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Coalition of Pennsylvania Casinos Sues State Lottery Over Online Games

Less than three months after the Pennsylvania Lottery launched its “iLotto” series of online games, a coalition of land-based casinos in the Keystone State is crying foul in court.

On August 22, the Pennsylvania Casino Gaming Coalition (PCGC) – a lobbying organization which represents seven of the state’s 13 licensed brick and mortar casinos – filed suit in Commonwealth Court against the Pennsylvania Department of Revenue and agency head Secretary C. Daniel Hassell.

The Department of Revenue oversees the state lottery, which went live with its iLotto games on June 4.

The PCGC includes the following casinos among its current membership:

  • Parx Casino
  • Hollywood Casino at Penn National Race Course
  • Harrah’s Philadelphia Casino & Racetrack
  • The Meadows Casino Racetrack Hotel
  • Stadium Casino
  • Valley Forge Casino Resort
  • Mohegan Sun Pocono

In October of 2017, Governor Tom Wolf signed a massive gambling expansion bill known as Act 42 into law. With the passage of Act 42, online casinos and poker were legalized, along with all forms of sports betting, but the bone of contention among local casinos is the provision allowing for online lottery sales.

But even before the iLottery program raked in nearly $3 million in revenue through June – on $21.6 million in sales to 45,000 unique players – Pennsylvania’s conventional casino industry penned a joint complaint to Wolf claiming iLotto games violated state law.

Casinos Allege iLotto Products Resemble Slots, Bingo, and Keno

According to the PCGC, the lottery’s online products have been designed to mimic casino games like slot machines, bingo, and keno.

Per the group’s suit, many of these games “have the same titles and/or themes as slot machines offered on Pennsylvania casino floors.”

And indeed, the Pennsylvania Lottery began its iLotto program with a game called “Ballroom Bingo” included among the selections.

In a press release issued by the PCGC, the seven casinos specifically name iLotto products Volcano Eruption Reveal, Robin Hood, Super Gems, Big Foot, and Monster Wins as closely resembling conventional slot machines and casino games.

PCGC spokesperson David La Torre also pointed out that these casino-style games are currently available to “Pennsylvanians as young as 18,” despite state law restricting casino gambling to ages 21 and up:

“The actions of the Pennsylvania Lottery are illegal. To make matters even worse, the agency is promoting casino-style gambling to teenagers.

Pennsylvania casinos must follow very stringent regulations on underage gaming or face millions of dollars in fines. Meanwhile, the Lottery is openly violating the law and marketing these games to anyone as young as 18.

Not to mention, any loss in casino revenue will hurt Pennsylvania’s tax collection for property tax relief and local improvement projects funded by gaming tax dollars.”

The coalition also claims that Pennsylvania has created an uneven playing field for gaming operators. Under the terms of Act 42, land-based casinos must pay $10 million in licensing fees in order to offer iGaming, before paying 54 percent tax on online slot revenue and 16 percent on table games.

The Lottery, meanwhile, “has no license fees, a lower age restriction, pays no taxes, and enjoys the imprimatur of the Commonwealth,” per the lawsuit.

Department of Revenue Defends iLotto as Revenue Engine

In its own statement, the Pennsylvania Department of Revenue rejected the PCGC’s claims while pledging to review the lawsuit:

“It is important to note that Act 42 authorized the Lottery’s new games, which are part of an effort to continue delivering to our customers games that they want and where they want while generating the additional funds to stabilize the Lottery Fund and provide vital services to older Pennsylvanians.”

As part of the sales pitch to have iLotto approved, the state lottery teased significant increase in revenues, of which 25 percent are directed to services for senior citizens.