I spent more than 20 years in the casino gaming industry, working for some of the world’s premier casino companies, including Las Vegas Sands in five states, including Pennsylvania.
When casinos complain about slot machine revenue losses, I can tell you they are misleading the public. Recently, this has been at the center of their misguided attacks on legal skill games. The big casinos like to claim they are losing money when, in fact, thanks to online gaming, they are doing better financially than they ever have.
Let me start with the recent casino handwringing that they are removing slot machines because of outside, unfair competition. Slot machine reductions are driven by in-casino economics, pure and simple. Having more games on the floor requires capital. Penny and nickel machines, for example, take up precious floor space and cost money to maintain. Slot machines also require more employees to service both guests and the machines.
Added to that is the well-known casino premise that they rarely operate at slot utilization rates higher than 30% to 40% of available machines at any one time. Reducing slot machines cuts costs and has little to no impact on slot revenues.
In the time I served in finance roles, I learned what drives revenues and competitive pressures in the industry and what does not.
That brings me to my other favorite complaint. In recent years, the American Gaming Association — mainly funded by casinos — and many in the commonwealth’s casino industry have claimed that skill games impact their overall profits.
Pennsylvania casinos continue to break revenue records month after month. For example, Live! Casino Pittsburgh saw a nearly 2% increase in slots revenue from last September to this September.
But don’t just take my word for it. In its own reports, the Pennsylvania Gaming Control Board (PGCB), the regulator for casinos in Pennsylvania, states that casino revenues are up significantly over just last year. The combined total revenue generated from all forms of gaming, along with fantasy contests, during September 2024 was $505,879,339, an increase of 6.17% compared to revenue generated in September 2023.
The PGCB also points out the real reason for the in-casino drop in slots revenue. It states that iGaming revenue for casinos increased by 10.79%. iGaming includes online slots, table games, and poker. Revenue from iGaming slots increased by 15% from last September. Casino gamblers are simply opting to participate in different avenues for their gambling enjoyment. Additionally, casino companies have ramped up advertising and incentives to drive casino play online. It’s a good business move because online casino play is more readily accessible and far cheaper to operate.
When looking at the iGaming revenue in September, the vast majority of it came from iSlots.
This is not just the picture in Pennsylvania. The boost in iGaming revenue and decline of in-casino slots revenue is a trend seen in many states, including those that have no skill games operating.
It’s hard to understand why casinos need to find a scapegoat and complain about any perceived competition. In reality, the industry, with iGaming as an important element, is doing well and providing tax revenue for the state. This is a good story to tell, and they should focus on telling it.
Skill games also have a great story. They support the livelihoods of small business owners, veteran organizations, volunteer fire companies and fraternal organizations. With proposed regulation legislation in Harrisburg, the games would provide the state with an estimated $250 million in new tax revenue in the first year. Some of that money could be used for mass transit and infrastructure needs across the state.
It’s time the casino industry ended its deceptive — and expensive — fight against legal skill games. And most importantly, it should stop misleading the public with false claims.
