CASINOS ARE GAME
Sportsbooks open just in time for Eagles’ return to playoffs
PHILADELPHIA – It doesn't take much time at SugarHouse Casino to discover the Philadelphia facility's newest offering. If customers miss the five-story sign attached to the building's exterior, another one just inside the casino's doors — standing maybe 8 feet tall and reading, “This way to live sports betting” — should catch their attention.
Just steps away, the casino's sportsbook awaits. There, several high-definition TVs surround a seating area for about 75 people, including a lucky 18 patrons who can sink into brown leather chairs closest to a 14-by-7-foot screen displaying multiple games. Pencils sit atop each table, ready for customers to scribble down their bets before delivering them to live tellers near four TVs
that scroll through upcoming games and the accompanying odds. Those who work up an appetite can call or text an order, from a $10 Geno’s cheesesteak to a $19.75 prime rib French dip, along with a 100-ounce Miller Lite draft beer to wash it down. It’ll be delivered to their seat by a waitress in a referee outfit.
“Legalized sports betting — it’s awesome, especially if the Eagles win,” said Brian Lowry, a Philadelphia resident who placed a bet on the Eagles at SugarHouse Friday afternoon.
Lowry, wearing an Eagles winter hat, needs the defending Super Bowl champion to lose by no more than 6 points — or, better yet, win — against the 6.5-point favorite Chicago Bears today, a game that will conclude an NFL Wild Card weekend that is sure to lure plenty of wagers.
These are the early days of sports betting in Pennsylvania, an athletics-crazed state where analysts believe there’s significant potential in the market. But, they caution, the thing to watch will be how much that is limited by the state’s 36 percent tax on sports wagering revenue, a rate that is roughly four times the slice collected in neighboring New Jersey.
While Pennsylvania and New Jersey are among the seven U.S. states now offering legal sports gambling, plenty more are expected to join the action in 2019, following last year’s U.S. Supreme Court decision that overturned the longstanding ban on sports wagering outside Nevada.
More Pennsylvania casinos will jump into the market soon, willing to pay a $10 million fee for a sports wagering license.
As it is now, SugarHouse and its sister facility, Rivers Casino in Pittsburgh, launched sports wagering in mid-December, joining Hollywood Casino at Penn National Race Course in Dauphin County, which kicked off the action in Pennsylvania before Thanksgiving.
Parx Casino in Bucks County will open its sportsbook Tuesday, with Harrah’s Philadelphia Casino and Racetrack in Delaware County and Valley Forge Casino Resort in Montgomery County expected to follow not long after. Presque Isle Downs & Casino in Erie has filed its petition with the state but has not come up for a vote before the Pennsylvania Gaming Control Board, board spokesman Richard McGarvey said.
As for when sports betting could come to Sands Casino Resort Bethlehem, customers shouldn’t bank on it anytime soon. Las Vegas Sands Corp. is selling the gambling complex to Wind Creek Hospitality, the gambling and hospitality arm of the Poarch Band of Creek Indians of Alabama, in a $1.3 billion deal expected to close by April.
“We’re focused on closing the transaction now,” Wind Creek spokeswoman Magi Thomley Williams said Thursday. “At the appropriate time, we will consider all the options available to us, including sports betting.”
Even for the Pennsylvania casinos already offering sports betting, what they offer now could be more of a preview of what they eventually have, especially when considering online sports wagering in the state has not started.
For example, at SugarHouse, the casino’s sportsbook is in its temporary home, one crafted by relocating some slot machines to other areas. SugarHouse plans to launch its permanent sportsbook this year; it will be larger and have more screens and seats, said Evan Davis, the casino’s vice president and general counsel.
“We wanted to open a temporary space, so we could get this action started as soon as possible,” said Davis, noting details of the casino’s permanent sportsbook are being finalized.
That allowed SugarHouse to be the first Philadelphia-area casino to launch sports betting, giving the facility a leg up as it captured the last three weeks of the NFL regular season — a stretch in which the Eagles beat the Los Angeles Rams, Houston Texans and Washington Redskins to reach the playoffs.
“The Eagles’ recent success and making it into the playoffs has only added to the excitement here,” said Davis, knowing he will have a packed sportsbook today, when some patrons may wander over to the casino’s table games at halftime.
With the success so far, SugarHouse has upped its number of self-serve kiosks — where customers can place bets without visiting a live teller — from six to 10 and is planning to add more.
“We’re trying to keep up with the demand we’ve seen,” Davis said.
Chris Grove, a gambling industry analyst and managing director at research and consulting firm Eilers & Krejcik Gaming, believes Pennsylvania eventually could have $680 million in annual sports betting revenue if the state’s tax rate is adjusted to resemble New Jersey’s, which is less than 10 percent for wagering in casinos. With the current tax rate, lower than Rhode Island’s 51 percent, Grove estimates Pennsylvania could rake in more than $400 million annually in sports betting revenue, which would easily exceed the roughly $250 million recorded in Nevada last year.
“It would surprise me if it didn’t end up being bigger than Nevada,” he said, noting Pennsylvania’s significant population and “incredibly strong affinity for sports.”
To secure profitability, Grove said, Pennsylvania casino operators will have to offset the high tax rate. The typical way to do that, he said, would be through offering markets that would pay back less to bettors, spending less on marketing or reducing investment and innovation in the product itself.
“The big story in Pennsylvania is how much the tax rate will hurt,” he said. “It will be interesting to see where casinos think they can pull back.”
With the high tax rate, Hollywood Casino, in Dauphin County, hasn’t been able to invest much in its sports betting operation, opting to retrofit its Simulcast Theater rather than build an area for the activity, said Eric Schippers, Penn National’s senior vice president of public affairs.
“Sports betting — especially at Pennsylvania’s tax rate — is not a big money-maker,” Schippers said. “In fact, we’re hoping to at least break even operating sports betting this year, but it is an added amenity that will, hopefully, generate additional visits to the casino.”
From Nov. 15 to Nov. 30, Hollywood Casino took in more than $1.4 million in bets, with adjusted gross revenue of about $509,000 after payouts. Of that, more than $183,200 was sent to the state, according to the gaming board’s sports wagering revenue report last month.
One perk of sports betting for a casino, however, is that it helps get people in the doors, driving business to higher-profit areas, including food and beverage, noted David G. Schwartz, director of the Center for Gaming Research at University of Nevada, Las Vegas.
SugarHouse is banking on plenty of that today, when enthusiastic Eagles fans are expected to descend upon the sportsbook — and bet a little money while they’re at it.
Vincent DeMarco, for one, likes the Eagles’ chances, so much so that he placed two bets Friday at SugarHouse — one based on the point spread and one moneyline bet, which allows a bettor to simply pick a winner.
“I think their chances of winning the game outright are excellent,” said the Mount Ephraim, N.J., resident, calling the Eagles a battle-tested team with the advantage of playoff experience.
As for Lowry, who used to go to Delaware Park Casino to place bets, he’s already thinking about who the Eagles would play if the team beats the Bears. That would be the New Orleans Saints, believed by many to be the Super Bowl favorites.
If the Eagles get past the Saints, Lowry predicts they Birds won’t lose again until the preseason.
In fact, he’d be willing to bet on it.
“Sports betting — especially at Pennsylvania’s tax rate — is not a big money-maker. In fact, we’re hoping to at least break even operating sports betting this year, but it is an added amenity that will, hopefully, generate additional visits to the casino.” — Eric Schippers, senior vice president of public affairs, Penn National