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The Pa. Lotterys new iLottery mimics slot games, casinos complain. A big court fight is brewing

by Andrew Maykuth State revenue officials are casting a hungry eye on the internet as the next frontier of gaming revenue. In New Jersey, where online gaming was introduced in 2013, casino revenue from digital games doubled from 2014 to 2017, reaching $245.6 million. Though digital offerings account for 9 percent of New Jersey casino revenue, internet winnings are taxed at a higher rate than casino winnings (15 percent vs. 8 percent). Last year internet betting accounted for $36.9 million, or 17 percent, of New Jersey's $211.6 million in tax revenue from gambling. In Pennsylvania, the new state law approved last year sets the tax rate for internet poker games and online table games at 16 percent of the casino's win. The tax rate for online slots is 54 percent. The casinos say they are operating at a disadvantage to the state-run iLottery, which they contend constitutes an "illegal incursion" into the interactive gaming domain that the Assembly assigned to casinos. In their letter to Hassell,  whose agency oversees the state lottery, the casinos said the iLottery has the "same interactive appearance, feel and play experience that a player would expect from land-based and online slot machines." The casino operators said the lottery also uses two "key casino tools" to retain customers — free play and a patron-loyalty program.The iLottery offers prizes up to $250,000 and plays that cost as little as a penny, similar to slot machines. Several iLottery games also have the same names as casino slot machines: Robin Hood, Super Gems, Slingo, Big Foot, Volcano Eruption and Monster Wins.

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