Pennsylvania Casinos Begin New Phase in War on PA iLottery Games

Pennsylvania’s land-based casino operators are on a mission to put an end to the online scratch-off games hosted at PAiLottery.com. The PA Lottery went online in 2018 and local casino operators have been up in arms ever since. Local casinos claim the games offered by PA iLottery are nothing more than repackaged slots being offered contrary to state law.

The major gambling reform bill introduced in 2017 authorized the PA Lottery to take its games online, but it also gave Pennsylvania’s land-based casinos the exclusive right to offer online slots. Shortly after PA iLottery launched, the Pennsylvania Casino Gaming Coalition filed suit on the basis PA iLottery instant win games are nothing more than slots under a different name.

Now that PA online casinos are scheduled to launch, the coalition has redoubled its efforts to put an end to PA iLottery games. The coalition has filed another injunction asking courts to order the Department of Revenue to stop offering “illegal, simulated casino-style online games.”

In a press release issued last week, the coalition outlined its fundamental arguments against PA iLottery games:

“Overall, the games have the same backbone as a slot machine – an outcome that is determined by a random number generator with animated graphics and computer operations used to provide a visual depiction of that outcome.”

Coalition spokesman David La Torre added this:

“Pennsylvania casinos are not opposed to iLottery – only simulated, casino-style games. In fact, casinos are supportive of the lottery’s mission and provide space for lottery ticket vending machines on their casino floors. Some have become the best-selling outlets of lottery tickets in Pennsylvania.”

8-Month-Old PA iLottery Lawsuit

The newest development is just the latest entry in a legal battle that got underway eight months ago. It began last year when a coalition of PA casino operators sent a letter to Revenue Secretary Daniel Hassel asking PA iLottery games be stopped due to violating the state’s new gambling laws.

The casinos argue that the 2017 gambling reform bill specifically states the lottery may not offer “games which simulate casino-style lottery games, specifically including poker, roulette, slot machines or blackjack.”

The casinos wrote:

“In virtually every way imaginable, Lottery’s iLottery program mimics a casino operation offering simulated casino-style games in direct contravention of (the law’s) express prohibition on Lottery offering ‘interactive lottery games which simulate casino-style games.”

That letter went unanswered and the Pennsylvania Lottery launched its iLottery games in June 2018. Governor Tom Wolf did not address the coalition’s concerns and the group in turn promised to take legal action.

PA casinos also claim they compete on an uneven playing field with the games offered by PAiLottery.com due to age restrictions.

While PA online casinos are restricted to customers 21 and older, online lottery games have a minimum age of just 18.

The coalition also accuses the PA Lottery of heavily marketing its casino-style games, free play and rewards program through multiple platforms, including email, TV and direct mail.

Seven casinos have joined the coalition in the fight against PA iLottery games:

• Parx Casino
• Hollywood Casino
• Harrah’s Philadelphia
• The Meadows
• Stadium Casino
• Valley Forge Casino
• Mohegan Sun Pocono

PA Casinos: iLottery Games too Similar to Ours

The coalition points out that many of the games offered by the PA Lottery online are very similar to some of the games offered on the casino floors in Pennsylvania and others. Some even boast the same titles and themes.

PA iLottery games specifically mentioned in the lawsuit include Big Foot, Monster Wins, Robin Hood, Super Gems, Volcano Eruption, Gorilla Go Wild, Foxin’ Wins, A Dragon’s Story and Slingo.

The Xpress Sports games launched by the PA Lottery last year are also noted as being very similar to the casinos’ own virtual sports betting products.

Oher similarities noted by the coalition include:

• While most traditional lottery games carry a minimum payout percentage of 40%, the iLottery games pay out on average 85% – the same minimum payout for Pennsylvania slot machines.
• The Lottery does not offer any products in nickel and dime denominations – except its iLottery games.

More strikingly, the casinos point out that the authority which oversees the Lottery, the PA Department of Revenue, demands that its game supplier does not sell the same iLottery games to Pennsylvania casinos. The coalition says that this proves the iLottery games are considered casino games by its own regulator.

Gambling Expansion in Pennsylvania

Pennsylvania significantly overhauled its gambling landscape in 2017 with the passage of a wide-ranging bill that impacted in-person and online gambling alike. Online poker, casino games, fantasy sports and sports betting were all legalized with the passage of that law.

Online sports betting went live last month, and online casino sites have a tentative launch date of July 2019.

Online casinos need to be licensed separately for online slots, online table games and online poker. Each license costs $4 million, although a package deal costing $10 million was offered to casinos during a 90-day period following the enactment of the law.