A gaming expansion bill passed by the state Senate would not only allow a variety of new privately-run gambling options, but it would also allow the Pennsylvania Lottery to go online.
The health of the Lottery has emerged as a matter of concern because its revenue is directed toward programs benefiting seniors, including funding local agencies on aging, subsidizing bus rides and providing property tax rebates, said state Sen. Wayne Langerholc, R-Cambria County.
Those concerns are amplified because seniors are already nervous about how a planned merger of state agencies, including the Department of Aging, might impact services, Langerholc said.
The legislation will “put the Lottery on an equal footing,” he said.
It’s a necessary step to keep the Lottery afloat as consumer tastes change and gambling expansion creates increasing amounts of competition, said Gary Miller, a spokesman for the Pennsylvania Lottery.
“We’re pleased that Senate recognized the need for the Pennsylvania Lottery to modernize by selling games online, which will help us to meet our players where they already are and remain competitive in a rapidly evolving gaming environment,” Miller said. “Expanding into iLottery games will help us to generate the long-term, sustainable profit growth necessary to maintain the Lottery’s funding of vital services for older Pennsylvanians.”
The Pennsylvania Lottery expects to finish 2016-17 with 2.3 percent less revenue than it generated in the prior year, Miller said.
Part of the problem is that 2015-16 was a good year for the Lottery, as a $1.6 billion jackpot in the Powerball inflated sales, he said.
But the Lottery has also been struggling with the fact that gamblers are spending less on the daily drawing games. Those games generate more money for the Lottery than the instant games that are becoming increasingly popular.
In 2015-16, 67 percent of the $4 billion spent on Lottery games in Pennsylvania was spent on instant scratch-off tickets. Just five years ago, instant games accounted for 59 percent of the $3.2 billion in Lottery sales.
Gov. Tom Wolf’s budget anticipates that the Legislature will follow through and allow the Lottery to offer online games.
The Lottery provision is part of a broader gaming expansion that would make Pennsylvania the first state to allow both casinos and the Lottery to offer online games. It would also allow the state to regulate fantasy sports games and allow airports in the state to open gambling parlors.
In an April hearing on the solvency of the Lottery, Wolf’s budget secretary Randy Albright estimated that letting the Lottery offer online games would generate $19 million in new revenue for the Lottery fund. On the other hand, if the Legislature expanded gambling in other ways without allowing the Lottery to go on-line, it would have an immediate negative impact on the Lottery.
Albright said that if the state allows online gaming for other operators and not the Lottery, it would cost the Lottery $6 million in revenue a year.
The Senate approved the gambling measure by a 38-12 vote.
One of those who opposed the bill was state Sen. John Gordner, R-Columbia County.
Gordner said that despite the bill’s provision allowing the Lottery to offer online games, he thinks the legislation will create too much competition for gambling dollars.
“If there is further expansion, there are going to be losers,” Gordner said. Those on the wrong side of expansion could be the Lottery and the casinos and horse tracks that employ thousands of people in the state, he said.
Determining who will get the pieces of the gambling revenue pie isn’t the only consideration. Gordner said it’s not sound public policy to make it gambling too accessible.
“Do we want people sitting at home gambling at 11 o’clock at night? At 3 o’clock in the morning?” he asked.
The Senate gambling bill is an amended version of Legislation that had already passed in the House. The altered bill now goes back to the House.