Casinos argue Pennsylvania’s new iLottery games violate law

HARRISBURG » Pennsylvania’s 13 licensed casinos say Pennsylvania’s new iLottery online games violate state law and warned the Wolf administration they plan to take action if they aren’t stopped.

The casinos wrote Revenue Secretary Daniel Hassell on Wednesday to argue the games , which in some ways resemble slot machines, violate the law passed last year authorizing them.

A Revenue Department spokesman said the agency was reviewing the letter and would comment later.

The casinos said they want the current iLottery games halted by Tuesday or they will “consider all actions” available to them.

“In virtually every way imaginable, Lottery’s iLottery program mimics a casino operation offering simulated casino-style games in direct contravention of (the law’s) express prohibition on Lottery offering ‘interactive lottery games which simulate casino-style games,’” the casinos wrote.

They said 18-year-olds are allowed to play, where bettors must be at least 21 to play in a Pennsylvania casino.

They also argued the games are competing with their own ability to run online games — which will require them to pay a $10 million licensing fee.

Casinos expressed similar concerns about iLottery infringing on their business when the law was being debated last year.

The law said the state lottery may not offer games that simulate casino-style lottery games, specifically roulette, poker, blackjack or slots.

The casino operators said in the letter to Hassell, whose agency includes the lottery, that payout percentages in iLottery match those for casino floor slots and they use two “key casino tools” — free play and a patron-loyalty program.

“Moreover, Lottery has been heavily marketing its casino-style games, free play and rewards program through direct mail, email, and television advertising,” and through a digital marketer to encourage player registration, the casinos told Hassell.

“Overall, the games essentially have the same backbone as a slot machine; an outcome that is determined by a random number generator with animated graphics and computer operations used to provide a visual depiction of that outcome,” the casinos alleged.

The iLottery games began last month, with prizes up to $250,000 and plays costing as little as a penny. So far, 40,000 people have registered online, which is required in order to play the games. They have attracted about $18 million in bets, and paid out more than $16 million in prizes so far, a spokesman said Thursday.

Pennsylvania Lottery revenue has been essentially flat over 2015-17, at just under $1.5 billion, but the current year is expected to be higher.

Lawmakers have repeatedly turned to gambling in recent years as a way to raise money without imposing a broad-based tax.

The Lottery says Pennsylvania is the seventh U.S. state to sell lottery games online.