Parx Falls Off the Fence in Pennsylvania, Comes Out Against Online Gaming at Senate Hearing

Posted on: March 8, 2017, 12:00h. 

Last updated on: March 8, 2017, 12:56h.

Casino.org Staff Writer Read More

Expertise: Commercial Gaming.

Parx Casino declared its hostility to Pennsylvania’s push to legalize online gaming at a crucial Senate Committee hearing on Tuesday.

The opposition of the LVS-controlled Sands Bethlehem is a given in these circumstances, although, unusually, a LVS representative was not present at Harrisburg hearing this week.

But Parx has largely sat on the fence on the issue in the past, so its sudden emergence as a declared foe of regulation is significant. It means now the two biggest casinos in Pennsylvania oppose online gambling regulation.

Parx CEO Anthony Ricci told a joint hearing of the Senate Community, Economic & Recreational Development Committee and the House Gaming Oversight Committee that his company was concerned about the threat of cannibalization online gaming poses to the land-based casino industry.   

Parx and Recreation

“How can we reasonably assume that after Blockbuster Video, Tower Records, Borders… (all) closing stores and eliminating jobs due to competition from online retailing, our industry is somehow different?” he queried.

David Satz, senior vice president of Caesars Entertainment, which owns Harrah’s Philadelphia, was on hand to counter this argument. His company has the perspective of operating both in New Jersey’s online gaming market and Pennsylvania’s land-based market.

Satz said that 80 percent of Caesars’ online customers in New Jersey “are customers we did not know,” and nearly half of the rest were old customers that had not set foot in the casino for over a year. Caesars’ experience supports numerous research that suggests that, far from cannibalizing the land-based market, online gaming enhances it.

Caesars’ has embraced online gaming, said Satz, precisely because “we don’t want to go the way of the Blockbusters and the newspapers and the like.”

Tax Rebut

Rizzi also complained of the proposed tax rate on online gaming revenue, which is currently set at 16 percent, in stark contrast with the 54 percent land-based slots tax, a point that was echoed by several lawmakers in attendance.

But many of those testifying in favor of regulation, from Caesars, to Amaya, to the Poker Players Alliance, put this into perspective. The tax rates had nothing to do with profits or cost savings, they said, but are necessitous because of online gambling’s lower margins. Anything higher would make it next-to-impossible for a regulated market to thrive.      

Pennsylvania went close to legalizing online gambling last year and many believe there is the will to get the job done this year. Governor Tom Wolf even factored $150 million in extra gambling revenues from the gambling expansion plan that includes online gaming into his spending plan for the 2017/18 fiscal year.

Last year’s bill had overwhelming support in the House but ran out of time in the Senate, where the appetite for online gaming is more difficult to gauge. These senate hearings, then, are crucial to the advancement of regulation.

The next one, on the wider gambling expansion package, is due to be held on March 20.