Online Casino Operators Lose Court Battle with the Pennsylvania Lottery

When Pennsylvania Governor Tom Wolf greenlighted gambling expansion in the state in 2017, it was the start of a race. Both the Pennsylvania Lottery and casino operators were allowed to offer online games, with the Lottery staying in its niche and casino operators introducing digital casinos. The Lottery won the race, introducing several options before the operators could get anything going, leading to the operators crying foul. They took their case to a judge but didn’t find any sympathy there. Last week, a court ruled against the casino operators, but an appeal might still be on its way.

Pennsylvania Lottery Avoids the Gavel

After Governor Wolf approved the state’s gambling expansion, the Lottery began offering, in May 2018, a number of online options through its iLottery division that the operators asserted were identical to some of the games they were developing. They used as examples nine iLottery games that had the same titles or themes as slot machines and the fact that the payouts more closely resemble those of slot machines and not of lotteries. They also pointed out that, of the iLottery options being offered, 22 are “certified for compliance with casino gaming standards in other jurisdictions,” including in the UK and New Jersey.

The casino operators, who had to pay $10 million each to get into iGaming in Pennsylvania, sued the Lottery, arguing that it was infringing on their turf. In total, seven venues filed suit, including all five of Pennsylvania’s racinos and Cordish Companies, the operator of the state’s Live! casino coming to Philadelphia. However, they didn’t do a good enough job presenting their case.

Judge Renee Cohn Jubelirer heard the arguments and ultimately determined that the Lottery was innocent. She chalked up any similarities to an evolving gaming market, adding that none of the iLottery options included signature or protected content. Jubelirer added, “Rather, they are features that: relate to technological advances in online gaming; are based on online entertainment and gaming, as well as existing entertainment sources like television and board games which have indisputably inspired both iLottery game and slot machines game designers; or existed in the same or similar fashion in traditional lottery products that were translated into a new online medium.”

The presence of the iLottery certainly hasn’t hurt the iGaming segment. Online gaming in Pennsylvania reported its seventh straight month of record revenue this past February. With Caesars Entertainment, Penn National, Parx, and others operating in the online space, there seems to be enough revenue to go around. Sports gambling has helped, and the state’s gambling market doesn’t show any signs of slowing down.

Although the casino operators are said to be weighing their options and might try to appeal the court’s decision, the Lottery is happy to put the issue behind it. It can now get back to innovating, rolling out more non-casino-options similar to the jackpot instant win option it introduced in February.