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Pennsylvania is new No. 2 in nation for gambling revenue

Jeremy Boren
| Thursday, Jan. 19, 2012

Pennsylvania outplayed New Jersey last year to become the second-biggest gambling state in the nation, according to revenue figures the Pennsylvania Gaming Control Board released on Wednesday.

Three-card poker player Joe Gumola, 61, of Irwin said he's pleased with the silver-medal distinction but tries to avoid inflating the Rivers Casino's bottom line. He and his wife have visited the North Shore casino about once a month since putting aside early worries that the food and entertainment wouldn't be worth the 30-mile drive.

"I'm not surprised; people are always looking for ways to have fun and make a couple dollars," said Gumola, who owns a Connellsville auto repair shop. "I've got some things paid off in my life, so now I have a little extra money to play with."

Pennsylvania's 10 casinos raked in $3.02 billion in gross revenue in 2011, up 21.6 percent from the previous year. That was enough to edge out New Jersey, which reported $2.95 billion in revenues, a 9.5 percent decrease from 2010. Both figures exclude freebies that casinos use to attract gamblers.

Analysts and casino operators attributed Pennsylvania's rise to the surging popularity of table games — which began operating in the state in July 2010 — and that many casinos have grown past their adolescence of unpredictable revenue swings and are investing in new amenities such as hotels, ballrooms and restaurants to attract more gamblers.

"Clearly, Pennsylvania is going to be much stronger than New Jersey for the next two years," said Michael Paladino, a gambling industry analyst with Fitch Ratings in New York.

Pennsylvania won't catch up to Las Vegas or some international gambling destinations anytime soon. Nevada produced $10.4 billion in gambling revenues in 2010, more than triple Pennsylvania's production, according to the American Gaming Association.

Revenue from Atlantic City casinos has mostly declined recently. New Jersey gaming regulators celebrated a 4.2 percent increase in statewide revenues last month, which they said was the largest monthly increase since December 2006.

Paladino said as casinos, such as the Sands Casino Resort in Bethlehem, add hotels to attract gamblers from farther away, they will continue to drive growth, but probably not as dramatically.

"As the market matures, it will start to slow down. I wouldn't expect to see that kind of growth rate in 2012 or 2013," he said.

Alex Picou, a gaming, travel and lodging industry analyst with FBR Capital Markets, said casinos in Eastern Pennsylvania are well positioned to sap gamblers from New Jersey.

"There were a lot of people going across the bridge to Atlantic City that aren't doing that anymore," he said.

Pennsylvania casinos added a combined 166 gaming tables to their floors last year to capitalize on their popularity. That strategy produced nearly $619 million in revenues in 2011 from table game players, up dramatically from $212.5 million for half of 2010.

Slot machines remain Pennsylvania's biggest money-maker for casinos and taxpayers. They produced $2.4 billion in revenue in 2011, up from $2.27 billion in 2010.

Pennsylvania taxes table games at 16 percent, a rate set to drop to 14 percent in July, the second anniversary of table gaming. The tax is 55 percent on slot machines.

"What you're seeing is these casinos are now into their third, fourth and fifth years of marketing and creating a customer base, and that has created growth," said Doug Harbach, a spokesman for the Pennsylvania Gaming Control Board.

Managers at Rivers Casino and Meadows Racetrack & Casino in North Strabane said they have hired more dealers to staff additional gaming table shifts throughout the day because of increased demand.

Bud Green, assistant general manager at Rivers, said the casino will stay put with 108 gaming tables for now, but has a class of 80 dealers preparing to start. He said table games create a high-energy experience for players akin to being on the Las Vegas strip.

"If you come here on a Saturday, the table games are all packed and people are hooting and hollering, and that's the ultimate casino atmosphere," Green said.

Lance Young, director of table games at the Meadows, said the casino added a high-limit room last year to draw in gamblers looking for a more sophisticated scene while playing blackjack, roulette or mini baccarat.

Bets start at $50 a hand and go up to $15,000 a hand.

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