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Slots revenues account for some 70% of total gaming revenue in New Jersey and are expected to comprise the same share of the market when Pennsylvania casinos launch their online operations. Looking at a 54% tax rate versus 9.25% in New Jersey, it’s easy to see why Pennsylvania operators feel like they are getting a bad deal. With margins already slim in a highly competitive market, Pennsylvania’s online casino operators will be forced to reduce return to player rates and reduce bonuses and incentives to drive revenue growth, making the market that much less attractive when compared to neighboring states. To further complicate the already difficult competitive landscape for online casinos in Pennsylvania, state regulations have also banned online gambling at land-based casinos, a move that opponents say will cut out an essential way to bring in new players and drive online revenue. The logic is simple, by allowing players to register and start playing online when they step into a land-based casino property, two things happen. First, the casino has made the player abundantly aware of their online casino offer. Second, by incentivizing players to register with the online site while on the property, operators make sure that players are encouraged to use their brand over a competitor. For example, in nearby New Jersey, the Resorts Atlantic City has gone so far as to set up an iGaming Lounge, with trained staff available to facilitate new player registrations and drive brand loyalty. “The Resorts iGaming Lounge has acted as an excellent training ground for inexperienced online players and has provided almost 25,000 registrations for the online service,” Ed Andrewes, head of Resorts Atlantic City’s online gaming division told Online Poker Report . A third pillar of Pennsylvania’s regulatory environment seen as problematic for the industry is the requirement that all skins, the online casino floor into which player first enters, reside on a sub-domain of the existing brick and mortar license holder. Opponents of this measure say that such a move will increase operating costs for the license holders, provide consumers with fewer choices, curtail effective marketing spending, curtail competition and ensure the state loses out on additional licensing fees.
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