Pennsylvanians Still Divided on Gambling Expansion

December 5, 2014

A week ago, Thomas Sweetz M.S. an instructor of business at Misericordia University in Dallas Township, penned a column for the where he laid out the myriad possibilities for gambling expansion in Pennsylvania, drawing on both current trends and gambling’s historical impact.

Sweetz own opinions are not fully crystallized in the column, although he does seem to favor land-based expansion over online gambling, as he feels land-based expansion brings in tourism and jobs. Still, based on his comments, I wouldn’t consider him championing one or opposed to the other.

The column has a handful of somewhat inconsequential inaccuracies (two examples are: There is no evidence that problem gambling rates increase when access is increased, and five, not six, casinos have closed in Atlantic City) but Sweetz general point shouldn’t be lost in the shuffle: What is the best way for states to expand gaming options?

While Sweetz’s column certainly offers some food for thought, the biggest takeaway comes not from his words but the fact that his open-ended views on gaming sparked a healthy debate in the comments section of the article, offering us a small window into the minds of Pennsylvanians on the issue of gambling expansion.

Opinions varied, and many comments veered off into a more generalized frustration with the current political system, particularly the promises (property tax relief and education) made when Pennsylvania first expanded land-based gaming under former Governor Ed Rendell, but I always recommend people read these comments to get an idea of what the average person thinks about gambling, gambling expansion, and particularly online gambling.

Conflating destination casinos with regional casinos

One grievance I have with the hypothesis put forth is the author’s conflation of destination casinos (the billion-dollar monstrosities found in Las Vegas and Macau)  and regional casinos (the casinos that dot the Pennsylvania landscape) which is like comparing a Michelin Star eatery with your local Applebee’s.

Regional casinos are capable of attracting some tourism, but they rely heavily on the local community and region to survive. A 13th and a 14th casino in Pennsylvania is not going to be a tourism boom, and are going to leave the industry at the mercy of the local economy and vulnerable to being hurt by new casinos that might be approved in nearby states.

Foxwoods is learning this lesson the hard way. With no major airport access the casino (despite its size) is a regional casino, and recent expansion and proposed expansion in surrounding states have taken a toll on the once booming enterprise in the middle of nowhere, Connecticut. Like most regional casinos, Foxwoods was also hit hard by the recession of 2008.

Not an either or proposition

Another point of contention I will address is the idea that it’s either “this or that,” when it comes to gaming expansion.

New York and Massachusetts are both resisting online expansion because they want to get their brick & mortar expansion completed first, which seems like poor policy – especially when you take into consideration that online gambling takes a minimum of a year to get off the ground, and brick & mortar several years. This is valuable time that is going by the wayside because states are for some reason uncomfortable taking on more than gaming project at a time.

What these states, and Pennsylvania, should be looking into is a comprehensive expansion/overhaul of their gaming options. Online gambling may not be right for every state, but to dismiss the possibility of online gaming expansion without looking at its positives and negatives is a mistake.

To look at online and land-based gaming as being diametrically opposed is also a mistake; they are two sides to the same coins. A casino that offers online gaming options has far more marketing and revenue generating options than a company that offers just one or the other.

Thus far there have been zero major incidents with online gambling in New Jersey, Nevada, and Delaware, and while the revenue projections are below expectations, it’s still producing revenue these states, and casinos would otherwise not receive.

A more general example of this can be seen by looking at the retailers who tried to suppress eCommerce and resisted online sales; who are now by and large extinct, while the people who embraced it early on have continued to thrive and even in cases where their store sales have declined, the sum of their store and online sales are higher.

A second example of that shows the power of flexibility is, which began its existence as an online bookseller, but has been able to shed its bookstore brand after diversifying their products. Books no longer come to mind when someone mentions, now its shopping, an impressive array of tablets and streaming TV options, and pretty much anything else you can think of.

Pennsylvania needs to do the same. It needs to consider all of the options on the table and make sure it’s positioning itself to survive in the future, not just the present.

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