwest, and Southeast, they stand out a bit.”
Santarelli cited the convenience of mobile casino play as a prime reason it could slow land-based casino growth. “Though the convenience of a pocket casino is surely a strategic advantage, if you’re a slot customer, it appears the iCasino is actually the value play for your entertainment dollar as well,” Santarelli wrote. “Said differently, the entertainment dollar lasts twice as long in the iCasino environment….
“Accordingly, we find the theme of the pandemic making iCasino legalization a likely source of funds for states far less likely now, post bailouts, than perhaps was the case six-12 months ago. As such, we think the rollout of iCasino is likely to be a lot more challenging than most expect, and far more challenging than sports betting.
“As per our findings here, we also think there is some merit to cannibalization of traditional casino operations, which would thereby lessen the desire of certain casino operators that haven’t had success in iCasino, or aren’t well-positioned to succeed in the vertical, to push for legalization.”
