Q&A with the Gaming Control Board

City & State spoke with Kevin O’Toole and Doug Harbach, executive director and communications director with the Gaming Control Board, respectively, on the latest trends in gaming and how the state may handle issues popping up related to sports betting, skill games and more. 

The conversation has been edited for length and clarity. 

Can you elaborate on your work and the regulations involved in the gaming industry?

Kevin O’Toole: All gaming regulators have licensing requirements – certain entities and certain individuals all have to go through a background investigation to make sure that they meet the qualifications of licensure, which are honesty, integrity and good character. Once a casino is up and operating, you have to regulate certain key aspects of the operation. You have to make sure that there's adequate security and surveillance over the property to ensure that the public is safe and that any inappropriate conduct, whether it's criminal or not, can be detected through surveillance. 

So you have the concept of internal controls. Pretty much every jurisdiction that I know of mandates certain internal controls over the core aspects of the casino, which could include the casino cage – where money comes in and out. You have internal controls on security, minimum staffing and you have internal controls over the table games, slot machines and then, you have to have an enforcement mechanism. We're there to make sure that there's compliance with the statutory provisions that cover the activity and the regulations that are promulgated by the regulatory agency. We have an Office of Enforcement Counsel, but in every situation where there is non-compliance doesn't necessarily get ‘prosecuted.’ It could be a warning letter notifying a casino that our representative found a situation of non-compliance. But if it's a serious matter, it could go by way of a negotiated consent agreement between our Office of Enforcement Counsel and the casino. Those consent agreements go before our seven-member board at a public meeting and the agreed-upon fine is either approved or not approved by the Gaming Control Board. Usually, fines are approved, but occasionally, the board might look at it and say it's insufficient for the seriousness of the violation or it's too much for the type of non-compliance. That’s gaming regulation in a nutshell. 

Doug Harbach: We have full-time staff at each of these casinos, too, so it's not just from afar. We've got boots on the ground that are regulating those things, and then replicate that (oversight) for the casinos for internet gaming, video gaming terminals at truck stops, sports wagering and fantasy contests – those are all the things that we regulate besides land-based casinos.

KO: Within the statute, the number one paragraph of legislative intent is that the Gaming Control Board should ensure that things operate in a fair way for the patrons. It's an important section about ensuring the protection of the patrons in all things related to gambling activity. We do have certain test protocols on the slot machines to make sure that they're operating fairly, and we do regulate the table games to make sure that there are procedures for how to play any particular type of game and if those procedures also meet that standard of fairness.

How has the introduction of online gaming and sports betting changed the landscape?

KO: Well, the new technologies have contributed significantly to the revenue growth. With just land-based casinos, we had 13 up and running before the gambling expansion bill – and they generated about $3.3 billion annually. After the expansion, it took about a year and a half to two years to bring that revenue figure up over $5 billion, and now it's getting closer to $6 billion. 

Sports wagering has been a very good activity. It's exciting to get everybody engaged because they get to do a lot of bets on their favorite players or their favorite teams. So far this year, I think sports wagering generated about $260 million in revenue, and there's no reason to believe that it’s not going to do something similar to that in the second half of the year. I think there will be around $500 million in revenue, but iGaming – which simulates slot machine play and table games – that revenue is significantly higher. That revenue is up between $1.5 billion to $2 billion, three times higher than sports wagering. 

And it’s not that there aren’t as many sports wagers out there; it’s just a more volatile activity. There are good weeks and there are tough weeks (for sports wagering). The Philadelphia Eagles or Phillies are good teams, so you expect people in the region to favor those teams. When they’re having a good year, it’s a little bit harder for the sportsbook operator to continue to generate wins. It’s not always a sure bet. 

What are you doing to make younger demographics aware of gambling-related risks?

KO: The statute dictates the legal age to gamble and it's always been 21 years except for fantasy contests with a gambling expansion bill, which made fantasy games available for those who are 18. We have significant initiatives to provide awareness, education and treatment to compulsive or problem gamblers, or people who believe that they may be approaching those categories. Those initiatives apply to people who are 21 or 22 and they apply to people who are 61 and 62. 

We’ve also had a self-exclusion list for a long time and a lot of people know about that and how to sign up to be excluded, whether that be for a one-year period, a five-year period or for a lifetime. For the age group 21 and up, we are hopeful that they will look at the various links that are on their screens if they’re playing online because we require the problem gambling logo and we require a link to the self-imposed list. Any gambler can limit the amount of deposits that they can make in the course of a timeframe. They have self-imposed holding periods or cooling-off periods where the only requirement is that it has to be at least 72 hours. It could be a three-day cooling-off period but it could be a month or six months. We have tracked those statistics and they’re slowly growing. The last month we collected data for was June, when 3.64% of all registered players in the course of that month utilized one or more of those self-imposed limits. 

The last point is that all of the interactive operators, whether they're sports or iGaming, are required to have call centers. The gambling public, who have registered accounts, can communicate with the call center associated with any of the particular operators and voice their concern about any problem that they're having with respect to the play. They can call and say, “Hey, how can I stop playing?” We also have an Office of Compulsive Problem Gambling, and they field calls frequently to help persons of all age groups.

When it comes to the unregulated skill games proliferating across the state, what is the latest you’ve heard on the legislative front and do you expect any regulations to be implemented soon?

KO: We know it’s a topic that has received an awful lot of attention since the middle of last year.  I gave testimony during at least one policy committee hearing and they’ve held a public hearing on skill-based games. The most effective way for us to express what our views are is through those kinds of legislative hearings.

Does the Gaming Control Board have a stance on how these games should be legally defined or classified?

KO: We follow the judicial opinions. In a couple of cases, we were able to file amicus briefs so we could present our position. We also filed amicus briefs on the issue of whether the Pennsylvania Supreme Court should hear an appeal. We're pleased that the state Supreme Court took up two cases because it raises such important issues that our board and I certainly think the highest court in Pennsylvania should be the court that considers the final ruling on where those games stand in terms of legality and in terms of the Gaming Act. We’re glad about that from a judicial standpoint, but right now, there were opinions by the Commonwealth Court of Pennsylvania that indicated that if they were predominantly skill-based they’re not unlawful under the crimes code. So that is the state of the law right now, pending any decisions by the Supreme Court.