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Executives explain why Pa. needs online gambling

| Sunday, March 12, 2017, 9:00 p.m.

Pennsylvania has done things right so far in developing a strong casino industry throughout the state, Nicholas Menas says.

Now, adds the vice president of government relations for Amaya Inc., one of the world's largest publicly traded real-money online gaming companies, legislators need to help the state's 12 casinos grow by approving Internet gambling.

“Legalizing, regulating and licensing (iGaming) is the only thing to do,” he said March 8 at a joint hearing of state House and Senate committees that will consider iGaming, legalization of Daily Fantasy Sports, gambling tablets at airports and other gaming proposals.

At least eight gambling bills have been introduced since the legislative session began in January, said Sen. Mario Scavello, R-Monroe County, who led the hearing. He said a second joint hearing on other gambling proposals is set for March 20.

In January, Scavello predicted that the House and Senate would approve online gaming by the end of March. State Rep. George Dunbar, R-Westmoreland County and the prime sponsor of a current omnibus gambling bill, said that's still possible, but April or May is more likely.

Opponents of online gaming cite two main fears:

• Internet gambling will cannibalize existing casinos by drawing customers away.

• Online slot revenue would be taxed at a much lower rate than land-based slots, reducing state revenue overall.

Menas and other witnesses presented strong evidence to allay those concerns.

“The concept of cannibalization just doesn't fit into this discussion,” Menas said, because people who gamble online are not among those who currently visit traditional casinos.

“They're adding to the pot, they're not subtracting from the pot,” he said of online players.

Other witnesses, including Wendy Hamilton, representing Rivers Casino in Pittsburgh and Sugarhouse in Philadelphia, agreed. A 2014 study commissioned for the Legislature also found that online and land-based casinos appeal to different audiences.

David J. Satz, senior vice president of Caesars Entertainment Inc., which operates Harrah's Philadelphia, said that in New Jersey, 80 percent of Caesars online poker players are new customers and not in the company's national players club database. He said poker revenue at the company's New Jersey casinos increased after the legalization of online poker.

Supporters said casinos would use online gambling to attract more people to brick-and-mortar facilities, which also offer restaurants, entertainment and other amenities not available online. Currently, only New Jersey, Delaware and Nevada have legalized Internet gaming. Gamblers must be within the state to play.

Chairman Robert Green and Chief Executive Officer Tony Ricci of Philadelphia's Parx Casino, which generates more gaming revenue than any other Pennsylvania casino, spoke against Internet gaming. Ricci suggested that half of online revenue would come at the expense of an existing casino but did not provide any studies to support that.

Other points of note from the hearing:

• Nemacolin casino losing money: Lady Luck Nemacolin has lost $1 million to $2 million per year since opening in July 2013, said Donn Mitchell, chief administrative officer for Isle of Capri Casinos, which operates the resort casino in Fayette County. He blamed the $10 “amenities” fee that resort casino patrons must pay to enter the casino; out-of-state competition, specifically the new Rocky Gap casino in Maryland; and “extraordinarily high” regulatory costs. Both Mitchell and Valley Forge CEO Eric Pearson supported online gaming as long as their small casinos are allowed to participate. They also support a plan allowing them to eliminate the amenities fee in return for a $1 million payment to the state.

• Unregulated sites easy to reach: John Pappas of the Poker Players Alliance demonstrated that Pennsylvanians can access unregulated online gambling sites easily. From the witness table, he did an Internet search and generated numerous links to sites offering Internet gambling. That emphasized the fact that online gaming – like sports and DFS betting – is common but without the consumer protections and tax revenue that come with regulation. “That was eye-opening to a lot of people,” Dunbar said after the hearing.

Menas said Pennsylvania did “probably the best job of any gaming jurisdiction across the country” in creating a gaming marketplace. With the number of gaming licenses capped and sites spread out to minimize competition, casinos get their players largely by being convenient. Similar “convenience” sites in Nevada that did not adapt to changing times are “ghost towns” today, he cautioned.

“They had a shelf life because they failed to reinvent themselves,” Menas told legislators. “Atlantic City failed to reinvent itself. (iGaming) is a tool that will allow your land-based casinos to reinvent themselves.”

Mark Gruetze is the Tribune-Review's gambling columnist. Reach him at PlayersAdv@outlook.com

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