Table Games Account For 45% Pennsylvania Online Casino Revenue

The industry had a lot to cheer and a lot to jeer when Pennsylvania passed its 2017 gaming expansion law. The massive piece of legislation brought online poker, online casino, retail and online sports betting, online lottery, mini-casinos, and more to the Keystone State.

One of the biggest criticisms of the law was the burdensome tax rates on online slot machines. Pennsylvania used a bifurcated system that saw online slot machines taxed at 54%, with online casino table games and poker taxed at just 16%.

That decision is having an impact.

Pennsylvania Online Casino Charts a Different Course

In New Jersey and other jurisdictions (where tax rates are identical across all verticals), online slot revenue accounts for an estimated 75-80% of all online casino revenue. Pennsylvania started on a similar trajectory, but as the market has matured, the ratio is getting closer to 50-50.

In February, the breakdown was 55% slots and 45% table games (poker not included).

Here’s why that is likely happening.

PA Operators Are Shifting Play From Slots To Table Games

The industry was rightly concerned when the disparate tax rates were codified. Slots are the big-ticket items at online casinos. It’s what the customers want.

With operators saddled with a 54% tax rate, they would much rather see those customers playing blackjack, roulette, and other table games. The big question was, could they change customer behaviors, and get slot players to shift table games.

If they could, then the only land-based casino games you’d see would be the ones with high hold percentages. The reality is, land-based casinos understand they need to appeal to everyone, and let customers gravitate to the games they enjoy, many of which have small hold percentages.

There were even concerns that profits weren’t viable given the tax rate and concerns that operators wouldn’t apply for the expensive licenses. At the least, Pennsylvania operators would never be able to maximize online revenue like New Jersey online casinos have.

There was always a belief that operators could shift some play from slots to table games, but the most optimistic estimates I heard at the time were in the 10-15% range.

From highlighted games to focusing time and innovation to table games to marketing and promotions, it appears operators have exceeded their expectations in shifting customer play to table games.

The question is, is the shift at the expense of slot revenue?

Is Slot Churn Higher At Pennsylvania Online Casinos?

It’s doubtful the shift is one-for-one. The higher percentage of revenue coming from table games is unlikely to be from slot players shifting to table games. Instead, it’s likely a combination of shifting play and slot players churning a bit faster due to fewer promotions and a smaller catalog of games (NJ online casinos measure slot titles by the hundred and PA online casinos measure them by the dozen).

And that leads to another question (for another article): Does deemphasizing slots lower Pennsylvania’s online gambling revenue ceiling?