“High Stakes: Talking Pennsylvania Gambling With the Power Players” is an ongoing series by PlayPennsylvania featuring interviews with people who are shaping the PA casino and sports betting industry. Pennsylvania reported record breaking gambling revenue for the 2020/2021 fiscal year. All forms of gambling in PA combined to create $3.9 billion in revenue and $150 million in tax revenue for the state.
Pennsylvania Gaming Control Board Chairman David M. Barasch turned in his gavel and announced his retirement on July 15. Barasch was not known to bang the gavel or rule with an iron fist. Instead, he led with an even keel, a calming tone and a collaborative attitude.
Barasch served as ex officio on the PGCB from 2007 to 2008. In 2015, Gov. Tom Wolf appointed Barasch chairman and he accepted a second three year term in 2018. All PGCB commissioners are term-limited to six years. Denise Smyler was named the new chairwoman.
The following interview has been edited for length and clarity.
Gambling expansion in Pennsylvania
Does 2015 feel like a minute or a decade ago? What were the biggest challenges during your time as chairman?
Barasch: It feels like the blink of an eye. It was an interesting and challenging situation but I’m glad I did it. Gov. Wolf thought it would be good having a former prosecutor in charge of the Pennsylvania Gaming Control Board (PGCB). The first big challenge was gambling expansion. The board relied heavily on what was going on in New Jersey and Nevada. It was a challenge for the professional staff who do a great amount of the work.
One of the first things that happened as a result of the expansion was bidding on mini-casinos. The state received bids in five auctions in 2018.
Barasch: Because of my background, when we did the auctions I immediately became very interested and concerned in the possibility of collusion in the bidding. We designed some systems about how the bids were received and opened. The initial rounds collected much more money than the governor or the general assembly thought they would.
In October 2018 Gov. Wolf signed the Gambling Expansion bill and in June 2019, online sportsbooks started launching in the PA. What was it like during those months to get things set up?
Barasch: I did everything I could to double-down that we are part-timers and there are professionals here who live and breathe this. I told (Executive Director) Kevin O’Toole that the board and I were not going to try to micromanage. We met regularly and he told me about the work that was happening to get sports betting up and running. I can’t say enough about the attitudes of the senior staff. They knew it was going to be a challenge and attacked it with focus and a lot of thought. I did anything I could to empower Kevin and the best people in our agency to figure out how we were going to do it. The proof is in the pudding. We’ve hit the deadlines and so far there hasn’t been any major problems I can think of.
You mention you had worries about underage gambling and concerns about geolocation for online casinos and sports betting. For the most part, your fears haven’t become a reality. Can you talk about some of your worries about VGTs?
Barasch: The VGTs have always been conceptually problematic. If you are gambling at a slot machine in a casino the surveillance is in real time and we have people who work for the PGCB at the casino. How can we effectively make sure all the things we worry about at casinos aren’t happening on a different scale at a truck stop? We can’t put a person in every truck stop. We’ve used a lot of technology for monitoring.
Coronavirus shut down PA casinos for about three months starting in March 2020, then again for a few weeks in December. What challenges did this present for the PGCB?
Barasch: It put tremendous stress on our staff and a big portion had to be laid off because a number of them were inside the casinos that closed. You worry about how you are going to reach the level of professionalism we had before COVID.
We have not been together as a group for 18 months. There has been very little in-person contact between the board members. In the first four-and-a-half years, I was in the office regularly and was used to talking to people face-to-face. Then COVID came and to try to keep your finger on the pulse became harder. You lose that feeling for what people are concerned about. My goal was to try to do things by consensus and it’s a lot easier to do when people are sitting around a table in executive session and you can talk it out.
The Pennsylvania Gaming Control Board has also experienced a high amount of turnover.
Barasch: We have had, both pre and during COVID, unprecedented turnover on this board. During the most recent election, three of the four legislative appointees lost or didn’t run. That’s an unusual situation. You work with commissioners for a while and tend to learn their tendencies, and it’s even harder when you haven’t met them in-person.
With the amount of turnover that’s happened, I think it’s remarkable that we’ve been able to keep moving ahead. There were far more changes on the board over the past five years than any other time. I lead, but I’m also looking for consensus and to do that you need to talk to people. I have a lot of confidence Denise will do a wonderful job.
iGaming growth in Pennsylvania
Online casinos started arriving in Pennsylvania in June 20219. In FY 2020/21 iGaming revenue in PA was more than $897.2 million AGR (adjusted gross revenue). It represented a 272.5% increase compared to the nearly $240.9 million generated in the previous fiscal year,
What are your thoughts on the explosion of iGaming in Pennsylvania?
Barasch: For us, the projections we made on the growth of iGaming and sports betting were quite lower than what happened. Nothing could have forecasted the casinos shutting down. How much of that explosion is love of iGaming as opposed to not being able to play in a casino? I think we are going to find out in the next couple months as more people get comfortable returning to casinos. Will the iGaming numbers plateau? We got to a higher level of revenue much sooner than we expected. But we don’t know if it’s a temporary phenomenon.
On keeping order
When asked how he kept order during his time as chair, Barasch simply replied “this isn’t my first rodeo” in the tone of a cowboy who has been a part of quite a few stare downs at the O.K. Corral.
His legal career spanned 47 years in state, federal and private practice. He served as the state’s advocate in the Three Mile Island nuclear accident litigation and also for a utility case that went to the Supreme Court. In another notable case, as U.S. Attorney, Barasch put then Pennsylvania Attorney General Ernest Preate Jr. in prison for charges which included soliciting $20,000 in secret, prohibited cash contributions from proprietors of illegal gambling businesses.
Why have you chosen not to speak to the media during your time as chairman?
Barasch: I’m the chair of a board who votes. I have a lot of opinions and I am not someone who generally hides his opinions. But I have found that if you are playing the role of a semi-judicial figure you have to shut up.
Online casino growth and customers returning to casinos
There are certain things from COVID shutdowns that Barasch and his wife still find are a part of their lives. Barasch watches movies on streaming services and wonders when he will return to a theater. He prefers ordering groceries ahead and picking them up curbside. All of these changes make him think about Pennsylvania casinos.
Will people return to casinos in the same numbers or has online gambling cannibalized brick and mortar casinos?
Barasch: I think it is a challenge for the brick-and-mortar casinos. Even if they have skin in the online game, a lot of money has been invested in brick-and-mortar casinos. If people’s first experience with legal iGaming and sports betting happened during COVID, it severed the connection to the brick-and-mortar casinos. Everyone is trying to cover their bets. I think it’s a big challenge for the casino industry. Is this an abnormal development and will things return to some notion of what we thought this industry would look like or is this a permanent change?
I don’t think my wife and I will ever stop doing curbside pickup from Giant. It makes my life so much easier. Now that I think about it, I never liked grocery shopping.
What’s next?
The 73-year-old Barasch does not sound like a man who is ready to settle into a rocking chair on the porch. He says he would have continued serving as chairman if the statute allowed it. He recalls attending Cornell University Law School and the feeling of wanting to change the world.
What will you miss the most?
Barasch: I’ll miss not being involved in public policy matters. The hardest thing for me is being in the grandstand watching the show and the debates of the day about public policy. I was happy to do this for the governor. I may yet find something else to do.
Lead photo from PGCB Twitter. From left: Chairman David Barasch, PGCB Commissioner Kathy Manderino, and Exec. Director Kevin O’Toole.
The post High Stakes: Retired PGCB Chairman Opens Up About Gambling Expansion, iGaming Growth and the Future of the Industry appeared first on Play Pennsylvania.