Online gaming surge in Pennsylvania and NJ not enough to offset casino losses

Even in states with the US laxest online gambling laws, revenues plummeted by hundreds of millions of dollars following the closure of land-based casinos last month amid the coronavirus pandemic.

Pennsylvania, New Jersey and Delaware allow for full online casino gaming, including poker, roulette and slots. Nevada, which allows online poker, bans other digital table games. Despite online gambling surged in all three states, newly released data show it wasn't nearly enough to offset massive losses from traditional casinos, The Philadelphia Inquirer reports.

In Pennsylvania, total gambling revenues fell from $304 million in February to just $153 million last month after the state's 12 casinos were all shuttered March 16. Adding that loss to a $124 million drop-off from February to March in New Jersey, nearly $274 million in likely revenue was lost in just 16 days across the two states.

The numbers will grow even bleaker when Delaware releases full figures later this month, according to Vernon Kick, director of the Delaware Lottery. That comes despite a 58% percent boost in online gaming in that state. "Even though we've spiked up, it's still just a drop in the bucket," he said.

Pennsylvania has had the worst of it so far. The state taxes slots at 54% and table games at 16%, compared to 8% for both in New Jersey. That meant a large reduction in Pennsylvania tax revenues in March, falling to $62 million from $124 million in February.

Online gambling surged in Pennsylvania, with overall revenues increasing by 24%. However, the bump barely made a dent in state tax revenues, with the increase in online gaming revenues amounting to less than a $2 million boost. "We certainly have seen an uptick in online play, in particular table games, the biggest being poker," said Doug Harbach, a spokesman for the Pennsylvania Gaming Control Board. "It does not make up for the casino losses. It will not come close to satisfying the tax revenue we've been used to."

In New Jersey, where all of the state's nine casinos are located in Atlantic City, total gambling revenues fell 44% in March compared to a year earlier. Online gambling again offered a silver lining, increasing by about two-thirds compared to the same time last year. But as in Pennsylvania, overall tax revenues still dropped precipitously last month, with about $8 million less flowing to public coffers in March than in February.

As for Delaware, the state has just three casinos, and figures showing the total impact on revenues are not yet available. Slot machines, taxed at 37.5%, typically account for the lion's share of statewide gambling revenues, and March figures are not yet available.

Early reports do show a substantial increase in online gambling, with a 58% percent boost in pre-tax revenue from February to March. But in real dollars, that wasn't enough to make up for even a modest drop in revenues from casino table games, which are taxed at 15.5%. Revenues from those games fell from $4.1 million in February to $3.4 million through March 29, a 16% drop.

“iGaming is a very, very small portion,” Kirk, director of the Delaware Lottery, said. "It’s “up considerably, but those are percentages. Our dollars are not anything to write home about.”