Expanding Video Gaming Terminals in PA Opportunities & Challenges

In the ever-evolving landscape of Pennsylvania's gambling industry, Video Gaming Terminals (VGTs) have emerged as a contender for a more significant role. While not as renowned as traditional slot machines, VGTs have been quietly gaining traction and seeking expansion.

This article delves into the world of VGTs, their potential contribution to Pennsylvania's gaming revenue, and the hurdles they face in their pursuit of growth.

When most people think of Pennsylvania gambling, they envision glitzy casinos with rows of slot machines and bustling online sports betting platforms. However, Video Gaming Terminals, or VGTs, have been steadily making their mark in the state's gaming landscape. These electronic gaming devices, while not identical to slot machines, share similarities and offer unique advantages.

In a recent Pennsylvania Senate hearing, key players from the VGT industry voiced their ambitions and desire for expansion. Three prominent executives, Matthew R. Hortenstine, Brent Mayes, and Rick Kirby, testified about the potential of VGTs to contribute significantly to the state's gaming revenue.

Before delving into their potential, it's essential to understand what VGTs are. The Pennsylvania Gaming Control Board (PGCB) defines VGTs as electronic gaming devices with randomly generated outcomes, similar to traditional slot machines. These devices have been strategically placed at truck stop establishments across the state, adhering to specific criteria.

Recent statistics from the PGCB's FY 2022/2023 Annual Report reveal the growing presence of VGTs in Pennsylvania. The state now boasts 69 facilities across 33 counties offering VGTs, a notable increase from the previous fiscal year. The number of VGT machines also rose, showing signs of expansion within the industry.

Despite their relative obscurity compared to traditional casinos and online sports betting platforms, VGTs have made a tangible impact on Pennsylvania's economy.

In the past year, these gaming terminals generated $42.1 million in gaming revenue, contributing $21.9 million in state and local taxes. This underscores their potential to become significant contributors to the state's coffers.

Illinois serves as a compelling example of what's possible with VGTs. With approximately 45,000 terminals spread across 8,200 locations, Illinois boasts one of the most robust VGT industries in the nation. These terminals have not only driven substantial revenue but have also provided a substantial source of tax income for the state and local municipalities.

Matthew R. Hortenstine, General Counsel at J&J Ventures Gaming, LLC, believes that Pennsylvania can replicate Illinois' success by expanding VGTs to include various types of locations.

In Illinois, these terminals are found in bars, restaurants, veterans' associations, fraternal organizations, and truck stops. Hortenstine envisions a future where Pennsylvania follows suit, potentially generating tax revenue of up to $800 million with the proposed expansion.

While VGTs hold immense potential, they face a formidable challenge from unregulated skill games. Rick Kirby, Chairman of Betson Enterprises, highlighted the difficulties faced by VGT operators due to the proliferation of these unregulated games.

Truck stops in Pennsylvania, in particular, have increasingly opted for skill games over VGTs due to the complexities and regulatory requirements associated with the latter.

Senator Gene Yaw (R-23) has proposed a 16% tax rate as part of a framework to regulate skill games. Hortenstine and Yaw agree that a path forward for regulating skill games could provide stability for VGTs.

While both parties acknowledge the need for compromise, they share the belief that a regulatory framework can safeguard the interests of all stakeholders in Pennsylvania's gaming industry. Video Gaming Terminals are poised to play a more substantial role in Pennsylvania's gaming landscape.

With the potential for expansion and increased contributions to state revenue, VGTs face both opportunities and challenges. By striking a balance between growth and regulation, Pennsylvania can pave the way for a thriving and diversified gaming industry.