Are Brick and Mortar Casinos on the way out??

[Susan Star Paddock]

Internet Gambling has been illegal in every state, so when states have wanted gambling revenue they have turned to licensing brick and mortar casinos...mostly big slots barns like the ones here in PA. However, just on the horizon are signs that these casinos may be a bad bet, and be slowly going the way of other businesses that are dying due to web competitors.

Delaware has become the first state with internet gambling within its borders.  The implications for PA, and other states is that they will all eventually move toward permitting on-line gambling.  Even if they do not immediately move in this direction, Casino investors should want to see the impact in Delaware before they put up any more bricks and mortar casinos.  Think Blockbuster vs. Net Flix, or Borders vs. Amazon. 

The plans for auctioning off more licenses in PA, most likely just faltered as it is very hard to see how anyone could justify a $250-500 milion investment when the same can be done for less than 1% of that in terms of servers for the web. 

In may be a while before we know for sure which way it will work. Valley View Downs project has collected new investors. 

The bill to auction off remaining casino licenses (the ill-fated 2nd Philadelphia license and possibly Valley View Downs) passed the house but has stalled in the Senate committee and may go nowhere. 

 

Delaware to allow online gambling

By Doug Denison, The (Wilmington, Del.) News Journal 6/28/2012

 

DOVER, Del. – Delaware became the first state to enter the realm of legal online casino gambling Thursday with the governor's approval of legislation that allows for full-service betting websites offering slots play and games like roulette, poker and blackjack. 

Democratic Gov. Jack Markell signed the Delaware Gaming Competitiveness Act of 2012 into law the morning after the bill passed the state Senate on a close vote that reflected opposition from lawmakers who believe expanding gambling to the digital realm will expand the social ills associated with it.

Proponents hailed the measure as a viable way to help preserve the state's embattled casino industry, which is facing aggressive competition from new venues in the neighboring states of Maryland and Pennsylvania.

"We're talking about a couple thousand jobs," Markell said. "The competitive landscape for this industry has changed dramatically."

Online slot machine play and casino games such as blackjack and poker will be accessible through each Delaware casino's website and controlled centrally by the state Lottery Office. Delaware lottery tickets also will be offered for sale on a state-run website.

Federal law limits online gambling to players within the state's borders, which will be verified using geolocation software.

The state hopes to launch online gambling in 2013 and intends to make betting available on a variety of digital devices including smart phones and tablets.

Other states already offer lottery ticket sales via the Internet and Nevada is moving toward the implementation of online poker play, but Delaware is the only state so far to legalize comprehensive online casino gaming.

The legislation sets aside a portion of the expected profits from online gambling to offset $3.75 million in licensing fees currently paid by Delaware's three casinos, with the caveat that the venues use those savings to fund new marketing efforts or capital expansion projects.

Casinos in Delaware employ about 2,500 people and legalized gambling generates more than $250 million annually in state tax dollars.

"We can help protect the jobs and this revenue source for our state," said Senate President Pro Tem Anthony DeLuca, the lead Senate sponsor of the bill.

"We can keep Delaware at the forefront of developing new and better gambling options.," he said.

The Department of Finance estimates the new gambling offerings will generate $7.75 million in revenues for the state in fiscal 2013.