State shouldn’t put all its chips on the lottery
Gov. Tom Wolf is optimistic about the prospects of getting the Pennsylvania Lottery back into sound revenue territory — optimism that might be shared by some lawmakers as well.
However, the governor’s projections don’t seem to be acknowledging fully the short- and long-term implications of the Keystone State’s major expansion of casino gambling, and that also can be said about the legislators whose thinking is mimicking the chief executive’s view.
It’s true that many younger state residents will be attracted to the new iLottery games that will be rolled out in early May, along with virtual sports games and Keno. The younger crowd probably will boost revenue to some degree, compensating for older state residents and others who will be dropping out of lottery play for whatever reason.
But younger residents, like older ones, also are being attracted more and more to the nightlife that the casinos offer, and the opening of mini-casinos will offer additional nightlife opportunities, thus capturing more money that otherwise might be used for lottery play.
The important question dogging the current lottery optimism is how much revenue will not be forthcoming because of the growing casino factor.
When they make their lofty predictions, state officials like to ignore the fact that people’s gambling money isn’t without limits. And, those officials aren’t putting much emphasis on the fact that some Pennsylvania players will continue to cross borders into the neighboring states of Maryland, West Virginia, Ohio and New York — or going on gambling excursions to Las Vegas, Atlantic City and Niagara Falls, Canada — thus denying Pennsylvania important gambling revenue.
The bottom line: Expanded Pennsylvania gambling might not be the sure thing — as well as the state budget fix — that people like Wolf are hoping it will be.
The window for disappointment still remains open. According to a report by the online news and information service Capitolwire, Wolf’s 2018-19 budget proposal projects that the lottery will return to the black with a positive ending balance of $1.3 million for the current fiscal year, which ends June 30. In addition, he’s projecting a $7 million positive balance for fiscal year 2018-19, which begins July 1.
Both of those numbers also depend on proposed shifts in how lottery funds are spent.
The lottery posted an $18.2 million deficit for fiscal year 2016-17, and the House Democratic Appropriations Committee has issued a prediction that that deficit would jump to $78 million by June 30, without anything being done to increase revenues.
The new iLottery and other games are being envisioned as a panacea, although they might in fact end up being something significantly less.
A Capitolwire report on Monday quoted Gary Miller, a lottery spokesman, saying, “We’ve been running on a business model that’s been basically unchanged since 1972. It’s important for the lottery to remain relevant and competitive in a rapidly changing business environment because older Pennsylvanians are counting on it.”
But Pennsylvania politicians seem to be counting on it even more.
Pennsylvania’s entry into its new gambling universe, authorized by a comprehensive gambling revenue package enacted by the Legislature last October, has Wolf and others using the words “lottery solvency” to describe what lies ahead.
However, profit projections like $1.3 million and $7 million, in an enterprise so large, are shaky at best. The current optimism could turn pessimistic very quickly.