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A battle is brewing in Pennsylvania

As the applications come in for regulated online casinos and poker in the state of Pennsylvania, the Lottery may have given themselves an unfair advantage in the race to scoop up disposable income from residents.

The Pennsylvania lottery recently launched their i-Lottery suite of games, and the early numbers are in. After one month of release, the lottery stated that over 45,000 accounts were created, and those accounts totaled over 21 million USD in betting handle. The hold on that amount came to just shy of 3 million for the month, which is considered a massive success for a product that is really only now coming out of the soft-launch phase.

In the report announcing the first-month results, Jeffrey Johnson of the Department of Revenue was quoted as saying “PA iLottery games are a fun, new way to play and win from home or while on the go. iLottery is a big part of our effort to meet our players where they already are while generating new funds to benefit older Pennsylvanians.”

So, why the beef? Well, the star of the i-Lottery show is the digital scratch ticket. Casinos in the state are arguing that the game being offered by the lottery essentially amounts to the same mechanics as a slot machine, in which case they would be in violation of the recently-passed online gambling laws. In fact, despite claims to the contrary, the lottery had been marketing their online offering as “casino-style” and games that were “slots-like” in nature.

Now, what this really boils down to is whether or not these games are indeed acting like a slot machine or more like a traditional paper scratch ticket. Paper tickets that are sold by the lottery have a finite number of tickets printed, meaning that there are only a certain number of winning tickets available. If the online version of the games used this “closed-loop” model, then maybe the casinos wouldn’t have as much of an argument. However, given the brazen marketing that the lottery launched, along with the fact that these digital games do not have the same mechanics as the paper version, has left the casino operators with no choice but to protest these games all the way up the chain to the Governor.

Of course, with early numbers that show a massive amount of potential revenue for the state, it is hard to say if the government will step in and do anything to curtail the release of these games by the lottery. This is just another struggle in the state’s attempts to reap the benefits of the comprehensive legislation if approved in 2017. To date, there have yet to be any completed applications for the 13 new online gambling licenses, which likely stems from the hefty $10 million license fees and 54% tax on revenue from slot machines.

Where this all ends up is difficult to say, but if the Pennsylvania government watches what is happening in neighboring states, they may find themselves moving a little more quickly. Online gaming in Delaware and New Jersey is picking up steam, and the recent launch of sports betting will only accelerate the number of tax revenues being deposited in the state coffers.

What we do know is this: you can expect this fight to continue for some time, as the casino owners will have no intention of standing down unless there are concessions made in their favor as well.