Can PA online lottery coexist with PA online casinos?

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Pennsylvania became the first US state to legalize both online lottery and online casino gambling, following the passage of a sweeping set of gambling reforms last year.

PA Online lottery products went live in May, and when online play launches (sometime in Q4 2018 or Q1 2019), Keystone State will be the first state to offer both products side by side. to the side.

On the surface, this shouldn’t be a problem.

First, the theory that any new form of gambling will cannibalize existing forms of gambling has been completely debunked. Instead of cannibalizing revenue from land-based casinos, New Jersey’s online casino offerings have supported them.

Second, traditional lottery games — draw tickets, instant scratch cards and keno — bear little resemblance to online casino games.

The same goes for online raffle tickets. When raffle tickets are sold online, the game mechanics do not change. The draws take place at specific times, with the only difference that instead of holding a physical ticket, the player has a virtual ticket. (Online raffle tickets and keno are not yet available in the state.)

On the other hand, the instant win online lottery games available in Pennsylvania, and online keno to some extent, are another story. And now that we’ve seen a sample of Pennsylvania Lottery games online, online casinos should be concerned.

Slots by any other name

Traditional instant games require the player to physically scratch the ticket with a coin or, in some cases, pull the tabs to reveal the symbols/numbers and potential prizes. It is then up to the player to determine whether the ticket is a winner or a loser. Basically, it takes a bit of time and effort to play these games.

This is not the case online.

With the click of a mouse, the entire card is instantly revealed and the game lets the player know if they’re a winner or a loser, usually with fun animations and sounds. If it sounds a lot like an online slot machine, that’s because it is.

Since their Minnesota debut in 2014, instant win online lottery games are commonly referred to as slot machines by another name. In fact, it was the slot-like game mechanics that lifted people and caused the Minnesota legislature to ban the games a year after the national lottery approved them.

Besides Pennsylvania and their brief stopover in Minnesotaonline instant games are available in two other states: Georgia and Michigan.

Instant win online lottery games have proven popular in both states, especially as a temporary substitute for MI’s online casinos. There’s no reason they can’t have the same appeal in PA, where they’re the only online game in town right now.

A true first-mover advantage

With the Pennsylvania Lottery beating online gambling, instant win online games are going to have several months to build a following before they have to face off against online casino operators.

With the launch of the online lottery in May, this advantage could exceed six months.

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The online slots tax rate will hurt in more ways than one

Lower RTP

Generally, online slots would have a clear advantage over online lottery games, as slots traditionally have a much higher return to player percentage than lottery games.

This advantage will be minimal in Pennsylvania. The Legislature’s insistence that its online slots tax rate mirror the state’s 54% land rate (in addition to a steep up-front license fee) is a major cause for consternation. among the future operators of online casinos.

As such, carriers will likely offset these charges by lowering RTP percentages. If the PA Lottery copies Michigan’s high RTP (compared to lottery products) for its instant win games, customers may not even notice a difference in RTP between online lottery instant win games and slot machines. under online.

Less marketing

Pennsylvania casinos could also try to save money by cutting marketing costs and the benefits of the rewards they offer players.

Marketing discounts will make it harder for online casinos to compete with the online lottery for the pool of customers to win, and fewer rewards benefits will hurt customer loyalty.

Result for PA lottery, casinos

Due to their similarities, online slot machines and online instant win lottery games are expected to compete for some of the same customers.

The first-mover advantage of the lottery, coupled with the hefty taxes and license fees on online casinos, could work in favor of the lottery.

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