Online gambling has seen a massive boost under COVID-19. It’s not enough to fill public coffers.
Even in states with the nation’s laxest online gambling laws, revenues plummeted by hundreds of millions of dollars following the closure of bricks-and-mortar casinos last month
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. As casinos across the country went dark under the novel coronavirus last month, eyes turned toward those digital life rafts: could they ride out the storm?
According to the first financial reports released since the closures, the answer is a resounding “No.”
Despite online gambling indeed skyrocketing in all three states, newly released data show it wasn’t nearly enough to offset massive losses from traditional casinos.
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. Add that loss to a $124 million drop off from February to March in New Jersey, and a staggering $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,” Kirk said, “it’s still just a drop in the bucket.”
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 dramatic 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 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.”
But it’s the host towns of Pennsylvania’s 12 casinos that could end up feeling the greatest pinch.
According to state figures, gambling money has accounted for just 0.5% of total state tax revenues so far this fiscal year. Compare that to Bensalem in Bucks County, which receives nearly a quarter of its annual revenues — $11 million a year — from Parx Casino.
Mayor Joseph DiGirolamo says the town is upright for the time being: The $11 million is a fixed host fee that arrives in four installments each year. Because Parx, the state’s largest casino, was operating for most of the first quarter, he expects it to arrive without issue within the next month.
But if the casino remains closed?
“After that I’m worried,” DiGirolamo said. “It’s a big part of our budget.”
In New Jersey, where all of the state’s nine casinos are located in Atlantic City, total gambling revenues dove 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.
It was the largest monthly decline in the 42-year history of legalized gambling in Atlantic City, eclipsing the nearly 28% decline in November 2012 following Superstorm Sandy, where casinos were closed for nine days from late October through early November.
With most sports shut down, sports betting revenue fell by over 58%, to just over $13 million. The handle, or total amount wagered on sports before winning bets were paid, was nearly $182 million.
Internet gambling soared in March as more gamblers took their business online—the only game in town. Atlantic City’s casinos won nearly $65 million online, an in crease of over 65% from March 2019.
David Schwartz, a gambling historian with the University of Nevada Las Vegas, said the deep declines were expected.
Delaware represents an enigma. 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 gams 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.”
The Associated Press contributed to this report.