Report: Pa. gaming revenue up 21 percent in 2011
PHILADELPHIA — Pennsylvania's casinos pulled in $3 billion in gross gambling revenue last year, a 21.3 percent increase over 2010, and generated nearly $1.5 billion in tax revenue for the state, according to an industry survey released Wednesday.
The American Gaming Association's 2012 "State of the States" survey reports consumers spent $3.02 billion at the state's 10 existing casinos in 2011, placing Pennsylvania third in the report, behind New Jersey and Nevada. The state also saw a nearly 10 percent spike in casino tax revenue, pulling in nearly $1.5 billion. Thirteen of the 22 states surveyed showed increases in tax revenue, but no other jurisdiction surpassed $1 billion.
The report is the latest evidence of dramatic growth in the state's casino industry since the passage of the state's gambling law in 2004 and the opening of the first casino in the Poconos two years later. There are now 11 casinos spread across the state from Philadelphia to Erie — including the most recent, Valley Forge Casino Resort in suburban Philadelphia, which opened March 31.
"They've had a good run," said Frank Fahrenkopf Jr., president of the AGA. "The Pennsylvania market ... is one of the real success stories of the last couple of years."
The state also showed a 3 percent growth in the number of casino jobs, going from 12,664 in 2010 to 13,050 last year. Tax revenues were up 9.6 percent, going from $1.3 billion in 2010 to $1.5 billion last year.
Pennsylvania taxes casinos at a rate of 55 percent and uses the revenue to support the state budget, public schools, civic development projects, volunteer firefighting squads, local governments and the horse racing industry. That rate is one of the highest in the nation, Fahrenkopf said, and the state's surge of success is due in part to the fact that the state's industry is young.
"There's got to be a fair return," he said. "I happen to think it's a high rate."
The rate, set by the Legislature, has not deterred interest in the state's casino licenses, according to the Pennsylvania Gaming Control Board.
"We're aware that it is a high tax rate here in Pennsylvania," gaming board spokesman Richard McGarvey said. "Obviously we had a lot of competition for the licenses that came to Pennsylvania. ... It certainly didn't discourage applicants."
The report also showed Pennsylvania's impact on the casino market in neighboring New Jersey, where the struggles of Atlantic City continued: Revenues there dropped 7 percent.
"There's no question that the Pennsylvania market is, I think, the major reason that we've had such a dramatic downturn over the past couple of years," Fahrenkopf said of Atlantic City, long a regular tourist destination for Pennsylvanians, many of whom now have casinos in their backyards.
By law, the state could be home to three more casinos. A license for a resort outside Pittsburgh is tied up in litigation, and another license is tied to a yet-to-be-built racetrack. The gaming board also revoked a second license that had been issued to Foxwoods in Philadelphia, and that license may soon be put out to bid again.
Now, with gambling expanding in Pennsylvania and other East Coast states, the question remains as to what effect the increased competition will have on all the markets over time, Fahrenkopf said.
"Only time will tell what the impact's going to be," he said. "We expect that this new competition will cause surrounding locations to up their game."
The American Gaming Association's 2012 "State of the States" survey reports consumers spent $3.02 billion at the state's 10 existing casinos in 2011, placing Pennsylvania third in the report, behind New Jersey and Nevada. The state also saw a nearly 10 percent spike in casino tax revenue, pulling in nearly $1.5 billion. Thirteen of the 22 states surveyed showed increases in tax revenue, but no other jurisdiction surpassed $1 billion.
The report is the latest evidence of dramatic growth in the state's casino industry since the passage of the state's gambling law in 2004 and the opening of the first casino in the Poconos two years later. There are now 11 casinos spread across the state from Philadelphia to Erie — including the most recent, Valley Forge Casino Resort in suburban Philadelphia, which opened March 31.
"They've had a good run," said Frank Fahrenkopf Jr., president of the AGA. "The Pennsylvania market ... is one of the real success stories of the last couple of years."
The state also showed a 3 percent growth in the number of casino jobs, going from 12,664 in 2010 to 13,050 last year. Tax revenues were up 9.6 percent, going from $1.3 billion in 2010 to $1.5 billion last year.
Pennsylvania taxes casinos at a rate of 55 percent and uses the revenue to support the state budget, public schools, civic development projects, volunteer firefighting squads, local governments and the horse racing industry. That rate is one of the highest in the nation, Fahrenkopf said, and the state's surge of success is due in part to the fact that the state's industry is young.
"There's got to be a fair return," he said. "I happen to think it's a high rate."
The rate, set by the Legislature, has not deterred interest in the state's casino licenses, according to the Pennsylvania Gaming Control Board.
"We're aware that it is a high tax rate here in Pennsylvania," gaming board spokesman Richard McGarvey said. "Obviously we had a lot of competition for the licenses that came to Pennsylvania. ... It certainly didn't discourage applicants."
The report also showed Pennsylvania's impact on the casino market in neighboring New Jersey, where the struggles of Atlantic City continued: Revenues there dropped 7 percent.
"There's no question that the Pennsylvania market is, I think, the major reason that we've had such a dramatic downturn over the past couple of years," Fahrenkopf said of Atlantic City, long a regular tourist destination for Pennsylvanians, many of whom now have casinos in their backyards.
By law, the state could be home to three more casinos. A license for a resort outside Pittsburgh is tied up in litigation, and another license is tied to a yet-to-be-built racetrack. The gaming board also revoked a second license that had been issued to Foxwoods in Philadelphia, and that license may soon be put out to bid again.
Now, with gambling expanding in Pennsylvania and other East Coast states, the question remains as to what effect the increased competition will have on all the markets over time, Fahrenkopf said.
"Only time will tell what the impact's going to be," he said. "We expect that this new competition will cause surrounding locations to up their game."
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