Pa. casinos seek court injunction to stop iLottery games

As Pennsylvania prepares to roll out online casino-based gambling in July, a group of seven commonwealth casinos are seeking to stop the Pennsylvania Lottery from continuing to offer certain online games.

The coalition has a filed a preliminary injunction with Commonwealth Court to stop the state Department of Revenue, which oversees the Lottery, from offering casino-style games that “imitate the look, sound, player experience and payouts of slot machines.”

The injunction follows a lawsuit filed last August that argued that the Lottery has unfair advantage over the casinos. Casino operators must pay $10 million license fees to offer online casino games, plus they will pay high tax rates of 54 percent and 16 percent, respectively, for online slot machines and table games.

The casinos, including Hollywood Casino at Penn National Race Course, contest they were given the exclusive right to offer these online games under the state’s 2017 gambling expansion law. The Lottery, meanwhile, was permitted to run other online games to generate additional revenue as gambling options have also grown to include smaller satellite casinos and sports betting.

But since the iLottery debuted last May, the casinos say they have found the following issues:

• Nine iLottery games have the same titles and/or themes as slot machines offered on Pennsylvania casino floors or online casinos in other states.
• iLottery games have an average payout of 85 percent, which is the minimum payout percentage for slot machines in Pennsylvania. Traditional lottery games have a 40 percent minimum payout.
• Several iLottery games offer bonus games and free spins, mirroring the play of slot machines.
• The state’s own vendors refer to the iLottery games as slot machines. The Department of Revenue also required its game supplier to not sell the same games to Pennsylvania casinos, effectively admitting these are casino games that would otherwise be sold to and offered by casino operators.
• At least 22 of the iLottery games are certified for compliance with casino gaming standards in other jurisdictions, including the United Kingdom’s Gambling Commission and New Jersey’s Internet and Mobile Gaming regulations.

“Pennsylvania casinos are not opposed to iLottery — only simulated, casino-style games,” said coalition spokesman David La Torre. “In fact, casinos are supportive of the lottery’s mission and provide space for lottery ticket vending machines on their casino floors. Some have become the best-selling outlets of lottery tickets in Pennsylvania.”

Jeffrey Johnson, a spokesman for the Department of Revenue, said the department believes the iLottery games are being operated in accordance with the 2017 law.

“We are working every day to ensure the Pennsylvania Lottery continues to fulfill its mission of responsibly generating profits for senior programs,” he said.

Read the full injunction here: As-filed Application for Preliminary Injunction by Jason Scott on Scribd