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Pennsylvania casinos file suit against state lottery over Internet-based games

Aug 22, 2018, 3:14 pm

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Pennsylvania Lottery

Seven commercial casino operators in Pennsylvania have filed suit in Commonwealth Court against the Pennsylvania Lottery over its new breed of "casino-style" online games.

The casino operators are asking the court to stop the Lottery from offering the games, introduced in May, arguing they cut too close to the online games that the casinos say state gambling law reserves exclusively for them.

The suit alleges several of the Lottery's games improperly imitate the look, sound and feel of slot machines by:

  • Appropriating the same titles as some of the more popular slot machines on casino floors.
  • Using spinning wheels, cascading tiles or other result reveals that are common to casino games.
  • Offering games in penny or dime denominations that are typical for casinos but have note been used for any other Lottery products to this point;
  • Requiring a player to set bets, a term that the suit notes traditional Lottery products do not use.
  • Offering marketing tools — free play offers and a patron loyalty program — that are key elements of casino marketing.

All violate provisions in both the state's Lottery and gambling laws that bar the state from selling any... "simulated casino-style lottery game, including video poker, video roulette, slot machines or video blackjack."

The suit also complains that, because it can sell tickets to 18-year-olds, the Lottery is obliterating longstanding state law that prohibits anyone under the age of 21 from being on a gaming floor.

The end result, the suit alleges, is "a direct incursion by the state into the exclusive market of the licensed gaming petitioners."

Lottery officials declined comment on the suit Wednesday afternoon, noting they had not yet had a chance to review it.

But spokesman Gary Miller defended the iLottery games generally, noting that they are simply part of the ongoing effort "to continue delivering to our customers games that they want and where they want while generating the additional funds to stabilize the Lottery Fund and provide vital services to older Pennsylvanians."

The lawsuit comes as most of Pennsylvania's casinos are preparing to launch their own online gambling platforms later this year — at a license enhancement cost of $10 million apiece.

The casinos' games, however, may not launch until early next year, according to the suit.

Both "iLottery" and the commercial online gambling were authorized in a massive gambling expansion bill agreed to by state lawmakers and Gov. Tom Wolf last year as part of a deal to close the 2017-18 state budget.

The state pushed for the iLottery games in part to help the state-run games — which just posted a record sales year in 2017-18 — stay on a level competitive playing field with commercial casinos in a world where literally every electronic device will be a betting position.

The suit follows an earlier appeal by the casinos to the Wolf Administration's Department of Revenue, which oversees the Pennsylvania Lottery, to work collaboratively with them to develop "a lawful iLottery program."

At that point, the Lottery did change some marketing for its new online games, but no substantial changes were made to the games themselves.

Six of Pennsylvania's 13 commercial casino licensees are not parties to the new suit. Several of those firms are — including Bethlehem Sands and Presque Isle — are currently transitioning between owners.

PennLive's attempts to reach some of the other companies that are not joined in the suit, including Philadelphia's SugarHouse and Pittsburgh's Rivers casinos, were not immediately successful.

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