Pennsylvania Report Favors iGaming, Philly Casino

A report commissioned by the Pennsylvania legislature says internet gaming may increase the state’s pool of revenues, and that the new Philadelphia casino will not saturate the market.

A report commissioned by the Pennsylvania legislature advises that internet gaming could create new players for Pennsylvania, and increase overall revenues.

The $153,000 study, by consultancy Econsult Solutions, was charged with analyzing the future of casino gambling in Pennsylvania, with a focus on the potential of internet gaming and market saturation in the eastern portion of the state.

According to Econsult’s report, internet gaming would appeal to a different player than the state’s 12 brick-and-mortar casinos, and could thus provide incremental gaming revenue to the state.

The report estimates that the state could clear $113 million annually from online gaming.

On the thorny issue of Philadelphia’s second casino license, still to be decided by the Pennsylvania Gaming Control Board, the report concludes that despite a chorus of calls from local media and competing casinos to dump the idea of a second Philadelphia casino because of oversaturation, the market can actually handle the increased capacity.

“We do believe that we’re not near the saturation point,” said Stephen Mullin, president of Econsult Solutions, in an interview with the Philadelphia CBS TV affiliate. “We do believe that the Philadelphia metropolitan area market is very, very large, and it can have more supply without having anywhere near a net cannibalization.” He said that while some effect will be felt by regional casinos, the net increase in revenues to the state from a second Philadelphia casino will be “sizable.”

The report also examined Pennsylvania’s blackjack rules, which are traditional Vegas-style rules including 3-to-2 payoffs for a blackjack, the requirement for the dealer to stand on soft 17, and the surrender option. The report recommends “flexibility” on the rules—in other words, that regulators be open to the option of tightening them by allowing dealer hits on 17 or worse, at one point erroneously stating that the soft-17 rule “tips the odds slightly in favor of the player,” which is incorrect.

Finally, the Econsult report states that the Pennsylvania gaming board may be too large for the market. The board has 15 times more worker per casino than Nevada, which has the most casinos in the country. “Other states that regulate and manage their casino markets more than Nevada or New Jersey also expend much less manpower for daily regulation of casinos,” the report said.

The report came under criticism last week from government watchdog group Common Cause Pennsylvania, which complained that Econsult has worked for two of the companies vying for the second Philadelphia license.

““It’s always tough to serve two masters, and there may be questions as to whether the commonwealth got a fair, accurate and unbiased report,” said Barry Kauffman, executive director of Common Cause Pennsylvania, according to the Pittsburgh Tribune-Review.

The head of another consulting firm that pursued the license to do the legislative study—and turned down work from a Pennsylvania casino to avoid any conflicts—agreed with Kauffman. “We live and die on our reputation,” Steven Rittvo, chairman and CEO of The Innovation Group, told the newspaper. “Something like that, for me, was a conflict.”

Members of the legislative committee that authorized the study said they did not consider the ties a conflict.