Pennsylvania Lottery to Break Revenue Record, But Officials Concerned with Unregulated Skill Machines

The Pennsylvania Lottery is on pace for a record banner year.

Appearing before the state House Appropriations Committee this week, Pennsylvania Lottery Executive Director Drew Svitko said the lottery is on track to easily break its all-time sales record.

The lottery sold $4.5 billion in game tickets during the 2018-19 fiscal year, the current high mark. Svitko revealed that sales in FY20-21 are expected to be “north of $5 billion.”

The lottery boss said the state’s online games fared well during the pandemic, as many players went online to test their luck. And somewhat surprisingly, Svitko revealed that retail ticket scratch-off sales were strong throughout 2020. He cited the fact that many lottery retailers, such as grocery and convenience stores, have been considered essential businesses and therefore permitted to remain open.

The Pennsylvania Lottery turns 50 years old this year. Launched in 1971, the lottery benefits older Pennsylvanians by way of property tax relief, prescription assistance, senior centers, free meals, and public transit services.

During the 2019-20 fiscal year, the lottery generated a profit of $1.14 billion.

Skill Gaming Concerns

 Pennsylvania’s gaming industry has grown exponentially in recent years. In 2017, the Republican-controlled state legislature and Gov. Tom Wolf (D) passed a far-reaching gaming expansion bill.

The package authorized as many as 10 Category 4 satellite casinos, although only five such licenses were awarded through successful auctions. Pennsylvania additionally legalized online gambling, sports betting, fantasy sports, and video gaming terminals (VGTs) in certain diesel truck stops.

Pennsylvania is today the country’s No. 2 gaming state in terms of revenue. Only Nevada generates more revenue from gambling.

Despite the added gaming offerings, Svitko says the lottery continues to see revenue climb. But he’s greatly concerned with unregulated so-called “skill gaming machines” that have proliferated in restaurants, bars, and convenience stores.

Svitko said nearly 30 percent of lottery retailers have at least one skill gaming terminal on their premises.

“I think the increase of gaming in the marketplace is dangerous and risky and harmful in the long run to us and our mission of generating money for those important programs,” Svitko said.

The Pennsylvania Gaming Control Board does not regulate skill games. The machines generate no tax revenue, as the proceeds are divvied up between the business and gaming manufacturer and distributor. Their legality continues to be contested in state courts.

Gaming Industry Recovery

Pennsylvania’s gaming industry began the new year in a positive fashion. Gross gaming revenue from land-based casinos, online gaming, sports betting, VGTs, and fantasy sports totaled $311.1 million. That’s a 2.7 percent increase in January 2020.

But brick-and-mortar casinos continued to struggle. Slot win was down 26 percent to $140.7 million, and table games saw the win drop 30 percent to $50.8 million.

The losses were offset by iGaming’s continued surge. Interactive slots won $51 million — a 609 percent year-over-year increase. Online tables kept $26.7 million of gamblers’ bets, up 479 percent.

Sportsbook revenue jumped 49 percent to $33.9 million. Pennsylvania allows both in-person and online sports betting.

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